13 charged in $20M Supplemental Job Displacement Benefits Fraud Conspiracy

Riverside County prosecutors announced Monday that the first of 13 defendants across three criminal cases have been arraigned, facing a range of charges that include conspiracy, workers’ compensation insurance fraud, caping, and receiving kickbacks. The first two individuals charged are Oswaldo Forero, 65, of Irvine, and Melbe Zepeda, 41, of Bellflower, who prosecutors say illegally ran two schools (Ryon College in Riverside and Sutech School in Los Angeles) that fraudulently operated primarily through funding by the Supplemental Job Displacement Disability benefits program, and used a group of con-conspirators to cash vouchers valued between $4,000 and $10,000 each. Prosecutors allege that Forero and Zepeda used “cappers” who enroll as many students as possible regardless of eligibility, overbilled for supplies, and offered cash for vouchers. In one instance, they are even accused of enrolling and cashing a voucher on behalf of a recently-deceased student.

The Riverside investigation into Ryon College and Sutech School began in 2019, in collaboration with the California Department of Insurance and the Bureau of Private Post-Secondary Education, building on a 2018 investigation that started after a fraud investigator from Berkshire Hathaway reviewed records from the schools. Court records give insight into how the defendants orchestrated the scam, hiding their ownership of both a counseling center and a copy service. The conflict of interest in controlling Delfin Counseling led to the involvement of another defendant in running the daily operations of the company, creating what the complaint refers to as a “front for a capping and kickback entity.” In addition, The two owned Universal Copy, which was used as a front to cash vouchers and fund a “vast network of cappers” who received cash payments for each student that signed up.

In addition to the two owners, 11 individuals have been arraigned or have arraignments pending on related charges. The arraignments are scheduled between December 2020 and March 2021.