Officials of Installation Firm Cover-All Jailed on
Chatsworth, CA, October 19, 2006--Three top officials of the nation's largest flooring installation company were arrested Wednesday on suspicion of committing almost $11 million in insurance fraud, prosecutors said, according to the Los Angeles Daily News.
The newspaper reported that Gadi Leshem, 59, founder and president of Cover-All Inc. of Chatsworth, was arrested at his Northridge home by state insurance fraud investigators.
Also arrested were company Vice President Zeev Golan, 54, and his wife Irit Golan, 52, corporate secretary and payroll supervisor, both of Northridge.
Each was charged with conspiracy and four counts of insurance fraud in a felony indictment alleging $10.9 million in workers' compensation premium fraud. If convicted, each suspect faces a maximum of 17 years in prison.
"The loss of $11 million in insurance money is a serious crime," said Jane Robison, a spokeswoman for the Los Angeles County District Attorney's Office.
The three were each being held on $6.5 million bail.
"We'll be entering pleas of not guilty and will address the specifics of the evidence in court," said Janet Levine, an attorney representing Leshem. "Cover-All has provided good services and good, honest employees and benefits for people in many states and hopes to continue to do so."
Attorneys for the Golans had not yet been retained, Levine said.
The complaint alleges that each suspect conspired to underreport the company's payroll by $31.8 million between September 2001 and April 2006, thereby reducing the firm's workers' comp premiums by more than $10.9 million.
The case was investigated by the state Compensation Insurance Fund's Special Investigation Unit. Cover-All Inc. is the nation's largest carpet and flooring installation contractor, according to its Web site, with 55 offices in 17 states and exclusive contracts with Home Depot.
