CDI charges two men owning multiple tow businesses with insurance fraud

The owners of the largest towing businesses in Southern California have been charged in connection to a fraud scheme that defrauded workers’ compensation insurance companies out of about $6 million in insurance premiums. 

Brothers Mark Hassan, 46 of Corona Del Mar and Ahmed Hassan, 35, of Walnut were charged on multiple counts of felony insurance fraud, according to a California Department of Insurance (CDI) press release. 

CDI says it started an investigation into Mark Hassan after receiving two fraud referrals from an insurance company alleging he had underreported his company’s payroll for Hadley Town. The investigation was expanded when CDI received a third fraud referral alleging his brother, Ahmed Hassan, owner of California Heights Tow, filed a fraudulent employee injury claim against his insurance policy for a Hadley Tow employee. 

Mark Hassan was also the owner of FMG, Courtesy Tow, Crescenta Valley Tow and California Coach Towing, including several other tow companies across the Los Angeles area, the release says. It adds that he held towing contracts with multiple law enforcement agencies throughout Southern California. 

Detectives learned that Mark Hassan used uninsured tow company, Courtesy Tow as a “shell company” to conceal portions of Hadley Tow employee payroll to allegedly defraud workers’ compensation carriers of premiums they were owed, the release says. 

Ahmed Hassan also underreported employees’ wages in an attempt to lower his company’s workers’ compensation insurance premiums, the release says. 

“In addition to hiding and misrepresenting employee wages to their workers’ compensation insurance providers, the Hassan brothers paid portions or all of employee wages without withholding standard deductions, which led to Employment Development Department opening a payroll tax evasion investigation,” the release says.

The Hadley Tow and California Heights Tow companies reported a combined payroll of $3,038,164 to their insurance carries, the release says. A forensic audit revealed the actual combined payroll for the two companies was $16,716,657, it adds. The investigation found the alleged illegal actions resulted in an estimated premium loss of $5,897,487. 

“Underreporting of workers’ compensation insurance in California is illegal and undermines the financial stability of the insurance system, which shifts costs onto other policyholders,” the release says. “It also jeopardizes the availability of benefits for injured workers, hindering their access to necessary support. Unfair competition also arises as fraudulent businesses gain an advantage over ethical ones. Experts at the Department of Insurance are dedicated to protecting consumers by rigorously investigating cases of alleged illegal acts by insurance companies and individuals.”