U.S. Attorney Cracks $1.3 Million Auto Body Repair Scam

June 22, 2000

A Worcester, Mass. man was charged Wednesday with operating an auto body shop that routinely inflicted damage on cars brought in for repair and defrauded insurance companies by submitting false claims for the extra damage.

John S. Troiano, 48, was charged with one count of mail fraud involving the scheme to defraud insurance companies of more than $1.2 million, and with three counts of tax violations.

U.S. Attorney Donald K. Stern said the case puts a large dent in the fraud being committed against insurance companies. “Fraud against insurers is not a victimless crime,” he said. “The extra money they pay in fraudulent claims is reflected in increased premiums for innocent customers.”

The information alleges that Troiano owned and operated Kustom Auto Body in Worcester and defrauded insurance companies by submitting false claims for payment.

According to the information, Troiano’s basic scheme involved inflicting damage on cars brought in for repair work, usually as a result of an accident, then submitted fraudulent claims to automobile insurance companies which made it appear that the inflicted damage had been caused by a legitimate car accident or vandalism.

The charges allege that Troiano personally inflicted the majority of the damage using a variety of tools, but also drove cars into machinery to simulate sideswiping a guardrail and instructed his employees to drive cars into dumpsters on Worcester streets to simulate accidents.

According to the charges, Troiano submitted nearly 800 insurance claims between January, 1995 and March, 1998, resulting in payments of about $1.8 million and that Troiano inflicted damage himself on 70-80% of the cars brought to Kustom Auto Body.

The charges allege that while some car owners were unaware of the scheme, others participated and shared a portion of the insurance proceeds. According to the information, Troiano assisted some car owners in submitting fraudulent lost wage claims to insurance companies by signing documents falsely claiming that the car owners had been employed at Kustom.

Another aspect of the scheme, according to the charges, was that Troiano would provide customers with so- called “loaner” cars, which were in fact cars owned by other customers, then would submit car rental claims to insurance companies for such so-called loaners.

Troiano was also charged with three tax violations involving the filing of false tax forms with the U.S. Internal Revenue Service, and aiding and abetting the filing of such returns.

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