In People v. Woods, No. G061948, 2025 Cal. App. LEXIS 167 (Ct. App. Mar. 18, 2025), a jury convicted Jon Woods of 37 felony counts of workers compensation fraud.
Mr. Woods was a workers compensation attorney who had made business
arrangements that involved unlawful kickbacks and referral fees. He contended that the
Williamson rule (In re Williamson, 43 Cal. 2d
651, 276 P.2d 593 [1954]) precluded convictions on counts 5 through 37. The Williamson rule states that where the legislature has
defined a specific crime with a lesser punishment, the conduct described by that crime
may not be charged as a more general crime with a harsher punishment. Mr. Woods argued
that his conduct was covered by a more specific statute, Labor Code Section 139.32,
which makes it a misdemeanor to refer work to third-party servicers in exchange for
compensation.
The Workers Compensation System
Workers compensation is a system where employers agree to promptly compensate employees for injuries sustained on the job regardless of fault, and employees agree to the limited remedies available under the scheme.
The legislature passed laws to protect insurers and the overall workers
compensation system from abuse, including making it a crime to participate in a
kickback scheme, which was the criminal conduct of Mr. Woods, Edgar Gonzales, and
Carlos Arguello.
Facts of the Case
Mr. Woods arranged with Mr. Gonzales to use a copy services
business called USA Photocopy, which provided subpoena services for workers
compensation attorneys. USA Photocopy paid for some of Mr. Woods's business
expenses, including the salary of certain employees hired by Mr. Woods.
Mr. Woods's arrangement with Mr. Arguello involved a marketing company that
advertised to obtain workers compensation clients. Using Mr. Arguello's copy service
for subpoenas was a condition of engaging his advertising service. Mr. Woods paid
Mr. Arguello's businesses $1.425 million in fees for advertising services over the
course of their relationship.
Mr. Arguello pleaded guilty to federal criminal charges related to workers
compensation fraud and was sentenced to 4 years in federal prison. He also pleaded
guilty to charges brought by the Orange County district attorney.
The attorney general alleged that four aspects of Mr. Woods's relationships
with Mr. Gonzales and Mr. Arguello were illegal. These included operating as a
runner or capper service, providing fully signed and retained clients prior to any
interaction with Mr. Woods, a quid pro quo arrangement, and an illegal
cross-referral service.
After conviction, Mr. Woods was sentenced to 4 years in prison and ordered to
pay restitution in the amount of $701,452.
Mr. Woods appealed, and the court reversed counts 5–37 based on the Williamson rule. Mr. Woods contended that his
conduct was covered by a more specific statute, Penal Code Section 550, that
criminalizes kickback schemes, which is what Mr. Woods was accused of participating
in.
The Ruling
Absent some indication of legislative intent to the contrary, the
court held that the Williamson rule applied. The
court said there does not need to be a perfect overlap between the general and
specific statutes.
The people's theory of how Mr. Woods violated Penal Code Section 550 was
precisely that he violated Labor Code Section 139.32 and, therefore, the Williamson rule applied. The California Court of
Appeals agreed with Mr. Woods under these circumstances and thus reversed his
conviction on counts 5–37. This also required a reversal of the white-collar
sentencing enhancement based on these charges, as well as a restitution award based
on these charges. The restitution order of $701,452 was reversed without prejudice,
with the court reassessing restitution at a new sentencing hearing. In all other
respects, the judgment was affirmed.
Conclusion
A lawyer committed fraud, taking advantage of the workers
compensation system where his crimes resulted in more than a million dollars of
kickbacks and payment for cappers who illegally signed up clients for Mr. Woods. The
court only found that the state overcharged Mr. Woods and required him to serve an
appropriate sentence for his fraud on the workers compensation system, the
employers, and their insurers. Jail and an appropriate amount of restitution to the
defrauded insurers should be assessed.
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.
In People v. Woods, No. G061948, 2025 Cal. App. LEXIS 167 (Ct. App. Mar. 18, 2025), a jury convicted Jon Woods of 37 felony counts of workers compensation fraud.
Mr. Woods was a workers compensation attorney who had made business arrangements that involved unlawful kickbacks and referral fees. He contended that the Williamson rule (In re Williamson, 43 Cal. 2d 651, 276 P.2d 593 [1954]) precluded convictions on counts 5 through 37. The Williamson rule states that where the legislature has defined a specific crime with a lesser punishment, the conduct described by that crime may not be charged as a more general crime with a harsher punishment. Mr. Woods argued that his conduct was covered by a more specific statute, Labor Code Section 139.32, which makes it a misdemeanor to refer work to third-party servicers in exchange for compensation.
The Workers Compensation System
Workers compensation is a system where employers agree to promptly compensate employees for injuries sustained on the job regardless of fault, and employees agree to the limited remedies available under the scheme.
The legislature passed laws to protect insurers and the overall workers compensation system from abuse, including making it a crime to participate in a kickback scheme, which was the criminal conduct of Mr. Woods, Edgar Gonzales, and Carlos Arguello.
Facts of the Case
Mr. Woods arranged with Mr. Gonzales to use a copy services business called USA Photocopy, which provided subpoena services for workers compensation attorneys. USA Photocopy paid for some of Mr. Woods's business expenses, including the salary of certain employees hired by Mr. Woods.
Mr. Woods's arrangement with Mr. Arguello involved a marketing company that advertised to obtain workers compensation clients. Using Mr. Arguello's copy service for subpoenas was a condition of engaging his advertising service. Mr. Woods paid Mr. Arguello's businesses $1.425 million in fees for advertising services over the course of their relationship.
Mr. Arguello pleaded guilty to federal criminal charges related to workers compensation fraud and was sentenced to 4 years in federal prison. He also pleaded guilty to charges brought by the Orange County district attorney.
The attorney general alleged that four aspects of Mr. Woods's relationships with Mr. Gonzales and Mr. Arguello were illegal. These included operating as a runner or capper service, providing fully signed and retained clients prior to any interaction with Mr. Woods, a quid pro quo arrangement, and an illegal cross-referral service.
After conviction, Mr. Woods was sentenced to 4 years in prison and ordered to pay restitution in the amount of $701,452.
Mr. Woods appealed, and the court reversed counts 5–37 based on the Williamson rule. Mr. Woods contended that his conduct was covered by a more specific statute, Penal Code Section 550, that criminalizes kickback schemes, which is what Mr. Woods was accused of participating in.
The Ruling
Absent some indication of legislative intent to the contrary, the court held that the Williamson rule applied. The court said there does not need to be a perfect overlap between the general and specific statutes.
The people's theory of how Mr. Woods violated Penal Code Section 550 was precisely that he violated Labor Code Section 139.32 and, therefore, the Williamson rule applied. The California Court of Appeals agreed with Mr. Woods under these circumstances and thus reversed his conviction on counts 5–37. This also required a reversal of the white-collar sentencing enhancement based on these charges, as well as a restitution award based on these charges. The restitution order of $701,452 was reversed without prejudice, with the court reassessing restitution at a new sentencing hearing. In all other respects, the judgment was affirmed.
Conclusion
A lawyer committed fraud, taking advantage of the workers compensation system where his crimes resulted in more than a million dollars of kickbacks and payment for cappers who illegally signed up clients for Mr. Woods. The court only found that the state overcharged Mr. Woods and required him to serve an appropriate sentence for his fraud on the workers compensation system, the employers, and their insurers. Jail and an appropriate amount of restitution to the defrauded insurers should be assessed.
© 2025 Barry Zalma, Esq., CFE
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.