Calif. “Insider” Conspirators Arrested

Insurance Commissioner John Garamendi announced the arrests of nine suspects by the California Urban Auto Fraud Task Force for embezzlement, conspiracy and tax evasion in connection with an “insider” insurance scam. Investigators made the arrests in the Calif. cities of Oakland, Richmond, Vallejo, Fairfield and Norwalk and in Raleigh, N.C. Each suspect could face a maximum of five years in state prison and/or fines up to $50,000.

All suspects allegedly made fraudulent automobile insurance claims and received illegal settlement checks between 1994 and 2001, from Thomas Jackson, 55, of Elk Grove, Calif. Jackson was formerly a senior claims representative with Progressive, Grange and Zurich.

In February, Jackson pled guilty to nine counts of embezzlement and admitted enhancements for aggravated white-collar crimes totaling almost $600,000. He was sentenced to six years and four months in state prison for insurance fraud. Jackson used his “insider” position to issue fraudulent auto insurance claim checks to the nine suspects. The investigation discovered that Jackson had falsely inserted the names of his “insider conspirators” as phantom passengers in legitimate auto claim files and issued fraudulent checks to the nine suspects.

The arrests were the result of a two-year investigation into fraudulent auto insurance claims. An audit conducted by Zurich Insurance Company’s special investigation unit discovered unsubstantiated settlement checks issued by their claims adjuster, Thomas Jackson. Zurich then notified Jackson’s previous employers, Grange and Progressive insurance companies, who also found false settlement checks that he had issued during his employment as a claims representative for both companies.

The Urban Auto Task Force investigators then contacted the true parties involved in the traffic collisions associated with the settlement checks, including attorneys that litigated the settlements. None of them knew or could explain why the nine “insiders” had received payments.

The investigation revealed that they had all allegedly agreed to have their names inserted into legitimate auto claim files and receive fraudulent checks from the insurers. All of the individuals were arrested and could face a maximum of five years in state prison and/or fines up to $50,000. Bail was set at $1 million for three of the nine suspects. Among the nine arrested: Kelvin Douglas Joiner; Karen Ann Johnson-Harvey; Sandra Kay Joiner; Marvis Kemp McBride; Stephanie Marie Flippin; Quentin Eric Johnson; Paulette Terry; Paulette Hasty-Stewart; and Gwendolyn Ann McCoy.

Topics California Auto Fraud