Calif. Authorities Bust Major Auto Fraud Ring

July 18, 2002

In its largest bust to date, the Los Angeles County Organized Auto Fraud Interdiction Task Force and 120 law enforcement officers and investigators executed arrest warrants July 16 for 28 individuals charged with insurance fraud and conspiracy in conjunction with a large scale insurance fraud ring. Twenty-one search warrants were also served on various locations.

The investigation conducted by the California Department of Insurance, California Highway Patrol, and Los Angeles County District Attorney’s Office revealed the ring was allegedly staging fraudulent collisions to collect settlements from insurance companies. According to investigators, “cappers or stagers” recruited people to participate in the staged crashes, file false insurance claims, obtain medical treatment for non-existent injuries, and demand settlement from insurers.

The investigation began in Nov. 2001, with the review of numerous insurance claim files and witness interviews. A first wave of search warrants provided critical leads and additional undercover investigations and surveillance. CDI and the CHP were successful in infiltrating the ring and participated in staged collisions, which resulted in fraudulent claims being submitted to the potential victim insurance carriers.

In one encounter with undercover officers, a primary suspect boldly proclaimed that there was so much business (staging accidents) from the San Fernando Valley to the South Bay that it was “out of control”. Based on evidence gathered during the investigation, the number of staged collisions allegedly orchestrated by the ring are estimated to total in the hundreds or thousands resulting in millions in losses to insurers and indirectly to consumers.

Medical billings submitted by a chiropractor who treated three of the claimants in a fraudulent staged collision totaled approximately $3,600 for each claimant. The law firm representing these claimants submitted a demand for payment totaling $60,000 or $20,000 for each claimant.

“We believe today’s arrests are just the beginning,” Department of Insurance Chief Fraud Investigator, Henry Avina, remarked. “This investigation is comprehensive and has many layers. We anticipate more arrests and search warrants on this case in the near future.”

Search and arrest warrants were executed for residences, chiropractic offices, and an auto body repair business in the following areas of Los Angeles County: Koreatown, West Hollywood, Glendale, Burbank, North Hollywood, Van Nuys, South Central Los Angeles, and Hawthorne.

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