A 52-year-old San Jose man has pleaded no contest to felony insurance fraud after he used his company to hide payroll for a security company run by a former San Jose police officer.
Nam Le operated Defense Protection Group to launder millions of dollars in payroll for Atlas Private Security, now known as Genesis Private Security, and VP Security. Atlas is owned by Robert Foster, a former police officer who was sentenced last year to jail for insurance fraud, money laundering, tax evasion, and worker exploitation.
Foster is in prison, serving the three-year term after being convicted of $1.3 million in insurance fraud and $18 million in money laundering.
Le will be sentenced next year for the fraud charges and faces prison if he fails to pay more than $100,000 in restitution.
“The criminal organization here was a security company run by a police officer and others,” said Santa Clara County District Attorney Jeff Rosen in a statement June 5. “It is deeply disappointing that a group that is supposed to be dedicated to protecting people instead decided to scam them.”
Foster, 50, of Morgan Hill, was convicted in January 2022 of a series of felony fraud charges, including 173 acts of conspiring to commit nsurance fraud and conducting a money laundering operation to cover it up.
Prior to his sentencing, Foster repaid complete restitution of $1.13 million to Everest National Insurance and the Employment Development Department. There was also a general order of restitution for the purpose of paying exploited workers.
Foster owned Atlas Private Security (now Genesis Private Security) with his wife, Mikaila Foster, 46, who also pleaded no contest to the same insurance fraud and money laundering charges. She was sentenced in April to one year in county jail and five years of probation.
Foster owned the business without the knowledge of the San Jose Police Department, Rosen said.
The Fosters illegally reduced their workers’ compensation insurance premiums and taxes by reporting false and inaccurate payroll, underreporting headcount, paying employees off-the-books, and underreporting employee injuries. The Fosters failed to pay employees overtime and dissuaded those employees from accurately reporting on-the-job injuries and wage-theft violations.
The 2021 probe also uncovered that the Fosters hid millions of dollars of payroll through a complex subcontractor masking scheme. Employees were paid by a different security company, Defense Protection Group (DPG), which had no knowledge of the employees’ hours, wages, or schedules. Instead, DPG simply moved money from the Fosters’ firm to the employees so that the Fosters could avoid paying their fair share of taxes, workers’ compensation insurance, and overtime wages.
For operating the under-the-table subcontractor scheme, Le was paid $0.50 to $1 per hour of payroll he helped hide.
After the Department of Labor questioned Le about the subcontractor scheme, he met with Foster and Richard McDiarmid, 62, Vice President of Operations for Atlas and former Emeryville police officer, at the Matrix Casino and asked to leave the conspiracy. Instead, the trio decided to expand the scam.
In all, Le helped launder approximately $18 million for Atlas Security, according to his plea. He was ordered to pay approximately $109,000 in restitution and penalties, including $60,000 back to the State of California Department of Insurance.
If all restitution is paid by sentencing, he will serve six years of formal probation and one year in county jail. If he has not paid all restitution by sentencing, he will be sentenced to four years in state prison.
The six-month investigation was spearheaded by the Santa Clara County District Attorney’s Bureau of Investigation in collaboration with the California Department of Insurance, Employment Development Department, CA Department of Justice Division of Medi-Cal Fraud and Elder Abuse, and United States Department of Labor. This case paralleled the formation of the DA’s Workforce Exploitation Task Force.