Commissioner Jones Announces Arrests Of Suspects In Organized Insurance Fraud Ring And Conspiracy
News: 2011 Press Release
Insurance Commissioner Dave Jones today announced that multiple suspects have been arrested as a result of indictments handed down by a Contra Costa County Grand Jury on September 22, 2011. Bail for these suspects has been collectively set at $18,650,000. The arrests are a result of a two year investigation by the California Department of Insurance (CDI), Fraud Division Detectives, into an organized insurance fraud ring and conspiracy. Together, all suspects have been charged with over 100 felony counts for violating multiple sections of Penal Code 550 and multiple felony counts for violations of Penal Code Section 487, Grand Theft, Penal Code Section 459, Burglary and Penal Code Section 182 Conspiracy.
"The co-conspirators in this fraud ring went to great lengths to carry out their illegal schemes -- including fraudulent claims of vehicle thefts, theft of personal property from vehicles and residences, traffic collisions, personal injury claims, wage loss claims, and vandalism claims," said Insurance Commissioner Dave Jones. "I would like to commend the Detectives of the California Department of Insurance's Fraud Division, along with Investigators from the California Highway Patrol and Contra Costa County District Attorney's Office, the National Insurance Crime Bureau, and various insurers, for their work in dismantling this major insurance fraud ring."
Contra Costa County District Attorney Mark Peterson believes this operation will send a message to others considering these types of insurance scams. "In these tough economic times legitimate law abiding businesses and consumers need real protection from those seeking to scam the system which can lead to higher insurance rates and premiums that many can't afford. We hope that inter-agency cooperation between law enforcement teams like the Office of the District Attorney and the Department of Insurance will lead to even more successful operations like the one we're announcing today." The Contra Costa County District Attorney's Office committed significant attorney hours and resources while working to obtain what is believed to be the largest criminal indictment in Contra Costa County history.
CDI Fraud Division Detectives opened an investigation in July 2009 into a suspected insurance fraud ring operating in the San Francisco Bay Area. Detectives focused on a group of subjects who were submitting suspected fraudulent insurance claims. According to Detectives, the suspected fraudulent claims included reported vehicle thefts, theft of personal property from vehicles and residences, traffic collisions, personal injury claims, wage loss claims, and vandalism claims. The investigation also revealed that the subjects filed police reports and submitted documents to various insurance companies in support of the claims.
CDI Detectives obtained and reviewed thousands of documents, interviewed dozens of witnesses, and served search warrants for records, together with Investigators from the California Highway Patrol and Contra Costa County District Attorney's Office. The investigation revealed that the group appeared to be involved in several insurance fraud schemes.
One scheme involved the purchase of jewelry, high end electronics and other merchandise. Investigators suspected that once purchased, the subjects returned the items to the retailer and retained the sales receipt. Members of the group shared the receipts of the returned items and presented them as evidence of property ownership in numerous suspected fraudulent insurance claims. Investigators also believed that in some cases, the receipts were altered and used several times by different subjects in their claims. The group also utilized garment "pull-tags" on un-purchased clothing as evidence of ownership in the insurance claims. At other times, members of the group would first sign declarations stating they owned property allegedly stolen, and/or then submit photographs wearing items allegedly stolen, all in support of claims believed by Investigators to be fraudulent.
Investigators further discovered that members of the group who filed insurance loss claims for alleged traffic collisions, stolen vehicles, and vehicle vandalisms allegedly repeatedly involved the same subjects with the same damage to their vehicles. In some cases, Investigators also found that the involved subjects submitted injury and wage loss claims as a result of the alleged collisions. The investigation determined the subjects did not suffer the wage loss as reported in their claims. Finally, Investigators believe that the co-conspirators submitted allegedly false declarations that each of them rented their personal vehicles to each other for reimbursement under the insurance policies.
Investigators are attempting to determine the amount of loss to the insurance industry as a result of these alleged fraud schemes. The estimated loss, which contains both real and potential amounts, is believed to be at least $300,000, and may be over $500,000.
Investigators have received assistance from Geico, Allstate, State Farm, Balboa, Homesite, Progressive, Farmers, American Bankers, 21st Century, Travelers, and Unitrin Insurance Carriers, as well as the National Insurance Crime Bureau.
This case is being prosecuted by the Contra Costa County District Attorney.
Multiple suspects were arrested today in the San Francisco Bay Area; one out of state suspect was taken into custody by the United States Marshals Office in New York. This suspect will be extradited to California to face prosecution.
At press time, several suspects were in custody in California. However, as this investigation is still ongoing and as additional suspects are still not yet in custody, please contact the Contra Costa District Attorney's Office for additional information.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California, regulating the $123 billion insurance marketplace. In 2013 the California Department of Insurance received more than 170,000 calls from consumers and helped recover over $63 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.