Farmers Insurance Exchange and Mid-Century Insurance Company have begun serving civil summons and complaints upon an Oakland, Calif. body shop and a Ventura County, Calif. body shop, their owners, former Farmers employees and other co-conspirators, accusing them of taking part in a large scale scheme designed to defraud the company’s policyholders. Using California’s novel anti-fraud statute, Farmers has sued these individuals, seeking over $12 million in damages and for injunctions, preventing the defendants from victimizing others in the future.
The two separate suits detail how these unscrupulous individuals allegedly committed aggressive and prolific fraud. The schemes included claiming damage and repairs to cars, when none existed; billing Farmers for services that were never rendered; inflating repair costs; and submitting phony repair invoices.
In Oakland, Farmers’ employees noticed a pattern of suspect claims coming from Phil-Am Complete Auto Services. Their investigation discovered a pattern of vehicles first involved with vandalism claims, followed by a claim where the vehicle swerved to miss a hazard, striking two parked cars. In all, Farmers uncovered 82 claims where a vehicle swerved, striking parked cars. The investigation included vehicle inspections and a confession from a co-conspirator, confirming the nature of the fraud. The suits allege that the defendants were involved in “paper losses,” where bills were submitted for nonexistent damage and repairs; damage inflation, where they represented that the vehicles sustained more damage than was the case; and VIN and license plate switches to conceal past claims using the same cars.
According to the California Department of Insurance, service of arrest and search warrants have now taken place. Arrested were body shop owners Art Mercado and Eduardo Enerio, as well as former Farmers’ employees Scott Carey and Martin Randisi.
The Ventura County action against the owners of Five Points Paint And Body seeks $1.5 million for their submission of false claims. Farmers began this investigation in June, 2000 and also inspected vehicles, demonstrating that the shop billed to replace parts that were only repaired, billed for services that were never rendered, exaggerated and inflated invoices. Law enforcement has now conducted search warrants upon the owners.
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