Twenty Arrested in Los Angeles for Alleged Insurance Fraud

California Insurance Commissioner John Garamendi announced the early morning arrests of 20 suspects involved in a staged auto collision ring dubbed “Operation Freeway Squat.” The bust targeted a major auto insurance fraud ring that involved staged auto collisions which has terrorized drivers on Southern California freeways for more than two years. As part of the scam, dozens of participants were recruited to participate in a “swoop and squat” staged-collision ring. Hundreds of individuals may have been involved in the ring.

The 20 suspects were arrested on multiple counts of insurance fraud, some of which stemmed from staging vehicle collisions. All suspects were booked into the Los Angeles County Jail with bail amounts ranging from $30,000 to $60,000.

On June 7, the Los Angeles County Auto Insurance Fraud Task Force (AIFTF) – a task force comprised of investigators from the California Department of Insurance’s (CDI) Fraud Division, California Highway Patrol, and L.A. County District Attorney’s office – served a multiple location search warrant which included one chiropractic clinic, one law office, and three residences. The AIFTF also arrested three suspects on June 7: law office administrator Ramon Alfonso Zanoletti, 52; his wife and clinic administrator Magdalena Zanoletti, 51, both from Santa Clarita; and Dr. Clarence E. Franklin, Jr., 73, of Cathedral City. The suspects were arrested for multiple counts of insurance fraud and were all booked into the L.A. County Jail, each with a $1,000,000 bail.

Noting that dozens of people are suspected of participating in this staged auto collision ring, Commissioner Garamendi issued a strong warning. “It is reprehensible to put lives in danger over the reckless pursuit of cash,” said Commissioner Garamendi. “This alleged crime stemmed from greed, pure and simple. Our investigators will examine every scrap of evidence in every case to lock any perpetrators behind bars.”

The AIFTF began the initial investigation into the alleged staged collision ring in March 2004, which triggered multiple search warrants and arrests warrants to be served in December 2004. Evidence from this investigation led AIFTF investigators to discover another suspected insurance fraud ring, which involved the Zanoletti couple and Dr. Clarence E. Franklin Jr., and a medical facility known as Franklin Chiropractic located in Los Angeles.

AIFTF investigators discovered that Franklin Chiropractic was used in the commission of hundreds of instances of insurance fraud – estimated to have cost several insurance companies millions of dollars. First, Ramon Alfonso Zanoletti would allegedly pay “cappers” for staged collision and non-staged collision cases; then, he would obtain legal representation for these claimants/clients due to the fact he worked in an attorney’s office, according to investigators. Next, Zanoletti would refer the claimants/patients who were injured in the collision to Franklin Chiropractic, where his wife Magdalena Zanoletti worked as the clinic administrator. Investigators said Magdalena Zanoletti would instruct patients to sign in for multiple medical treatments which were never received – in some cases, the patients were instructed to sign-in 30 times or more. She would then generate false medical billings and medical reports, according to the investigation. Dr. Clarence E. Franklin would allegedly sign off on the bogus medical reports indicating he had performed numerous types of examinations, treatments, and consultations when in fact he never rendered these services. These reports were then submitted to the patients’ attorneys for the purpose of filing a false insurance claim. The medical billings were used as a tool to increase the potential settlement amount paid by victim insurance companies.

Many of the collision cases connected to Alfonso Zanoletti resemble the profile of the Swoop and Squat and Sudden Stop-types of staged collisions which target innocent motorists, usually in light duty commercial vehicles on the L.A. and Orange County freeways and surface streets. In “Operation Freeway Squat,” the stagers of these collisions would allegedly target a victim, maneuver a squat vehicle in front of the victim, and use another vehicle to swoop or “cut-off” the squat vehicle giving the appearance of a legitimate reason to slam on the brakes. The unsuspecting victim is then unable to stop in time before crashing into the back of the squat vehicle. The stagers would also use block vehicles in the lanes adjacent to the victim in order to prevent the victim from swerving or changing lanes to avoid the collision. In addition to commercial vehicles, these stagers are also known to target expensive vehicles, SUVs and elderly drivers.

It is estimated that these stagers orchestrated more than 125 auto collisions. Although none of the victims was seriously injured, this type of crime can potentially cause financial, physiological and emotional consequences. The Auto Insurance Fraud Task Force was assisted by the Special Investigations Units of the following insurance companies: Mercury Insurance, State Farm, Bristol West/Coast National, USAA, Western United, Viking Insurance, Automobile Club, Hartford Insurance, Geico, Wawanesa, Progressive, Infinity Insurance, the United States Postal Inspection Service and the National Insurance Crime Bureau. The case is being prosecuted by the Los Angeles County District Attorney’s office

Source: CDI