The Philadelphia district attorney’s office has charged 41 people for what prosecutors described as a multi-million dollar auto insurance fraud scheme.
Prosecutors allege Ronald Galati Sr. and his co-conspirators ran their fraud scheme from Galati’s auto repair shop, American Collision and Auto Center in Philadelphia. Individuals charged in the alleged scheme include a former Philadelphia police officer, former insurance company adjusters and tow truck drivers, according to the district attorney’s office.
Prosecutors said these charges stem from a 16-month grand jury investigation of Galati’s auto repair shop. Progressive and Erie Insurance provided referrals and documentation which first brought American Collision’s suspicious claims to light.
Investigators alleged the Galati family used the auto repair shop as a corrupt organization from which to file fraudulent insurance claims. During the past four years, victim insurance companies issued payments totaling over $2,311,288 for fraudulent claims submitted from American Collision.
According to prosecutors, American Collision established a pattern of filing fraudulent claims with insurers that would routinely fall into one of the following five scenarios: fictitious deer accidents; vandalism; vehicular damages from falling objects; enhanced damages that compensated for waived deductibles; and the use of luxury cars in staged collisions to generate large settlement checks.
When crafting bogus accident claims, Galati favored deer hits, vandalism and vehicular damages from trajectory objects because each could be categorized as a non-fault accident for which the insured would not be held liable, prosecutors said.
In one particular case, Galati allegedly coached a customer to report to his insurer that he had struck a deer rather than admit that he had hit another car so that his insurer would assume responsibility without raising his rates.
Multiple grand jury witnesses testified that Galati stored deer blood, hair and carcasses in the back of his shop. These deer remnants — along with weeds which American Collision employees were instructed to gather from the river banks — served as props for what Galati deemed “Hollywood Photos,” or deceptive pictures of alleged vehicle damages that were submitted as part of insurance claims, prosecutors said.
In addition to deer hits, American Collision customers also filed claims alleging to have inadvertently collided with geese, dogs, cartons of fruit, flying metal and falling concrete, according to the charges.
Prosecutors said Galati also deliberately staged collisions in order to generate business. Some fraudulent claims allegedly involved intentional vandalism orchestrated by Galati and conspirator tow truck drivers. Galati allegedly supplied local drivers with a list of vehicles owned by previous customers and would instruct the drivers to damage these cars in the early morning hours to create business for his shop.
Some clients were aware that the vandalism was deliberate, prosecutors said, such as one cooperator who testified that he filed 11 fraudulent claims in conjunction with American Collision, nine of which were fabricated vandalism claims. In addition to vandalizing cars, Galati would also purchase luxury vehicles and pay his associates to deliberately crash cars into his parked BMW or Corvette. Galati discovered that financing these luxury vehicles through insurance fraud was an effective way to make car payments, according to prosecutors.
Prosecutors said Galati used the proceeds from his corrupt organization to throw elaborate parties at his shorefront properties and to fund expensive dinners at local restaurants. According to prosecutors, cooperating conspirators from American Collision stated that Galati could often be heard repeating his favorite mantra: “I live my life to cheat insurance companies – my high every day is to cheat insurance companies.”
Prosecutors said Galati achieved success with filing fabricated claims due to his knack for designing “creative accident scenarios” and his network of rogue professionals who conspired with him to legitimize these claims.
According to the charges, his network of co-conspirators had included a former police officer who allegedly would write fraudulent police accident reports for Galati, and two former insurance company adjusters who allegedly wrote inflated estimates and submitted paperwork for claims they knew were fictitious in exchange for cash or other gifts.
Source: The Philadelphia District Attorney’s Office