Two brothers who own towing companies in Southern California were detained for alleged involvement in a multimillion-dollar insurance fraud scheme.
Mark Hassan, 46, of Corona Del Mar, and Ahmed Hassan, 35, of Walnut, were arrested on March 11 for several counts of felony insurance fraud, according to the Los Angeles County District Attorney’s Office.
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Prosecutors allege that the pair defrauded workers’ compensation insurance companies by underreporting employee payroll and paying portions of employees’ earnings in cash.
The California Department of Insurance launched an investigation into the pair after receiving two fraud alerts from an insurance provider saying that Mark, the owner of Hadley Tow, had underreported his company’s workforce.
A third fraud alert was issued for Ahmed, the owner of California Heights Tow, when he allegedly filed a false employee injury claim against his insurance policy on behalf of a Hadley Tow employee.
At the time, Mark, who also controlled FMG Inc., operated Hadley Towing in Whittier, Courtesy Towing in Sylmar, Crescenta Valley Towing in La Crescenta, California Coach Towing in Walnut, and a number of other towing companies around the greater Los Angeles area.
He also had towing contracts with several law enforcement organizations throughout Southern California.
According to court records, investigators believe Mark used his uninsured towing company, Courtesy Tow, as a “shell company to conceal portions of Hadley Tow employee payroll to allegedly defraud workers’ compensation carriers of premiums owed.”
His brother Ahmed is also accused of underreporting employee earnings in order to save money on workers’ compensation insurance premiums for his company.
“In addition to hiding and misrepresenting employee wages to their workers’ compensation insurance providers, the Hassan brothers paid portions or all of employee wages without withholding standard deductions, which led to the Employment Development Department opening a payroll tax evasion investigation,” prosecutors said.
The brothers claimed a combined salary of $3,038,164 to their insurance carriers for Hadley Tow and California Heights Tow, but a forensic examination revealed that the real combined payroll for the enterprises was $16,716,657, resulting in an estimated premium loss of $5,897,487.
“Underreporting of workers’ compensation insurance in California is illegal and undermines the financial stability of the insurance system, which shifts costs onto other policyholders,” the California Department of Insurance said in a statement. “It also jeopardizes the availability of benefits for injured workers, hindering their access to necessary support. Unfair competition also arises as fraudulent businesses gain an advantage over ethical ones.”
Mark and Ahmed were arrested on various charges of felony insurance fraud. Mark was booked in the LASD Inmate Reception Center, while Ahmed was placed at the West Valley Detention Center in Rancho Cucamonga.
The District Attorney’s Office of Los Angeles County is prosecuting the case.
