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Auto, Health Fraud Probe Nets 13 Arrests

Insurance: Raids are part of a statewide crackdown. Officials say the operators staged car accidents.


At least 13 people were arrested Tuesday during raids on medical and legal clinics in Southern and Northern California as part of a statewide crackdown on auto and health insurance fraud, which costs consumers hundreds of millions of dollars each year.

Dubbing Los Angeles "the auto insurance fraud capital of the world," federal, state and local officials said the two alleged fraud rings broken up in the raids operated by contriving automobile accidents. The putative victims made their way to law and medical offices, where staff members allegedly inflated claims to be submitted to insurance companies.

Among those arrested were three doctors and one lawyer. One doctor sought by the authorities remains at large. Among the others arrested or still being sought were office staff.

Insurance fraud "is a growth industry" in Southern California, Charlie J. Parsons, FBI special agent in charge, said at a news conference Tuesday.

"This case, code-named 'Paper Accidents,' should serve as an official Sig-Alert to those involved in insurance fraud," he said.

California Insurance Commissioner Chuck Quackenbush estimated that $3 billion to $5 billion would be saved if insurance fraud was eliminated in the state. Fraud costs the average California household an additional $200 in insurance premiums, Parsons said.

"We are not done," Quackenbush said of a multi-agency effort to eliminate auto insurance fraud that began three years ago and has already put 15 Californians in jail. "We have a lot more operations going on."

Warrants were issued for 16 people in connection with Tuesday's raids. Thirteen were in custody--including one who tried to elude investigators by hiding under a pile of clothing inside a closet--and had been arraigned on federal mail fraud charges by late Tuesday. The three others remained at large.

Twelve medical clinics and law offices were searched Tuesday by more than 100 federal and state law enforcement officers.

"We are not targeting legitimate doctors and lawyers, but rather criminals who happen to have law degrees or medical degrees or run medical clinics," Parsons said.

The investigation involved local, state and federal law enforcement agencies, insurance companies, the state Department of Insurance and the U.S. Postal Inspection Service.

Here is how the alleged fraud rings worked:

A person known as a "capper" would recruit drivers who were willing to pretend that they had been involved in a traffic accident. One of the drivers would be covered by a valid insurance policy and would pose as the driver at fault.

The capper would take these people to a law office or medical clinic with which the capper had a relationship. False health-care billings would be produced and false accident claims would be filed with the insurance company.

In many cases the rings did not even bother to stage accidents. Instead, they merely submitted false claims.

In a few cases, however, innocent drivers were involved in accidents staged by members of the rings.

One alleged ring involved a law office run by Gus Luciano, 54, of Los Angeles, according to a criminal complaint filed Thursday in U.S. District Court in Los Angeles. Luciano and Liliana Bocanegra, who ran the day-to-day operations of the law office, would take clients supplied by cappers to medical clinics for treatment of allegedly nonexistent injuries. Claims would be submitted to insurance companies and proceeds from insurance settlements would be distributed to participants.

Another alleged ring involved medical clinics affiliated with Lissa Yuson, 43, of Daly City. Yuson, described by Quackenbush as the "queen" of auto insurance fraud, was discovered Tuesday by law enforcement officers hiding under a pile of clothing. Several members of her family were also arrested.

The arrests announced Tuesday do not conclude the investigation, Parsons said.

"I would never say we're going to wipe this out," Parsons said. "But we're going to make it very uncomfortable for them."


The Price of Fraud

For every $100 in claims from automobile accidents in California paid by insurance companies, an estimated $16.44 goes to pay fraudulent claims. Here is how that breaks down:


$16.44 of every $100 paid goes to fraud.


Faked thefts: $1.04

Previous damage: $2.15

Body shop overcharges: $2.20

Staged accidents: $3.00

Exaggerated soft- tissue injuries: $8.05

Source: California Department of Insurance

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