Brookdale Inn and Spa owner Sanjiv Kakkar arrives at the County Courthouse on Friday morning.
SANTA CRUZ - The owners of the historic Brookdale Inn and Spa are facing trial on charges that they falsified wage information to obtain lower insurance premiums.
Judge Robert Moody ordered Sanjiv and Neelam Kakkar held on five felony counts of insurance fraud Wednesday after hearing testimony from detectives with the state Department of Insurance.
The Department of Insurance investigated discrepancies between wage information the Kakkars supplied to the state Employment Development Department and the information they reported to their insurance company. By providing a lower number to their insurance company, prosecutor Kelly Walker alleges that they were able to obtain lower premiums for their workers' compensation insurance.
According to records, the couple paid approximately $800,000 less in insurance premiums than they should have over a period of several years, Walker said.
The pair, who purchased the Brookdale Inn in 2007 for $5.3 million, are due back in court July 10 for arraignment on the charges.
The Kakkars also have other pending criminal matters against them involving alleged violations of state health and safety codes. Sanjiv Kakkar also faces charges for allegedly passing bad checks. Those matters are trailing the workers' compensation fraud case.
Additionally, the Kakkars have an ongoing matter with county officials in civil court.
In April, the couple admitted to several building code violations and were given about a month to obtain permits to fix them. According to court records, they have not done so and the county is now pursuing contempt of court proceedings. They're due back in court on that matter in July.
The violations, uncovered during a January 2011 inspection, including construction projects started without needed permits, remodels of the lobby entrance, bar and restaurant and a roof over an indoor pool, according to county code compliance officials.
The inn was shuttered in October by the Boulder Creek Fire Department after a number of alleged fire code violations were found. A notice of violation was sent to Kakkar and the management company on Aug. 31, informing them the violations needed to be corrected within 30 days. The business didn't comply and fire officials "red-tagged" the property, closing it until compliance has been met.
A fire at the inn in August 2009 destroyed 20 apartments and displaced 65 people.
Follow Sentinel reporter Jessica M. Pasko on Twitter: @jmpasko96
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