State Insurance Commissioner John Garamendi announced the arrests of nine suspects today by the California Urban Auto Fraud Task Force for embezzlement, conspiracy and tax evasion in connection with an “insider” insurance scam. Investigators from the California Department of Insurance Fraud Division, the California Highway Patrol and the Sacramento County District Attorney’s office made the arrests in Oakland, Richmond, Vallejo, Fairfield, Norwalk, California and Raleigh, North Carolina. Each suspect could face a maximum of five years in state prison and/or fines up to $50,000.
All suspects allegedly made fraudulent automobile insurance claims and received illegal settlement checks between 1994 and 2001, from Thomas Jackson, 55, of Elk Grove, Calif. Jackson was formerly a senior claims representative with Progressive, Grange and Zurich insurance companies.
“The arrests made today resulted from an in-depth investigation and outstanding cooperative effort undertaken by California’s Auto Fraud Task Force,” Garamendi said. “If this illegal scam had not been uncovered, these individuals would still be cheating the system today, with no end in sight.”
In February, Jackson pled guilty to nine counts of embezzlement and admitted enhancements for aggravated white-collar crimes totaling almost $600,000. He was sentenced to six years and four months in state prison for insurance fraud. Jackson used his “insider” position to issue fraudulent auto insurance claim checks to the nine suspects arrested today.
The investigation discovered that Jackson had falsely inserted the names of his “insider conspirators,” as phantom passengers in legitimate auto claim files and issued fraudulent checks to the nine suspects.
The arrests were the result of a two-year investigation into fraudulent auto insurance claims. The case that led to the arrest and imprisonment of Jackson, and the arrest of six women and three men today, began in 2002. An audit conducted by Zurich Insurance Company’s special investigation unit discovered unsubstantiated settlement checks issued by their claims adjuster, Thomas Jackson. Zurich then notified Jackson’s previous employers, Grange and Progressive insurance companies, who also found false settlement checks that he had issued during his employment as a claims representative for both companies.
The Urban Auto Task Force investigators then contacted the true parties involved in the traffic collisions associated with the settlement checks, including attorneys that litigated the settlements. None of them knew or could explain why the nine “insiders” had received payments.
The investigation revealed that they had all agreed to have their names inserted into legitimate auto claim files and receive fraudulent checks from Progressive, Grange and Zurich insurance companies, through Thomas Jackson.
All of the individuals were arrested on felony counts of embezzlement, conspiracy and/or tax evasion. They could face a maximum of five years in state prison and/or fines up to $50,000. Bail was set at $1 million for three of the nine suspects.
“These con artists have been removed from the streets of California,” added Commissioner Garamendi. “Their arrest should serve notice to others that these scams will be vigorously pursued and prosecuted.”
Names and charges for nine “insider conspirators” arrested today:
*Kelvin Douglas Joiner, 48, Raleigh, N.C.. Bail set at $1,000,000. Received eight checks issued by Jackson totaling $71,588. Joiner is charged with one count of conspiracy, six counts of embezzlement and one count of tax evasion.
*Karen Ann Johnson-Harvey, 36, Vallejo, Calif. Bail set at $1,000,000. Received seven checks issued by Jackson totaling $59,787 with an additional $70,000 in checks using various aliases, totaling over $129,000. Johnson-Harvey is charged with eight counts of embezzlement and one count of tax evasion.
*Sandra Kay Joiner, 49, Raleigh, N.C. Bail set at $1,000,000. Received five checks issued by Jackson totaling $39,220. Joiner is charged with one count of conspiracy and five counts of embezzlement.
*Marvis Kemp McBride, 42, Oakland, Calif. Bail set at $100,000. Received three checks issued by Jackson totaling $20,100. McBride is charged with three counts of embezzlement.
*Stephanie Marie Flippin, 33, Richmond, Calif. Bail set at $100,000.
Received three checks issued by Jackson totaling $18,868. Flippin is charged with three counts of embezzlement.
*Quentin Eric Johnson, 51, Oakland, Calif. Bail set at $5,000.
Received two checks issued by Jackson totaling $14,106. Johnson is charged with one count of embezzlement.
*Paulette Terry, 37, Norwalk, Calif. Bail set at $10,000.
Received two checks issued by Jackson totaling $13,056. Terry is charged with two counts of embezzlement.
*Paulette Hasty-Stewart, 34, Fairfield, Calif. Bail set at $10,000.
Received two checks issued by Jackson totaling $8,125. Hasty-Stewart is charged with two counts of embezzlement.
*Gwendolyn Ann McCoy, 51, Oakland, Calif. Bail set at $5,000.
Received one check issued by Jackson totaling $7,380. McCoy is charged with one count of embezzlement.
The Urban Auto Fraud Task Force has 12 fraud teams operating statewide. There are several major undercover operations and complex investigations currently underway, each targeting specific major areas of organized criminal activity.
There are five teams in Los Angeles County, and teams in Alameda, Fresno, Riverside, Sacramento, San Bernardino, San Francisco and Santa Clara counties participating in the Task Force.
If you have any leads to further this ongoing investigation, please contact Rick Plein, Department of Insurance Fraud Division, (916) 854-5700.
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