SACRAMENTO – 37-year-old Michael George Mello and his sister, 38-year-old Mary Catherine Rodriguez (also known as Mary Mello) are the owners of the Green Valley Landscaping Services company. They have been under fire since October of 2013 for their unfair business practices, and have reportedly cheated their employees, workers’ compensation insurance companies, and the California Employment Development Department.
The California Department of Insurance, Enforcement Branch, Fraud Division announced in a press release that the pair have now pleaded no contest to charges of workers’ comp fraud and tax evasion. The action by the Sacramento District Attorney’s office accused them of conspiring to commit fraud by “significantly under-reporting the number of employees and payroll in their business”. In doing so they underpaid their workers’ comp insurance carriers out of $144,672.00 in premiums, and the Employment Development Department out of $110,462.00 in payroll tax.
In 2013, 43 of their employees won a judgement against the business for a total of $664,764.00 after the California Labor Commissioner launched an investigation in May of 2012, and found that despite reporting fewer than ten employees on their records, they had actually up to 43 people working for them. The business was improperly classifying many of its workers as independent contractors, affecting the pay they would get and cheating them of hours and overtime pay, in addition to underpaying the taxes and insurance premiums.
Mello ran the business out of at least two residential homes, his trailer is seen in this image from Cabot Circle in Sacramento (Google Maps)
“Mis-classification of employees as independent contractors harms legitimate businesses and cheats the hardworking men and women of California who are entitled to a just day’s pay for a hard day’s work,” said Labor Commissioner Julie A. Su. “This is a tactic by unscrupulous employers to deny workers’ pay for every regular hour worked and overtime. Mis-classification is also used to cut costs and to underbid projects, making it extremely difficult for legitimate contractors to compete”
Mello and the business were required to pay out $168,088 in earned overtime, and $338,176.00 in minimum wage violations. They also had to pay $157,500.00 for failing to provide itemized wage statements as required under state law.
The most recent action, for which Mello and Rodriguez pleaded no contest, resulted in a judgment for a restitution payment of the $144,672.00 to the affected insurance companies and $110,462.00 to the Employment Development Department. In addition to that, Mello was sentenced to 30 days in county jail, and five years formal probation. Rodriguez was sentenced to three years probation and 50 hours of community service.
“The underground economy is not a victimless crime,” said Insurance Commissioner Dave Jones. “Not only were numerous people in this case put at risk, but every consumer and legitimate business pays the price for workers’ compensation insurance fraud as insurers pass their losses on to policyholders and businesses then pass their increased costs to consumers.”
