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California and the West

86 Indicted in Alleged Car Insurance Scam

Crime: Luxury cars were deliberately damaged and used repeatedly to file phony claims totaling at least $21 million, sources say.

January 07, 1998|MICHAEL G. WAGNER | TIMES STAFF WRITER

SANTA ANA — In what is believed to be the largest auto insurance fraud case in California history, more than 80 people have been indicted in a scam involving luxury cars that were allegedly smashed with sledgehammers, reported stolen and used repeatedly to file phony accident claims, sources said.

In all, about 21 automobile insurance companies were hit for at least $21 million in phony claims. The arrests are expected to be made today in a sweep centered on Orange County.

On Dec. 15, the Orange County Grand Jury handed up sealed indictments in the case, concluding a two-year investigation that focused primarily on individuals and automobile repair shops in Orange County.

The various schemes apparently involved families and groups of individuals with ties to certain auto repair shops repeatedly filing claims on damaged cars, and receiving reimbursement for expensive repairs.

Details of the case are to be released this morning by Orange County Dist. Atty. Michael R. Capizzi and California Insurance Commissioner Chuck Quackenbush.

Eighty-six individuals were charged, some of them on multiple felony counts of fraud. They will face bail amounts that range from $15,000 to $100,000 per count. Officials plan to seek nearly $1 million in bail for one individual.

In all, 66 top-of-the-line automobiles, including Mercedeses, Lexuses, BMWs and Jaguars, were used in the alleged scam to defraud the insurance carriers.

"This was not a very sophisticated bunch," said the state source familiar with the investigation. "They would apparently take sledgehammers and bash in these very expensive cars and then file inflated claims for their repair."

The case apparently began when investigators for the insurance companies noticed the same cars turning up on numerous claims and called in national insurance fraud specialists.

When the investigators realized how many people and claims were apparently involved, they alerted the Department of Insurance, the California Highway Patrol, the National Insurance Crime Bureau and other agencies.

Investigators put the case together after executing about 50 search warrants for bank accounts, interviewing hundreds of witnesses and analyzing thousands of documents. They found "financial links" between individuals, auto shops and the same cars, the source said.

Many of those suspected were identified by handwriting experts who examined their signatures on California driver's licenses and insurance claim forms, and the endorsement signatures on insurance reimbursement checks.

The suspected claims were submitted to the insurance companies over a three-year period; the most recent was filed in June.

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