Ex-reserve deputy, security firm owner is convicted in fraud case
The former owner of a security and investigations firm, who also served as a reserve deputy with the Los Angeles County Sheriff's Department, was convicted Thursday of defrauding the state of millions of dollars in workers' compensation premiums, authorities said.
After three days of deliberations, a jury found Ousama "Sam" Karawia, 48, former president and chief executive of International Services Inc., guilty of seven felony counts including grand theft of labor, two counts of insurance fraud and four counts of illegal possession of assault weapons.
Allan Terrill Bailey, the company’s vice president for quality assurance, also was found guilty of four counts of failure to file tax returns and one count of illegal possession of an assault weapon.
Both men are scheduled to return to court Feb. 20 for sentencing before Los Angeles County Superior Court Judge Sam Ohta. Karawia is facing a maximum of up to 10 years in county jail. Bailey is facing up to six years behind bars.
Karawia’s company provided security for firms and government agencies around the country, including the downtown Los Angeles County Courthouse and the Statute of Liberty in New York.
Prosecutors presented evidence that his firm failed to pay $10.1 million in workers' compensation insurance premiums by trying to hide the size of the firm in a bid to avoid paying higher premiums to the State Compensation Insurance Fund.
The men created a shell company, International Armored Solutions Inc., and told state officials that they employed about 35 workers at the new company and that it was not part of the main security firm, prosecutors said.
Los Angeles County had awarded millions of dollars in contracts to the Torrance-based security firm even though federal and state investigations dating back more than a decade found problems with the company's practices.
A review of official records also showed that the company had been the subject of investigations and enforcement actions by the U.S. Department of Labor dating back to the mid-1990s for alleged violations of federal pay and contract laws.
International Services Inc. was placed under a federal consent decree in 2001 and, following noncompliance with the order, was barred in July 2005 from doing business with the U.S. government for three years, documents show.
At the time of his arrest, Karawia was a reserve deputy with the Los Angeles County Sheriff's Department. On the International Services website, Karawia said he was named deputy director of the Sheriff's Department's Homeland Security Support Unit.
"Sheriff [Lee] Baca recognized Mr. Karawia's contribution to the community as a business leader dedicated to advancing security awareness and preparation in our nation's struggle against international terrorism," the Web statement read.
At the time of his arrest, sheriff's spokesman Steve Whitmore said, the Homeland Security Support Unit had been disbanded for two years. Karawia was immediately relieved of duty as a reserve deputy.
-- Andrew Blankstein