All in the Family

James Gus Sdrales, 33, was sentenced in San Diego Superior Court on Dec. 3, to one year of work furlough and five years of felony probation as a result of his guilty plea to two felony counts of insurance fraud and two felony counts of forgery. Sdrales owned and operated Sdrales Insurance Agency located in Orange, Calif. His wife, Alexandrea K. Sdrales, 37, owner of S.I.A. Insurance Agency, plead guilty to a misdemeanor violation of the California Insurance Code for allowing her husband to transact insurance under her license and was sentenced to three years probation.

The defendants were also ordered to pay restitution totaling $115,518 to 14 insurance companies. This amount included a $10,000 contribution to the California Department of Insurance (CDI) Statewide Fraud Fund. The stipulated restitution was satisfied in full prior to sentencing.

The convictions are the result of a joint investigation by the CDI Criminal Investigations Branch's Investigation Bureau and the San Diego District Attorney's Office Insurance Fraud Unit.

Investigators learned James Sdrales allegedly forged loss run documents that were submitted to various insurance companies to obtain workers' compensation policies at discounted premium rates. As a result of accepting these fraudulent loss runs, the carriers issued policies at a lower cost or extended coverage to businesses the insurers would not normally cover.

Based upon these convictions, Insurance Commissioner Harry W. Low ordered the summary revocation of both the Sdrales' insurance licenses. The revocations became effective Dec. 5, 2001.

Farther north, two Fresno residents surrendered to investigators with the CDI. Lorita Amaro Villa, 53, surrendered at the Fresno Superior Court for felony violations of conspiracy to defraud another of property, presenting a false insurance claim and making false statements in support of an insurance claim. Bail was set at $10,000.

Her daughter, Cristina Mercedes Alfaro, 24, was charged with conspiracy to defraud another of property and making false statements in support of an insurance claim. Her bail was set at $5,000. The Fresno County District Attorney's Office is prosecuting the case.

According to investigators, Villa filed a claim with her insurance company for an automobile accident, stating that Alfaro was a passenger in the vehicle at the time of the accident. Villa and Alfaro provided recorded statements to the insurance company to support their claims.

CDI investigators determined that Alfaro had been the driver and Villa had been at home when the accident occurred. It was further maintained that Alfaro was an "excluded driver" from Villa's insurance policy, and Villa claimed responsibility in order to provide insurance coverage for the accident.

Inspector Comes Clean, Pays Up

Based upon his cooperation with CDI investigators, Francis Borgia Ashley Jr., 59, was allowed to surrender himself in Fresno County Superior Court in the presence of his attorney after an arrest warrant had been issued for him.

Ashley, who was charged with 12 counts of insurance fraud, was arraigned and, as a plea agreement, simultaneously pled "no contest" to a felony count of insurance fraud and a felony count of grand theft. Sentencing was delayed for one year, during which time Ashley agreed to make full restitution.

Ashley owned and operated G&A Automotive, an automotive repair shop. Investigators received information from the Bureau of Automotive Repair, indicating that G&A had submitted claims against mechanical breakdown insurance polices for work that was never performed.

CDI's investigation revealed that Ashley conducted initial qualifying inspections for people applying for automotive mechanical breakdown insurance. Ashley is alleged to have completed fictitious repair orders using information obtained from the inspections.

It is further alleged that he used signatures, also obtained from the inspections, to then forge claimants' signatures on fake repair orders, which were submitted to an insurer for payment.

Ashley told investigators he submitted the fake claims in order to pay for medical bills not covered by his health insurance.

After Ashley's court appearance, he was booked and released at Fresno County Jail and presented CDI Investigators with a cashier's check in the amount of $8,447.78, the full restitution required as a condition of his plea agreement.

"Paper" Chase Leads to Arrests

The Organized Auto Fraud Interdiction Task Force, comprised of investigators from the CDI Criminal Investigations Branch's Fraud Division, the California Highway Patrol, and the National Insurance Crime Bureau, announced the execution of nine arrest warrants and nine search warrants in Los Angeles, North Hollywood and Glendale. USAA Insurance Company assisted the task force during the investigation.

The search warrants included two chiropractic clinics and one attorney's office. Thirteen individuals were charged for their alleged involvement in an automobile insurance fraud ring. The Los Angeles District Attorney's Office, Auto Insurance Fraud Unit is prosecuting the case.

The 13 suspects were each charged with a felony violation of insurance fraud. The two primary suspects, Jose Morales and another co-conspirator who, at the time charges were brought in November remained at large, were each charged with 13 counts of felony insurance fraud. Bail for each was set at $1,000,000 each. Eight of the suspects were held on $25,000 bail.

An investigation was initiated upon receipt of information on a group of individuals staging "paper" accidents in the Los Angeles area.

Task Force undercover investigators who infiltrated the ring maintain that Morales recruited insured and at-fault drivers for alleged collisions. The investigators also stated that Morales would then cause damage to the vehicles of his recruits and introduce the participants to his partner, who was responsible for recruiting the "claimant" participants for the alleged collisions.

Investigators claimed Morales and his partner provided both parties with scripts containing the "details" of the accident in order to submit their claims with their respective insurance companies.

During the course of the investigation, it was established that Morales and his partner allegedly orchestrated specific staged collisions. After they orchestrated the crashes, they utilized the services of an attorney to represent claimants of the alleged accidents.

Additionally, the involved claimants were sent to two chiropractic clinics to receive treatment for their alleged soft tissue injuries. Investigators claimed fraudulent medical billings were ultimately submitted to the insurance companies for payment.

In one particular case, an insurance company paid out $25,000 for medical bills from a staged collision.