The Organized Auto Fraud Interdiction Task Force announced Oct. 25 the execution of search warrants on nine locations and the arrests of five individuals allegedly involved in a large-scale auto insurance fraud ring. The task force is comprised of investigators from the California Department of Insurance (CDI) Criminal Investigations Branch’s Fraud Division and the California Highway Patrol. Additionally, Farmers Insurance Company assisted the task force during the investigation.
According to investigators, the group of arrested suspects are believed to be responsible for more than 30 staged collisions over a two-year period of time, totaling in the hundreds of thousands of dollars in fraudulent insurance claims. The execution of the search warrants included the residences and offices of two chiropractors and two attorneys. The arrestees included Tony Chan, 35, law office administrator; Tony Lam, 60, chiropractor; Michael Choi, 29, Peter Lau, 36, stagers/cappers; and Derek Lai, 29, stager. Felony insurance fraud charges were filed against all of the suspects who are being held at the Los Angeles County Jail on $30,000 bail each.
This case began in February 2001, when Task Force Investigators were introduced to an individual by the name of Derek Lai, who allegedly recruited people to participate in staged collisions.
Based on this information, an investigation was initiated in which an undercover officer was introduced to the suspects involved in this ring. Investigators say the undercover officer was then introduced to suspect Peter Lau, who allegedly set up the staged collision that the undercover officer took part in. Also, Lau allegedly brought together the other participants for this staged collision. Along with Lau, suspects Michael Choi and Tony Chan also allegedly participated in the staged collision. Tony Chan is the administrator for the law office of Bill Hom. Hom’s law office represented the claimants in several of the filings of the alleged fraudulent claims against a number of insurance companies.
Investigators say after the staged collision was orchestrated, the undercover officer was sent to the chiropractic clinic of Tony Lam in Hacienda Heights. Lam’s clinic was allegedly used for numerous additional claims that have been identified during the investigation as possible staged collisions. The undercover officer met directly with Lam who allegedly created fraudulent medical billings for treatments that were never rendered totaling more than $4,000. These billings were ultimately submitted to the insurance company for payment.
The investigation into the alleged fraud ring is continuing and more arrests are expected in the near future.