A retired San Jose Police officer was sentenced to three years in jail on Tuesday for using a side security business to commit millions of dollars in insurance fraud, money laundering, tax evasion and worker exploitation, the Santa Clara District Attorney's Office said.
Robert Foster, 48, of Morgan Hill, was convicted of several felonies, including 173 acts of conspiring to commit $1.3 million in insurance fraud and $18 million in money laundering to cover it up, the DA's office said.
Foster owns Atlas Private Security (now Genesis Private Security) with his wife, Makaila Foster, 46, who also pleaded no contest to the same insurance fraud and money laundering charges, according to prosecutors. She will be sentenced to a year in jail and five years of probation beginning on April 20.
The six-month investigation into the Fosters uncovered many crimes carried out as managers of the security company. The Fosters illegally reduced their workers' compensation insurance premiums and taxes by reporting false and inaccurate payrolls, underreporting headcounts, paying employees off-the-books, and underreporting employee injuries, the DA said. The couple also failed to employees overtime and dissuaded those employees from accurately reporting on-the-job injuries and wage-theft violations.
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The probe also uncovered that the Fosters hid millions of dollars of payroll through a complex subcontractor-masking scheme. According to the DA, employees were paid by a different security company, Defense Protection Group, which had no knowledge of the employees' hours, wages, or schedules. Instead, the DA asserts, DPG simply moved money from the Fosters' firm to the employees so that the couple could avoid paying their fair share of taxes, workers comp insurance and overtime wages.
Before sentencing, Foster paid $1.3 million in restitution to Everest National Insurance and the Employment Development Department, the DA said. A general order of restitution for exploited workers was also given.
"No one is above accountability for illegally trying to make a profit on the backs and injured bodies of their workers," said Santa Clara District Attorney Jeff Rosen.