Following an investigation spanning two years, dozens of witnessinterviews, and examination of thousands of documents, a Calif.Grand Jury has indicted 22 suspects on more than 100 felonycounts.

California Insurance Commissioner Dave Jones reported that theindictments were handed down by a Contra Costa County, Calif. GrandJury on September 22, 2011 and that bail for the suspects has beencollectively set at $18,650,000.

Meanwhile, investigators are still unraveling the extent ofdamage inflicted on the insurance industry as a direct result ofthe alleged fraud schemes. The current loss projection, whichencompasses both tangible and potential damage amounts, rangesbetween $300,000 and $500,000.

Commissioner Jones noted that Geico, Allstate, State Farm,Balboa, Homesite, Progressive, Farmers, American Bankers, 21stCentury, Travelers, and Unitrin Insurance Carriers, and theNational Insurance Crime Bureau (NICB) were instrumental inexecuting the investigation. After publiclythanking those entities, Jones also commended the CDI frauddivision detectives, California Highway Patrol investigators,Contra Costa County district attorney's office for a job welldone.

Despite these very notable strides, it bears mention that theinvestigation is still ongoing and that additional suspects may bedetained, pending further developments.

Seeds of Suspicion

In July 2009, fraud detectives with the California Division ofInsurance (CDI) began a probe into a suspected insurance fraud ringoperating in the San Francisco Bay area. Detectives focused on agroup of subjects who were submitting suspicious insurance claims.The claims in question represented a possible smorgasbord ofcriminal acts. Detectives reported claims involving vehicle thefts;theft of personal property from vehicles and residences; trafficcollisions; personal injury; wage loss; and vandalism. In examiningthese cases, investigators learned that the subjects filed policereports and submitted documents to various insurers to try tocorroborate the claims.

CDI detectives obtained and reviewed thousands of documents,interviewed dozens of witnesses, and served search warrants forrecords, together with investigators from the California HighwayPatrol and Contra Costa County district attorney's Office. Thecollective investigation revealed that the group appeared to beinvolved in several insurance fraud schemes.

According to Commissioner Jones' office, one scheme involved thepurchase of jewelry, high-end electronics, and other merchandise.Investigators suspected that once purchased, the subjects returnedthe items to the retailer and retained the sales receipt. Membersof the group shared the receipts of the returned items andpresented them as evidence of property ownership in numerousinsurance claims. Additionally, authorities believe that in certaincases, receipts were altered and used several times by differentsubjects when filing their claims. The group also used garment“pull tags” on un-purchased clothing as evidence of ownership inthe insurance claims.

Meandering Trail of Fraud

The trail of deception didn't end there. Other variationsentailed signed declarations stating the subjects “owned” propertybelieved to have been stolen. The suspect(s) would then photographthemselves wearing these items to keep the stream of fishy claimsflowing.

Moreover, investigators found that group members may have filedinsurance loss claims for alleged traffic collisions, stolenvehicles, and vehicle vandalisms. Allegedly, the incidentsrepeatedly involved the same suspects with thesame damage to their vehicles. In select cases, themembers subsequently submitted injury claims and professed to havelost wages because of the collisions (despite evidence to thecontrary).

As of now, all suspects in the case have been charged with morethan 100 felony counts for violating section 1234.45 of theinsurance code and for multiple felony counts for violations ofgrand theft and burglary. In addition to corralling varioussuspects in the Bay area, authorities took an out-of-state suspectinto custody, who will be extradited to Calif. That person, alongwith the others, will face prosecution by the Contra Costa Countydistrict attorney.

The criminal indictment is believed to be the largest of itskind in the Calif. county's history. Jones believes the operationwill send a message of caution to others considering committinginsurance scams.

“The sheer magnitude of this case demonstrates the extremedegree of conspiratorial lengths that these suspects colluded toperpetrate,” he said in a press release.

“In these tough economic times, legitimate law-abidingbusinesses and consumers need real protection from those seeking toscam the system, which can lead to higher insurance rates andpremiums that many can't afford,” added Contra Costa CountyDistrict Attorney Mark Peterson. “We hope that inter-agencycooperation between law enforcement teams will lead to even moresuccessful operations like the one today.”

Source: www.insurance.ca.gov.