AG Becerra,Assemblymember Gonzalez Announce Legislation to Combat California’s Underground Economy

AG Becerra,Assemblymember Gonzalez Announce Legislation to Combat California’s Underground Economy

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wait I’m mighty you need to find me a
house where anywhere here and most of the days are like this amazes winner I
know you’re sandy Aegon’s I know I was in LA the other day and people were
wearing sweaters and and parkas good okay I don’t do we need the microphone
yes we do okay okay let’s go ahead and begin I
want to begin by saying of course good morning
but that principally that I’m pleased to be here with assembly member laurinaway
Silas Weir in her district and it is a thrill to be here with her in San Diego
and I want to make sure I introduce the other folks who are with us as well
because they are colleagues at the Department of Justice let me begin by
introducing John Marsh who is the assistant chief of the division of law
enforcement Chris Caligiuri who is called Jerry who is the director of
Bureau of Investigations Jim bazooka Luz who is a special agent in charge Susan
and she goes by Susie gore such a special agent supervisor Sean Collins
one of our special agent supervisors as well paul amita’s who is a special agent
Leo Rodriguez who is a special agent and Jake LaMotta who is also a special agent
I want to thank them because they’re really the folks out we’re here to talk
about the work that they do and the success that they have had we are here
at the port of San Diego because it generates billions of dollars of revenue
for the California economy every year but here in candiate San Diego and
elsewhere around the state there’s more going on in our
economy than meets the eye there’s a vast underground economy of business
businesses that are operating outside the law in California the underground
economy is estimated to account for something between sixty to a hundred and
forty billion dollars in business annually it cost taxpayers eight and a
half billion dollars in uncollected taxes each year alone this has
consequences for all Californians who play by the rules whether you’re a
hard-working employee or an upstanding business owner or a taxpayer who pays
your fair share if you play by the rules and help power our state’s economy which
is the fifth largest economy by the way in the world then you deserve a chance
to get ahead today’s today I I think because of all those things I think it
goes without saying I am pleased to stand here with assembly member
laurinaway Silas to announce a measure that establishes in law a program that
protects your chance to get ahead it’s the tax recovery in the underground
economy or the true program and behind me you see members of the true team a B
1296 which Assemblymember glossitis has introduced would create a permanent
infrastructure within the Department of Justice to carry on important work we’ve
already done to combat the underground economy back in 2014
several state agencies join forces to fight egregious felony level crimes in
the underground economy throughout our state our core partners are the
department of tax and fee Administration the Franchise Tax Board and the
Employment Development Department we work with colleagues from other states
and federal agencies as well such as the internet Internal Revenue Service
together we leverage our expertise and pull our investigative resources to
protect Californians who play by the rules and this partnership has yielded
results by the end of last year our teams had identified over 482 million
dollars in unreported gross receipts and more than 60 million dollars in
Associated tax loss to the state additionally our criminal enforcement
actions through these actions we have recovered
over 25 million dollars in lost tax revenue victim restitution and
investigative costs with many investigations ongoing we expect these
totals to rise as our teams identify even more tax losses and we’ve done it
all at no net cost to the taxpayer and that’s because this work generates
revenue for the state of California that’s because we recover unpaid taxes
from underground businesses and we often recover unpaid wages and benefits for
cheated workers the true bill we’re proposing today will anchor and
strengthen the teams we have in Sacramento and in Los Angeles and build
new ones right here in San Diego the San Francisco Bay Area and in Fresno
this will allow our teams to more effectively fight underground economy
crimes throughout the entire state the need is especially acute here in San
Diego and in the Bay Area because ports are hotspots for the movement of goods
in the underground economy it will go a long way in helping our state fund vital
programs and help protect the rights of hard-working Californians employees and
business owners alike who play by the rules
it will also help us hold accountable those who don’t play by the rules
take the owners and operators of the Bay Area business Rainbow Brite until last
year Rainbow Brite operated for adult residential care facilities and two
childcare centers in the Bay Area former Rainbow Brite employees tipped us
off that the company was cheating them out of pay and work compensation
insurance our investigation discovered more and more violations beyond what the
employees told us not just to the workers rights but of human rights
Aalto we have filed 72 charges against Rainbow Brite and its operators
including grand theft of employees wages human trafficking using physical force
sexual violence fraud and psychological coercion against the very employees that
were doing the work and who became the victims and one defendant has been
charged with three counts rape against a female employee whom he
was trafficking Rainbow Brite was just the latest in many critical underground
economy cases our team went after John Kim who owned and operated over 50
retail clothing stores throughout Southern California from 2010 to 2016 he
failed to report some 29 million dollars in sales 39 millions in taxable income
and eight million dollars in wages we filed a fifty-four felony complaint in
Superior Court in Los Angeles against mr. Kim he pleaded guilty to tax evasion
finally found false tax returns and worker compensation fraud and he
admitted to white-collar crime enhancements he paid the state of
California seven point six million dollars in restitution for tax liability
interests in the cost of investigation and he has served a two-year prison
sentence and just this past December of 2017
our teams collaboratively worked to lead in the seizure of illegal
pharmaceuticals those are drugs that are not approved by the FDA those drugs were
being sold in Sacramento and we arrested the operators of that scheme but we’re
just getting started the true bill will help us continue this essential work on
behalf of all Californians who power our economy a B 1296 is a win-win for
Californians who play by the rules and that’s why it gives me great pleasure to
be standing next to the champion for this legislation someone who understands
what it means to fight for workers and lawful business owners someone who wants
to see our economy just power us forward let me now turn the microphone over to
assembly member lauryn agua Silas so it’s an exciting day we already know
that we have the most kick-ass Attorney General in the nation but while he’s
most known for fighting Trump what we people didn’t know is he’s been fighting
for taxpayers here in California so when he came to me and said we need to
