SANTA CLARA (BCN) — The owner of a Santa Clara flooring business on Friday denied wrongdoing a day after he was charged in Superior Court in San Jose with underreporting the firm’s payroll to avoid nearly $118,000 in worker’s compensation insurance payments.
Ahmad Molaie, 61, of San Jose, said that the Santa Clara County District Attorney’s Office erred in bringing the charge of workers’ compensation premium fraud against him as owner of The Floor Center.
“I dispute that,” Molaie said. “He (the prosecutor) is wrong. That’s why we’re going to go to court for that. The guys who work for us are licensed.”
Molaie was arrested and charged with the single felony count on Wednesday, freed from county jail after posting $10,000 bail and will be arraigned on April 27, according to the district attorney’s office.
Prosecutors claim that while owner and operator of The Floor Center, at 5075 Stevens Creek Blvd. in Santa Clara, between 2011 and 2014, Molaie grossly underreported the people on his company’s payroll and misrepresented the nature of his business to his workers’ compensation insurance carrier.
He had obtained the insurance by stating that The Floor Center was only in the flooring retail business when it also employed people who performed remodeling jobs for customers, according to prosecutors.
By not reporting the remodeling work by his business, he paid $117,248 less in premiums to his insurer than he should have, prosecutors said.
Businesses that underreport workers in order to deceive the workers’ compensation insurance system enjoy an unfair advantage over competitors who follow state laws and make accurate reports to insurance firms selling policies, according to prosecutors.
State law mandates that businesses with employees must carry workers’ compensation insurance for them and the premiums businesses pay are assessed on factors such as the nature of the business, its safety record and the employees’ wages, they said.
The Floor Center, which opened in Campbell in 1982, sells flooring, cabinet and countertop products for homes, kitchens and bathrooms at its store and offers installation services in Santa Clara and San Mateo counties and parts of Santa Cruz and Alameda counties, according to its website.