Five people, including two attorneys and a chiropractor, were charged Tuesday in a major phony-injury scheme that Los Angeles County Dist. Atty. Ira Reiner said may have bilked the RTD out of $5 million.
In what Reiner described as "only the first volley" of charges in what is expected to be one of the largest insurance fraud cases ever prosecuted by his office, a total of 52 counts of conspiracy, grand theft and forgery were filed in connection with payments made for allegedly bogus injury claims arising out of Southern California Rapid Transit District bus accidents.
Reiner, saying more charges will be filed in coming months, said up to two dozen additional attorneys may be involved, as well as other former employees of the RTD's insurance adjuster, Leonard J. Russo Insurance Services Inc.
The charges follow nearly a year of investigation and come on the heels of recent arrests of four RTD employees in the alleged theft of fare-box cash and bus parts and last year's prosecution of about two dozen RTD bus drivers for operating transit vehicles without proper licenses and medical credentials.
Reiner said the scheme involved insurance adjusters, who worked on RTD claims and sold bus accident information to attorneys, who filed phony claims on behalf of clients who, in some cases, did not exist. The claims were supported by fraudulent medical reports, Reiner said, and usually resulted in settlements of under $5,000.
The bulk of the money went to the attorneys, Reiner said, adding that they "are the ones we're after. . . ."
The insurance fraud charges are the most serious yet related to the long series of disclosures by the news media and auditors of alleged mismanagement at the huge transit agency. The reports have fueled a drive in the Legislature to disband the RTD and create a new super-agency to operate buses and build new rail systems in the county.
Reiner on Tuesday joined the chorus of RTD critics, claiming that the "real fault" for the insurance fraud ring was the transit district's "lack of oversight" of the tens of millions of dollars it pays out each year in accident settlements.
Investigators estimate that in 1985 and early 1986, 30 to 40 phony claims totaling $100,000 were paid out each week. Based on that estimate, Reiner calculated that the losses could total about $5 million, but the charges filed Tuesday documented only a small fraction of that amount.
RTD and Russo officials have said the losses were only a few hundred thousand dollars and limited to a period of several months. RTD and Russo officials also claim that the problems have now been resolved and security measures adopted to curb phony claims.
On Tuesday, Leonard J, Russo, president of the insurance firm, and RTD Board President Jan Hall said they welcomed the district attorney's action.
The RTD hopes to be reimbursed for the alleged fraud losses by Russo's insurance company, although it is not clear how much may be reimbursed.
Reiner declined to say whether charges would be filed against any RTD employees or officials at the Russo insurance agency.
The district attorney's charges draw largely on the statements of a former Russo claims adjuster, Linda Yvonne Thompson, who was involved in the alleged scheme. Thompson, who had been jailed on an unrelated insurance fraud charge but was freed when she began cooperating with investigators, pleaded guilty Tuesday to one felony count of conspiracy. Under an agreement with prosecutors, she will not serve additional jail time if she continues to cooperate.
Also charged are: Inglewood attorney William L. Barnes; Los Angeles attorney J. Bruce Johnson, and Dr. Julius C. Brown, 70, a Los Angeles chiropractor. A fifth suspect, Eugene Glickman, an office manager at a Westside chiropractor's office, has been cooperating with investigators and is charged with one count of conspiracy.