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38 Held in Auto Body Shop Sting

A five-month operation in San Bernardino and Riverside counties targets insurance fraud.

September 17, 2004|Lance Pugmire | Times Staff Writer

A five-month law-enforcement sting targeting auto body shops in Riverside and San Bernardino counties led to 38 arrests for attempted insurance fraud, a rampant problem in California that has driven up the cost of car insurance, authorities said Thursday.

Undercover investigators visited 66 repair shops in the two counties and told shop employees that they intended to file false insurance claims for complete, new paint jobs on vehicles that only needed minor work.

Employees from 30 shops agreed to go along with the ploy, leading to the arrests of 38 people involved, authorities said.

One body shop employee, who was being videotaped, allegedly instructed an investigator on how to scratch up his entire car to ensure the highest possible insurance payout. A worker at a Riverside County repair shop allegedly pulled out a hammer and smashed it into the car several times, telling the investigator, "Now, we've got enough damage."

"This type of activity is happening all too often," said state Insurance Commissioner John Garamendi, who joined the district attorneys from Riverside and San Bernardino counties in announcing the arrests.

Garamendi said national studies have shown that 15% to 20% of insurance premiums covers fraud losses and fraud investigation. He said 800,000 automobile insurance claims were filed in the state last year.

"It gets expensive," Garamendi said. "These [task forces] will continue."

San Bernardino County Dist. Atty. Michael A. Ramos said he has filed a felony count of filing a false insurance claim against 15 of the body shop employees, who each face a maximum five-year prison sentence and a $50,000 fine.

"We believe there is a victim to these crimes -- all of us in this county who are tired of the rise in our premiums," Ramos said. "We want to deter everyone in this county from doing this again."

The Department of Insurance previously conducted sting operations in San Francisco, San Jose and Sacramento. None were larger than the Inland Empire task force.

In Riverside County, Dist. Atty. Grover Trask has filed charges against 23 body shop employees.

"This is a statewide, widespread problem and the only way we can solve it is to do these sting operations," Trask said. "Right now, this [fraud] is usual. We want it to be an unusual problem.... Most of these crimes are not investigated."

The repair shops involved in the sting were "small operators," Department of Insurance investigator Dale Banda said. Garamendi said the Bureau of Automotive Repair will investigate the arrests, and could strip the companies involved of their repair licenses.

In one Riverside County case, an individual provided a $3,800 painting estimate on a $6,000 car. Another repair shop employee declined to engage in fraud, but directed the undercover investigator to a shop down the street.

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