Three Convicted in Massachusetts Auto Fraud Ring Case

May 17, 2011

A Massachusetts jury has returned guilty verdicts against three men — including a lawyer and a chiropractor — accused of staging several fraudulent motor vehicle accidents, according to the attorney general’s office.

Omar Castillo, of Methuen, James C. Hyde, of Boxford and Michael H. Kaplan, of Hampstead, N.H., were all found guilty following a six-week jury trial on charges of insurance fraud, larceny and attempted larceny.

The three still face additional charges of conspiracy to commit motor vehicle insurance fraud and conspiracy to commit larceny, all of which will be scheduled for trial.

Hyde and Kaplan will serve two and a half years in the Essex County House of Correction, followed by a five-year probation. Castillo was also sentenced to two and a half years in the House of Correction, nine months to serve, with the balance suspended for a probationary period of five years.

“In the midst of rising insurance costs, these men used their knowledge of the auto insurance system to knowingly defraud companies and make some fast cash,” Attorney General Martha Coakley said. “This is a serious crime that not only defrauded insurance companies, but it also hurts consumers financially by contributing to an increase in premiums.”

Following the September 2003 death of a woman in a staged accident, both the Lawrence Police Department and the Insurance Fraud Bureau of Massachusetts joined together to create the Lawrence Task Force to investigate and prosecute staged accidents in the Lawrence area. After several successful prosecutions by the local district attorney, several of the pending investigations were referred to the attorney general’s office.

These convictions, in connection with two staged accidents in October 2002 and one in December 2002, stem from the work of the Lawrence Task Force with assistance from the Massachusetts State Police assigned to the Attorney General’s Office.

In September 2006, Leo Lopez was arrested by authorities in Georgia in connection with this case. He was subsequently indicted on multiple counts of motor vehicle insurance fraud, larceny and attempted larceny charges in connection with a wide ranging scheme to defraud insurance companies. On January 22, 2009, Lopez pleaded guilty to the indictments and was sentenced to nine months in the Essex County House of Correction.

Lopez recruited individuals to participate in staged motor vehicle accidents in the Lawrence area. Investigators determined that these accidents never actually occurred, but were reported to insurance companies for the sole purpose of filing fraudulent bodily injury and property damage claims. The recruited participants would give their vehicles to Lopez, who would then damage the vehicles, making them appear to have been involved in motor vehicle accidents. As part of the scheme, Lopez sent these participants to specific chiropractors and attorneys who would then bill or seek reimbursement from the insurance companies.

Kaplan, a chiropractor with offices in North Andover, participated in the scheme by treating individuals involved in these staged accidents and then submitting fraudulent insurance claims. Hyde, an attorney who practiced in Andover, was also involved in the scheme. Kaplan and Hyde knowingly employed Lopez and Castillo to recruit claimants for these staged accidents. Lopez and Castillo then directed the recruits to Kaplan and Hyde for unnecessary medical treatment and legal representation for accidents that never occurred. Kaplan and Hyde submitted fraudulent injury claims and letters to the claimants’ insurance companies seeking payment for injuries they allegedly received in the staged accidents.

A grand jury returned indictments against all of the men in 2008. The jury deliberated for approximately three days before returning with a guilty verdict yesterday on all charges.

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