19 Suspects Arrested for Auto Body Insurance Fraud

Nineteen suspects were arrested in California for various felony counts of insurance fraud, all resulting from an extensive sting operation in Butte and Shasta counties. Of the 20 suspects, seven individuals were arrested this morning in ButteCounty and 12 individuals in ShastaCounty self-surrendered to the Shasta County Jail and were released on their own recognizance, according to the California Department of Insurance.

During April and May 2006 in Shasta, and during May 2006 in Butte, the CDI Fraud Division, with assistance from the Butte and Shasta County District Attorney’s offices, began an undercover investigation into automobile body shop-related insurance fraud. They unearthed numerous instances of suspected insurance fraud that could have bilked consumers out of tens of thousands of dollars.

Using information from various sources, including the National Insurance Crime Bureau (NICB), the Bureau of Automotive Repair (BAR), the Butte County District Attorney’s office, and licensing data and public business directories, officers visited the shops in Butte and ShastaCounties.

In Butte County, as part of this investigation, an undercover officer visited 38 body shops and spoke with owners and estimators at each shop, saying she had been involved in a car accident. The undercover officer further explained that her car had damage to the left side as a result of the “legitimate” accident and that this damage would be covered under her existing auto insurance policy.

Furthermore, the undercover officer informed the owners and estimators that there was also existing damage on the right front fender which was already present when she purchased the vehicle. The undercover officer asked if it would be possible to combine the insured damage with the uninsured damage as one claim.

The investigation for ButteCounty resulted in eight body shops providing the undercover officer with a fraudulent repair estimate.

The fraudulent estimates included the damage the undercover officer said was not part of the collision and took place before insurance coverage was in place. The estimates ranged from $2,000 to $3,500. In one case, the owner of E&D’s Auto Body and Paint in Chico allegedly told the undercover officer that he would repair the unrelated insurance damage under the current insurance claim and give her $300 cash to have her car repaired at his shop.

The Butte County District Attorney’s Office will likely charge eight suspects with felony counts of insurance fraud. Of the eight, five are owners and three are employees.

The NICB, BAR and Esurance Insurance Co. assisted the CDI’s Fraud Division and the Butte County District Attorney’s office in this investigation.

Source: CDI