Alleged $350,000 Embezzlement an Affront to California Labor Law

Sacramento, CAUnder California labor law, employees are supposed to keep the money they are paid—not give part of it back to their employer, or buy supplies for the company, or use their wages to pay those of another worker. But that, in essence, was part of an elaborate scheme alleged to have been carried out by a contractor hired to undertake a variety of projects for various cities and municipalities in California.

According to a recent new release from the California Department of Industrial Relations (5/23/12), Reza Mohammedi is alleged to have entered into construction contracts inherent with various public works projects tendered by the cities of Brea, Fullerton, Orange and Laguna Woods, among others.

According to the California labor code and criteria contained in the agreements, Mohammedi—operating as Southland Construction—was required to pay a wage range of $42 to $53 per hour to employees properly qualified to perform the work under California labor law.

Instead, Southland is accused of hiring mostly undocumented Hispanic workers and operating an elaborate scheme involving the issuance of paychecks to workers reflecting the correct amounts in an alleged effort to document proof of payment. However, once issued, the accused is alleged to have coerced his employees to return the majority of their pay to him in cash, use excess wages to pay for materials required by the company, or pay the wages of other employees, in direct conflict with California labor employment law.

It is also reported that Mohammedi threatened to report his workers if they were to ever reveal, or talk of the scheme to officials. Mohammedi is also accused of coaching his workers in what to say were an inspector from the local public works department to ask them about their wages.

The alleged conduct is considered a major affront to guidelines regulating California prevailing wage.

"As Labor Commissioner, I am charged with ensuring that California labor laws are enforced in every workplace in the state," said California Labor Commissioner Julie Su in the official release. "As a result of our investigation of Southland Construction, my office issued a Civil Wage and Penalty Assessment of over $100,000 and referred the case to the Orange County District Attorney for criminal prosecution. The results of this case and our partnership with the OCDA demonstrate that we take these violations seriously and will crack down on employers who cheat their workers and pose a threat to legitimate employers in the state. I intend to work with District Attorneys across the state to ensure public works funds are used properly and workers are paid prevailing wages as required by law."

The scheme is alleged to have taken place over four years between 2008 and 2012. In addition to accusations of filing false reports with the Employment Development Department, Mohammedi is alleged to have filed false income tax reports and taking tax deductions for wages not actually paid to his employees.

In total, the accused is alleged to have embezzled in excess of $350,000. Mohammedi is charged with 15 counts of failing to file a return with the intent to evade tax, 15 felony counts of willful failure to pay tax, seven felony counts of taking and receiving a portion of a worker's wage on public work, six felony counts of recording false and forged instruments, and three felony counts of filing false tax returns. If convicted on all counts under California prevailing wage law and tax evasion, Mohammedi faces a maximum of 48 years behind bars.

California employee labor law exists to prevent the kind of fraud Mohammedi is accused of committing on the backs of his employees. His arraignment was scheduled for May 23rd.