Following an investigation spanning two years, dozens of witness interviews, and examination of thousands of documents, a Calif. Grand Jury has indicted 22 suspects on more than 100 felony counts. California Insurance Commissioner Dave Jones reported that the indictments were handed down by a Contra Costa County, Calif. Grand Jury on Sept. 22, 2011, noting that bail for the suspects had been collectively set at $18,650,000.

Investigators are still unravelling the extent of damage inflicted to the insurance industry as a result of the elaborate scheme, and additional suspects may be detained, pending further developments.

The current loss projection, which encompasses both tangible and potential damage amounts, ranges between $300,000 and $500,000.

Commissioner Jones said Geico, Allstate, State Farm, Balboa, Progressive, Farmers, American Bankers, 21st Century, Travelers, and Unitrin Insurance Carriers, as well as the National Insurance Crime Bureau (NICB) provided crucial information to further the efforts of CDI fraud division detectives and the Calif. Highway Patrol.

In July 2009, CDI fraud detectives began a probe in the San Francisco Bay area, focusing on a group of subjects who were submitting suspicious insurance claims. The claims in question represented a possible smorgasbord of criminal acts and involved vehicle thefts; theft of personal property from vehicles and residences; traffic collisions; personal injury; wage loss; and vandalism. The subjects had filed police reports and submitted documents to various insurers to try to corroborate the claims.

During the course of the investigation, thousands of documents were obtained and examined to reveal that the group appeared to be involved in several insurance fraud schemes. One scheme involved the purchase of jewelry, high-end electronics, and other merchandise. Detectives suspected that once purchased, items were quickly returned to the retailer, but that sales receipts were retained so group members could share the receipts to later present them as evidence of property ownership in numerous insurance claims. Authorities also believe that in certain cases, receipts were altered and used several times by different subjects when filing claims. Other plots entailed signed declarations stating the subjects “owned” property believed to have been stolen. The suspects would then photograph themselves wearing these items to keep the stream of fishy claims flowing.

Moreover, investigators found that subjects may have filed insurance loss claims for alleged traffic collisions, stolen vehicles, and vehicle vandalisms. Allegedly, the incidents repeatedly involved the same exact suspects with the same damage to their vehicles. In select cases, the members subsequently submitted injury claims and professed to have lost wages because of the collisions, despite evidence to the contrary.

The suspects are charged with more than 100 felony counts for violating insurance code, grand theft, and burglary. After corralling subjects in the Bay area, authorities took an out-of-state suspect into custody, who will face extradition and then prosecution by the Contra Costa County district attorney. The criminal indictment is the largest of its kind in the Calif. county's history. “The sheer magnitude of this case demonstrates the extreme degree of conspiratorial lengths these suspects colluded to perpetrate,” Jones said.

Special Reports /

Calif. Authorities Arrest 22 in Organized Fraud Ring

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