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What began as a seemingly unremarkable vandalism claim involving a luxury sedan has spawned felony charges alleging insurance fraud and at least two staged auto accidents. Now each of the eight people arrested in connection will face hard time—up to 5 years in jail—and individual fines of $50,000, if convicted of the charges before them.

Suren Grigorian, 45, reported that his 2007 Mercedes Benz had been vandalized while parked in the garage of his Burbank, Calif. residence. Grigorian then filed a claim for which his insurer paid $20,000. Suspicion was later aroused in Dec. 2010 when an informant told investigators at the California Division of Insurance (CDI) that it was Grigorian who inflicted the damage, rather than an anonymous perpetrator.

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