Father, son suspected of underreporting $12M in San Jose workers comp scheme

SAN JOSE, Calif. -  A father and son who are the owners of two commercial cleaning companies in San Jose were arrested this week after state officials allege they underreported $12 million in payroll to save on paying workers compensation insurance.   

Edgardo Cabrales Sr., 61, and his son, Edgar Cabrales Jr., 36, are charged with five felony counts each of insurance fraud, following an investigation by the California Department of Insurance.   

The investigation into the Cabrales' companies, Pine Building Maintenance and Network Facility Management, began after officials suspected the businesses of fraud.   

Since 2016, the Cabrales allegedly had secured insurance coverage for only a fraction of their Pine Building Maintenance employees and they had no workers' compensation insurance policy for their Network Facility Management employees.   

State officials allege the Cabrales failed to report about $12 million in wages in order to save money on insurance -- resulting in $4.2 million in lost premiums.   

Workers compensation insurance is required to cover employees in case of an accidental on-the-job injury, and businesses must report the number of employees, job classifications and the amount of payroll.   

Edgar Cabrales surrendered Tuesday and his father was arrested on Sunday at San Francisco International Airport.   

The Santa Clara County District Attorney's Office is prosecuting the case.