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A businessman who has been snapping up property in blighted downtown Ogden and helped produce a video touting Mayor Matthew Godfrey's vision of the city as a recreational hub faces felony fraud charges in California.
Gadi Leshem, president and chief executive officer of Cover-All Inc., a flooring-installation company, is accused along with two of his executives of cheating California out of $11 million in workers-compensation insurance premiums since 2001.
Leshem, 59, pleaded not guilty to one felony count of conspiracy and four felony counts of insurance fraud earlier this week in Los Angeles County Superior Court.
His attorney, Mark Werksman, said the case is without merit and that he expects all charges to be dismissed.
Businessmen promoting Ogden have called Leshem a "visionary" who began investing in Ogden because he sees great promise in the northern Utah city's future as an urban center linked by gondola to a mountain resort.
He was the executive producer last year of a video - "Ogden: It's All Within Reach" - that Godfrey used to promote the city as a recreational magnet to prospective businesses.
The mayor did not return a phone call seeking comment Friday.
According to records at the Weber County Assessor's Office, Leshem has invested in 28 parcels - mostly vacant commercial land downtown - worth nearly $1.5 million.
Most of the property, including two warehouses and two old homes, sits along Wall Avenue or in the blighted area slated for redevelopment as part of the Ogden River Project.
His company, Cover-All, a contractor for such businesses as Home Depot, has 1,500 employees across the nation, including dozens working from offices in Salt Lake City and Ogden.
Lauren Hersh, a spokeswoman for the California Department of Insurance, said Leshem as well as Cover-All's vice president and its corporate secretary are accused of reporting fewer employees to the state insurance fund than they were reporting to the state when they paid payroll taxes.
By underreporting the company's payroll to the state's compensation and insurance fund by nearly $32 million between 2001 - when the company first began its insurance policy - and 2005, Cover-All saved almost $11 million in premiums, according to the Los Angeles County District Attorney's Office.
"I don't think they thought the two departments would talk to each other," Hersh said.
Bail initially was set at $6 million for each defendant because each holds dual Israeli citizenship and was thought to be a flight risk, she said.
But the judge considered the fact they are prominent business owners in the San Fernando Valley community of Chatsworth and slashed bail to $100,000 each, she said. The charges were filed last month.
The other two defendants are Zeev Golan, 54, the vice president of the company, and his wife, Irit Golan, 52, the corporate secretary and payroll supervisor.
Werksman, Leshem's attorney, said the charges are a symptom of a state worker-compensation system in disarray where confusion over premiums reigns. The business dispute should be negotiated, not prosecuted criminally, he said. "The decision to name Mr. Leshem in the case is stunning and incomprehensible," Werksman said. "It is no reflection on Mr. Leshem's interests in Utah or other businesses, which are all conducted lawfully and ethically."