Auto Arrest Warrants Issued in Los Angeles

November 6, 2001

The Organized Auto Fraud Interdiction Task Force announced the execution of nine arrest warrants as well as the execution of nine search warrants in Los Angeles, North Hollywood and in the city of Glendale. The search warrants included two chiropractic clinics and one attorney’s office, and 13 individuals have been charged for their alleged involvement in an automobile insurance fraud ring.

The task force is comprised of investigators from the California Department of Insurance (CDI) Criminal Investigations Branch’s Fraud Division, the California Highway Patrol, and the National Insurance Crime Bureau. Additionally, USAA Insurance Company assisted the task force during the investigation.

The 13 suspects are each being charged with a felony violation of insurance fraud. The suspects that have been arrested are being held at the Los Angeles County Jail. The Los Angeles District Attorney’s Office, Auto Insurance Fraud Unit is prosecuting the case. The two primary suspects, Jose Morales and another co-conspirator who remains at large, are each being charged with 13 counts of felony insurance fraud and their bail has been set at $1,000,000 each. Eight suspects are each being held on $25,000 bail.

A CDI investigation was initiated upon receiving information on a group of individuals staging “paper” accidents in the Los Angeles area. Task Force Undercover Investigators were able to infiltrate the ring and determine Morales as a primary suspect who recruited insured and at-fault drivers for alleged collisions. According to investigators, Morales would then allegedly cause damage to the vehicles of his recruits and introduce the participants to his partner. Morales’ partner was allegedly responsible for recruiting the “claimant” participants for the alleged collisions. Investigators say Morales and his partner provided both parties with scripts containing the “details” of the accident in order to submit their claims with their respective insurance companies.

During the course of the investigation, it was established that Morales and his partner allegedly orchestrated specific staged collisions. After they orchestrated the crashes, they utilized the services of an attorney to represent claimants of the alleged accidents. Additionally, the involved claimants were sent to two chiropractic clinics to receive treatment for their alleged soft tissue injuries. Investigators say fraudulent medical billings were ultimately submitted to the insurance companies for payment. In one particular case, an insurance company paid out $25,000 for medical bills from a staged collision.

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