Sacto 9-1-1
September 19, 2013
Auburn man pleads guilty to workers' compensation fraud

A 78-year-old Auburn man pleaded guilty today in federal court in Sacramento to making false statements to obtain federal workers' compensation benefits.

According to the plea agreement, Bruce Lee Cearlock has been receiving workers' compensation benefits under the Federal Employees' Compensation Act for an injury that he suffered as a civilian employee for the U.S. Navy on Aug. 26, 1987. When filing the periodic reports required by the Office of Workers' Compensation Program to justify continued payments, between 2006 and 2008, Cearlock stated under penalty of perjury that he was neither self-employed nor involved in "any business enterprise," according to a Department of Justice news release.

Court documents, however, state that from at least 1999 until 2011, Cearlock was involved in operating Fuse, a bar in San Francisco. Cearlock hired and fired employees, made decisions on capital expenditures and dealt with private citizens and public officials as the owner of Fuse.

During that time, Cearlock also was president and secretary of a privately held corporation, Alleycorp Inc., the sole purpose of which was to own the Fuse nightclub, authorities said. Shares in Alleycorp were equally split between Cearlock and his wife.

On the basis of his statements to the Office of Workers' Compensation Program that he was not involved in any business enterprise, Cearlock continued to receive federal disability benefits.

Cearlock is to be sentenced Dec. 5 by U.S. District Judge Troy L. Nunley.

The case resulted from an investigation by the Department of Defense, Defense Criminal Investigation Service, Sacramento; the Naval Criminal Investigative Service; and the U.S. Department of Labor.

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