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CA Department of Insurance

Insurance Commissioner Jones Announces Sentencing of Los Angeles Attorney for Insurance Fraud

News: 2011 Press Release

For Release: August 19, 2011
Media Calls Only: 916-492-3566
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Insurance Commissioner Jones Announces Sentencing of Los Angeles Attorney for Insurance Fraud
Lawyer part of Phantom menace conspiracy to defraud Auto Insurance Companies

Insurance Commissioner Dave Jones today announced that Susana Ragos Chung, 60, a Los Angeles area based attorney has been sentenced in Alameda Superior Court for insurance fraud. Chung entered pleas of no contest on two felony counts for violations of Section 549 of the Penal Code, recklessly submitting fraudulent insurance claims. She was sentenced to five years formal probation and to also pay $117,561 in restitution to insurance companies for 15 separate fraudulent claims. In addition, she was ordered to pay $235,123 to the state restitution fund. Chung agreed to place herself on inactive status with the California State Bar pending its mandatory investigation into her criminal conduct, which may result in her disbarment.

"This attorney's participation in an extensive conspiracy resulted in the California automobile insurance industry being defrauded of hundreds of thousands of dollars," said Insurance Commissioner Dave Jones. "Criminal acts like this cost consumers more money for auto insurance in an already strained economy."

"My office is committed to the investigation and prosecution of Insurance Fraud. Because this type of crime is highly sophisticated and widespread, successful prosecution depends upon the collaboration of many different agencies," said Alameda District Attorney Nancy O'Malley. "The extensive and meticulous investigation of this case involved a successful partnership between the District Attorney's Office and the California Department of Insurance and the Highway Patrol, without which this resolution would not be possible."

In August 2003, the California Department of Insurance (CDI), Benicia Regional Office, Fraud Division, Urban Auto Fraud Task Force initiated an investigation known as "Phantom Menace" into organized automobile insurance fraud in the Bay Area. The Task Force included Investigators from the California Highway Patrol, and Alameda and San Francisco County District Attorney's Offices. As a result of the information and evidence gathered by the Task Force CDI began an undercover investigation in July 2004, which included contacting numerous auto body shops, medical offices and law offices.

Task force members were able to infiltrate a sophisticated auto fraud organized crime ring operating in the Bay Area. This ring was working with law offices in the Los Angeles area. One of these law offices was owned and operated by Chung. In November 2004, task force members acting in undercover capacities were solicited to participate in staged collisions. Numerous collisions were staged and undercover officers were referred to auto body repair shops, medical offices and law offices in an effort to file false automobile insurance claims and secure substantial bodily injury claim settlements.

Between 2003 and 2007, Chung participated in this fraud ring by submitting insurance claims for suspects who staged these collisions for profit. Chung represented the claimants who were allegedly "injured" in these fake collisions. The majority of the people she represented never met her, and many did not even know they had an attorney.

Nearly 100 people have been convicted in Alameda County over the last several years as part of this conspiracy, including more than 90 staged collision participants, and three chiropractors. The majority of the participants in these staged collisions readily admitted to law enforcement that no accident had ever occurred.

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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