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Security firm chief, 2 top executives accused of $9-million insurance fraud

April 15, 2009 |  1:40 pm

An executive with a security and investigations company, who also served as a reserve deputy with the Los Angeles County Sheriff's Department, was arrested this morning on suspicion of fraud after his firm allegedly failed to pay $9 million in workers' compensation insurance premiums, prosecutors said.

The Los Angeles County district attorney's office charged Ousama "Sam" Karawia, 45, president and chief executive officer of International Services Inc., with multiple counts of conspiracy, grand theft, making false statements and insurance fraud. He is being held in lieu of $2-million bail.

Authorities also arrested company Vice President Larry Finley, 42, who is being held on $1-million bail. A third person is being sought. Karawia and Finley are scheduled to be arraigned Friday in downtown Los Angeles. If convicted, each faces up to 14 years in state prison.

Neither Karawia nor Finley could immediately be reached for comment.

Prosecutors said the men created a shell company, International Armored Solutions Inc., to hide the true number of employees at the security firm to avoid paying higher workers' compensation insurance premiums to the State Compensation Insurance Fund, said Jane Robison, a spokeswoman for L.A. County Dist. Atty. Steve Cooley.

Authorities said Karawia told state officials he employed about 20 workers at the new company and that it was not part of the main security firm. Prosecutors said  the firm failed to pay $9.5 million in workers'  comp premiums for the 1,500 employees it employed.

Steve Whitmore, a spokesman for L.A. County Sheriff Lee Baca, said Karawia had been relieved of duty as a reserve deputy, effective immediately.

"We have taken his weapon, his badge and his identification," Whitmore said. "He has been suspended indefinitely and very possibly will be terminated."

"Sheriff Baca's past actions against those deputy sheriffs, active or reserve, who engage in criminal activity have been swift and permanent," Whitmore said.

On the International Services Inc. website, Karawia said he had served as deputy director of the Sheriff's Department's Homeland Security Support Unit.

"Sheriff 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.

Whitmore said the unit was disbanded two years ago.

-- Andrew Blankstein