Checkmate Offices Reopen After Raid

Times Staff Writers

Branches of Checkmate Staffing Inc. reopened Wednesday, one day after law enforcement officers and investigators raided its 22 California offices during a probe into possible workers' compensation insurance fraud.

The Orange-based company, which supplies temporary workers to such companies as Home Depot Inc. and J.C. Penney Co., fielded calls Wednesday from some worried customers.

Investigators from the state Insurance Department and the San Bernardino County Sheriff's Department on Tuesday served search warrants and carted out boxes of paperwork from Checkmate offices.

Authorities would not reveal what documents were seized. They also are seeking bank records as part of the investigation, said Tracy Bartell, deputy district attorney in San Bernardino County's workers' compensation fraud unit.

Checkmate opened in 1991 and is owned by Luis "Lou" Perez.

"The company has done nothing wrong," said Perez's attorney, Joseph Cavallo. "The company is simply involved in a dispute" with the State Compensation Insurance Fund over how much Checkmate owes the fund, which is the workers' comp insurer of last resort.

In May the fund, California's largest workers' compensation carrier, filed a breach-of-contract suit against Checkmate. The suit, filed in Orange County Superior Court, alleges that the firm owes the fund $5.8 million in unpaid premiums for coverage the carrier provided from May 24, 2000, to June 1, 2001.

"When companies fail to pay their bills.... that ultimately has an effect on a carrier's bottom line," said Jim Zelinski, spokesman for the State Fund.

Zelinksi said the State Fund was assisting the Department of Insurance in its Checkmate investigation.

Investigators previously had said some employers had defrauded insurance companies in an attempt to lower workers' comp rates, which have skyrocketed in California in recent years.

Next week, auditors from insurance carriers who believe they may have been victimized by Checkmate will begin poring over the records to see whether there was any insurance premium fraud, Bartell said.

Investigators have not specified what laws Checkmate may have violated. It is illegal to misrepresent to insurance firms the job classification of workers, the number of workers or a company's safety record in order to qualify for a lower premium.

Bartell said it would be at least three weeks before any decision was made about whether to file charges.

Meanwhile, some Checkmate employees expressed support for the company.

"Everybody was pretty calm and we stuck together as a team," said a Checkmate manager who declined to be named. She contacted her three dozen clients, most of whom expressed support for the company, she said.

The manager said Perez told workers Wednesday that the investigation stemmed from an insurance broker with whom Checkmate had worked.

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