City Contractor Charged with Cheating Employees Out of Over $600,000 in Wages and Failing to Pay Over $100,000 in Workers’ Compensation Insurance Premiums

For Immediate Release
Friday, January 27, 2012

CONTACT: Stephanie Ong Stillman, DA Gascón’s Office, (415) 553-1167 or (415) 740-5134
Omid Talai, DA Gascón’s Office, (415) 553-9272

San Francisco – District Attorney George Gascón and Insurance Commissioner Dave Jones announced today that Frances Ann Doherty, 51, of Millbrae was scheduled to be arraigned on 57 felony counts related to wage theft, filing false instruments, offering fraudulent documents, and workers’ compensation insurance premium fraud.

“The crimes we have charged against this employer are extremely serious,” said San Francisco District Attorney George Gascón. “In order to win dozens of painting contracts with the City, the defendant promised to pay her workers San Francisco’s prevailing wage, and job after job allegedly submitted false documentation showing that she did so. We intend to prove that over the course of three years the defendant underpaid her employees and pocketed over $600,000 that the City thought it was paying for those wages, and defrauded her workers’ compensation insurance carriers out of over $100,000 in insurance premiums. This conduct not only victimizes workers who are desperately trying to make a living in a very tough economy, it also hurts the honest businesses that were unable to successfully compete for these projects which the defendant was able to underbid and win as a result of this scheme.”

“This case is an excellent example of inter-agency collaboration,” said Commissioner Dave Jones. “The underground economy is a real threat to California’s law-abiding businesses and owners. Rooting out these bad actors and the fraud they commit is a top priority of my Department.”

According to court documents, Doherty is the owner of Doherty Painting & Construction, a painting contracting company that was awarded numerous public contracts with the City and County of San Francisco, San Francisco Unified School District and other public agencies. Contractors on public work projects are required to pay their workers the prevailing wage and verify to the public agency on a weekly basis that the appropriate wages were paid. Court documents indicate that Doherty reported on 23 different public projects that her employees had been paid the prevailing wage on each and every project, with some projects lasting several months. Based on evidence obtained as a result of the criminal investigation, it is alleged that Doherty Painting’s employees were only paid a fraction of the wages to which they were entitled. It is also alleged that Doherty provided fraudulent information to public agencies that were doing compliance audits in an effort to conceal the prevailing wage violations.

Doherty also allegedly provided fraudulent employee payroll information to Redwood Fire & Casualty Insurance Company and to Zurich Insurance from September 2006 through June 2009, which enabled her to pay lower workers’ compensation insurance premiums to these carriers. The premium for a workers’ compensation policy is determined by the amount of the employee payroll, the type of work each employee performs, and the safety record of the employer. These factors combined will determine the risk to the insurance company and its exposure to loss. It is alleged that the total loss to the insurance carriers as a result of the premium fraud is $108,000.

Doherty was charged with 23 felony counts of violating Penal Code section 115(a) [filing or recording false records in a public office]; 23 felony counts of violating Labor Code section 1778 [theft of wages by an employer on a public contact]; 8 felony counts of violating Penal Code section 132 [offering fraudulent documents in a lawful investigation]; and 3 felony counts of violating Insurance Code section 11760(a) [making false representations to reduce insurance premium rates].

Doherty was arrested at her place of business in San Francisco on January 26. Bail was set at $750,000. Arraignment was continued until Friday, February 3, 9am in Department 9.

This case was investigated by San Francisco District Attorney Investigator Diane Kenny and California Department of Insurance Detective Gladys Rivera. Assistance with the investigation was also provided by the Office of Labor and Standards Enforcement. The case is being prosecuted by Assistant District Attorney Archie Wong.