Newport businessman accused of underreporting payroll by $5.6 million

A Newport Beach businessman pleaded not guilty Wednesday in Orange County Superior Court to dozens of felonies related to insurance fraud and tax evasion.

Prosecutors allege Darrin Shawn Wilson, 50, underreported more than $5.6 million in payroll at his two companies to avoid paying higher workers’ compensation insurance rates.

They also accuse Wilson of failing to pay more than over $384,000 in taxes from 2009 to 2013.

Wilson owns two companies, an asphalt paving business called Seal-It and a property management business named Mavrick Company, according to the Orange County district attorney’s office.

Prosecutors allege that between 2009 and 2013, Wilson underreported his payroll at the two businesses to California’s State Compensation Insurance Fund and private insurer AIG.

Authorities say they discovered this when an employee submitted a workers’ compensation claim after falling about 12 feet from a ladder while painting for the Mavrick Company.

Wilson allegedly claimed the worker was a subcontractor, not an employee. As a subcontractor he would not have been required to be included in the Mavrick Company’s payroll, according to the district attorney’s office.

Investigators allegedly discovered the worker, however, did not have the contractor’s license required to be a subcontractor, effectively making him an employee of Mavrick Company.

Prosecutors allege Wilson used this technique of mislabeling employees as subcontractors numerous times to avoid paying higher insurance premiums.

In all, Wilson faces 15 felony counts of misrepresenting facts to the State Compensation Insurance Fund, five felony counts of misrepresenting facts to a workers’ compensation insurance company, 20 felony counts of failing to file a return with the intent to evade tax and 20 felony counts of willful failure to pay tax.

He’s currently free on $500,000 bail, according to the district attorney’s office.