OAKLAND (CBS SF) – The Alameda County District Attorney’s Office has charged three owners of East Bay painting and construction companies in an alleged $5 million workers’ compensation fraud scheme.

Prosecutors said Eric Andrew Oller and Brian Christopher Mitchell, former owners of Signature Painting and Construction (SPC) in Walnut Creek, were charged with conspiracy, felony insurance fraud and workers’ compensation fraud.

The Alameda County DA has also charged Yama Sekander, owner of A-1 World Class Painting, with felony workers’ compensation fraud.

According to prosecutors, SPC allegedly used multiple methods in an attempt to illegally reduce their workers’ compensation premiums.

“If a business creates an environment where they falsely pay a lower insurance premium, that company has an unfair competitive advantage over one that is law-abiding,” said District Attorney Nancy O’Malley.

Among the methods allegedly used by SPC include using A-1 as a shell company and another company owned by Oller to pay their employees. The company also allegedly misclassified employees and underreported payroll costs.

Prosecutors also accuse Mitchell and Oller of moving employees from one company to another to save money on insurance, paid employees under the table and also told some injured employees to report working for one company when they worked for another.

According to the DA’s office, the State Compensation Insurance Fund lost about $3.1 million in premiums, while AmTrust lost about $1.9 million in the scheme.

Mitchell, Oller and Sekander were arraigned Monday morning. Prosecutors said their next court appearance is scheduled for November 18.