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Turlock man nabbed in unemployment fraud investigation

POSTED August 28, 2012 1:26 p.m.

A Turlock man is among six defendants arrested by the Federal Bureau of Investigations on allegations of an unemployment and disability scheme that resulted in a loss of more than $5 million for the Employment Development Department.

The arrests, made Monday, are just part of an ongoing investigation into a fraudulent unemployment and disability benefits scheme based out of Sutter County in California. Four other individuals were previously indicted as part of the investigation.

In a 24-count indictment that was unsealed Monday, a federal grand jury charged Ryan Herbert Smith, 46, of Turlock; Chindo Gharu, 49, of Yuba City; Seema Rajput, 45, of Modesto; Rajinder Kaur Dhillon, 70, of Sacramento; Rajinder Kaur Dhillon 47, of Yuba City; and Balwinder Singh Khangura, 64, of Yuba City and Sacramento, with participating in a scheme to defraud the state of California of unemployment and disability benefits. Smith, Gharu, Rajinder Kaur Dhillon, and Khangura were arrested and the remaining two defendants are expected to self-surrender.

According to the previous indictment, Mohammad Nawaz Khan, 56; Mohammad Adnan Khan, 31; Iqila Begum Khan, 31, all of Live Oak; and Mohammad Shahbaz Khan 56, of Yuba City, controlled a series of companies that were reported to the Employment Development Department as farm labor contractors. The Khans sold fake paystubs to other people in the community and used the companies they controlled to report false wages for the individuals who purchased those paystubs.

According to the FBI, the Khans at times instructed the purchasers how the fake paystubs could be used to fraudulently claim unemployment and disability benefits. Over the course of the conspiracy, the defendants allegedly reported wages for over 400 separate individuals that resulted in more than 2,000 fraudulent claims for unemployment and disability benefits. The loss in this case is over $5 million, the FBI reported.

The new indictment accuses Smith, Charu, Rajput, Dhillon, Dhillon, and Khangura of purchasing paystubs that falsely showed they had been paid wages by companies controlled by the Khans. The defendants would then use that paystub to file for unemployment benefits, disability benefits, or both.

“Whether it’s against the employer-funded unemployment insurance program or the employee-funded disability insurance program, fraud is costly to all of us,” said EDD Director Pam Harris. “Our department and its dedicated investigators are committed to detecting and deterring fraud and ensuring justice is served in this case and any other where individuals are cheating a system meant to benefit hard-working Californians and businesses.”

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