Northern California Insurance Fraud Ring Busted

October 5, 2011

Multiple suspects in an insurance fraud ring have been arrested as a result of indictments handed down by a Contra Costa County Grand Jury, it was announced on Wednesday.

The arrests are a result of a two-year investigation by California Department of Insurance Fraud Division detectives into an organized insurance fraud ring and conspiracy. Together, the suspects have been charged with over 100 felony counts for violating section 1234.45 of the California insurance code and multiple felony counts for violations of penal code section 487, grand theft and penal code section 459, burglary.

The indictments were handed down by the grand jury on Sept. 22. Bail for the suspects has been collectively set at more than $18 million.

“The sheer magnitude of this case demonstrates the extreme degree of conspiratorial lengths that these suspects colluded to perpetrate,” Insurance Commissioner Dave Jones said in a statement.

Detectives opened an investigation in July, 2009 into a suspected insurance fraud ring operating in the San Francisco Bay Area, focusing on a group of subjects who were submitting suspected fraudulent insurance claims, according to Jones’ office.

According to detectives, the claims included reported vehicle thefts, theft of personal property from vehicles and residences, traffic collisions, personal injury claims, wage loss claims and vandalism claims. The investigation also revealed that the subjects filed police reports and submitted documents to various insurance companies in support of the claims, according to detectives.

One alleged scheme involved the purchase of jewelry, high-end electronics and other merchandise that once purchased were returned the items to the retailer with the sales receipt retained. Members of the group allegedly shared the receipts of the returned items and presented them as evidence of property ownership in numerous suspected fraudulent insurance claims. Investigators also believed that in some cases, the receipts were altered and used several times by different subjects in their claims. The group also utilized garment “pull-tags” on un-purchased clothing as evidence of ownership in the insurance claims.

Investigators say they are attempting to determine the amount of loss to the insurance industry as a result of these alleged schemes. The estimated loss is believed to be at least $300,000, but may exceed $500,000.

Investigators received assistance in the investigation from Geico, Allstate, State Farm, Balboa, Homesite, Progressive, Farmers, American Bankers, 21st Century, Travelers and Unitrin Insurance Carriers, as well as the National Insurance Crime Bureau.

Several suspects were in custody in California, but the investigation is ongoing, with additional suspects not yet in custody.

This case is being prosecuted by the Contra Costa County District Attorney.

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