formalize a program that works we already know it works he has a actual
yeah I mean he just went through three examples where money comes back where
bad guys are put away and quite frankly workers are restored we know it works
we need to formalize it and we need to bring it here to San Diego so today’s an
exciting day we introduced a be 1296 today put it across the desk and it’s a
it’s a start to show places like San Diego and San Francisco and Fresno that
he’s coming for you to if you’re doing things wrong what we have to understand
about the underground economy is not just one person is hurt of course in my
former life is a labor leader we think often about the workers who are hurt and
and that’s you know what I’ve spent most of my life doing protecting those
workers who who are often not being paid they’re often having document servitude
their documents are being taken away from them they’re there almost in an
indentured servitude situation or perhaps they are being paid something
but not enough no workers compensation and that that’s a problem in itself but
what we often don’t think about is how it hurts established businesses so the
pharmaceutical example that that the Attorney General gave had it had a
separate component as well they were selling fake handbags at the same place
what that does of course designer handbags expensive handbags what that
does is of course take away from legitimate sellers who have you know
paid the right amount to sell those bags it takes away from taxes that the state
should be holding and those pharmaceuticals that he talked about
that’s a consumer protection issue right there so this is a type of task force
brought together that’s effective at protecting the public the consumers our
state as far as taxpayer and of course the workers as well in
stopping the underground economy helps all of us in that sense and so I’m
excited to be able to carry this bill we’ll get it through and hopefully
signed and funded because in the long run we’ll actually get the state money
for it so with that I will take any questions these are larger criminal enterprises
but it’s everything if you listen to some of the examples it was childcare
facilities in adult serving facilities right we we have people who sell things
we have massage parlors and restaurants and but it’s usually fairly large
operations you know we have some other in fact we have another bill that deals
more with document servitude and taking people’s documents for small employers
more for you know the kind of situation we had one in Oceanside where the
employer takes somebody’s passport and makes them work in their home that’s a
different situation this is much more a large criminal element that has a lot of
unpaid taxes unpaid wages and in owes the state money and can be put in jail if we had a large enough team we’d go
after everyone who’s cheating you and the taxpayers of the types of revenue
that you and I pay if we had the resources what we have to do is focus on
the kind of criminal activity that’s costing all of us a lot of money and so
we go after the bigger operations but if we had a large enough team member with
the Assemblymembers help we’re gonna be able to expand so we’ll be here to go
after some of those enterprises that we haven’t had an opportunity to really
investigate because we don’t have the large enough team by the way I forgot to
introduce one other member of the team and that’s max who does tremendous work
without max we might not discover some of those drugs and other types of
contraband that’s trying to come into the country or be sold without proper
licensing but it’s everything you can think of anything that makes money that
cheats us out of what we should get whether as consumers or as taxpayers so there’s a the Joint Task Force deals
with a bunch of things including unpaid taxes and there’s a lot of by working
together they get one piece of an often see the other pieces come come in
there’s also a hotline people can call but the childcare it’s a fascinating
case right because you’re talking about senior care and child care and as
they’re you’re thinking oh it started with workers who came forward and said
we used to work and this is a problem they’re not paying appropriately and
then they find out that they’re trafficking human trafficking rape we’re
literally human trafficking as we see it having having more place like that they
find a cachet of guns one of which was at the child care the home that was
doing child care under a blanket on the table of a child care facility so you
can imagine the number of different crimes usually these people are engaged
in that are putting the public at risk I’m sure the people bringing their
children there to be cared for had no idea that there were I think those are
the actual guns from that case it could be wrong I only know what I read in the
newspaper they don’t give me an extra 14 so I but but it is usually so by the
Joint Task Force working together you may get one complaint that’s a worker
complaint through through dir or you may get one one complaint that’s a tax
complaint and it allows them to work through all these other channels to find
out everything that they’re doing let me pose that question let me pose that
question to Susan corsets who is one of the members of our team on this and she
can give you some sense of the scope of this and what we hear by the way this is
also an opportunity for us to say anyone who happens to read watch or hear this
report if you know if somebody was cheating the state and cheating US
consumers please report it to us we will investigate if we have that opportunity
but Susan you want to come forward and tell us if there’s anything we’re aware
of in the San Diego area there’s a lot going on San Diego I’m Susie Gore’s
agent I’m with the Department of Justice thank you very much
Assemblywoman Xavier Becerra so we do get complaints and just like
the Assemblywoman was explaining it’s it’s about working collaboratively right
so different agencies may get different complaints and work in silos but through
this program we can actually work together all the state agencies and get
things accomplished more quickly more effectively that’s the whole goal the
complaints that are coming in now are coming in statewide it’s from the San
Diego border all the way up to the Oregon border and it is everything from
the labor issues that you do see normally with dir Department dust
relations to counterfeiting whether it’s the handbags
whether it’s the pharmaceuticals that you see in the bottom left-hand corner
over there or counterfeit you’re getting counterfeit tobacco products you’re
getting narcotics in pharmaceuticals that are not fda-approved you have every
crime that’s actually occurring in the underground economy where people are
making money but they’re not paying the taxes back to the state of California
and back to the workers who are actually working at those jobs so it’s really
about leveling the playing field so in San Diego to give you that exact I
can’t because of the compares so many complaints that are coming in and it’s
really all about illegal pharmaceuticals illegal tobacco illegal workers human
trafficking both sexual trafficking and labor trafficking the complaints are
just coming in and we just don’t have the resources to do it no because we
only have teams right now currently in LA and in Sacramento that covered the
entire state but we just don’t have the resources there enough and Rainbow Brite
was in the Bay Area thank you very much

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