Owners and employees of various auto body shops in Shasta and Butte counties were allegedly involved in fraudulent insurance claims — with loss estimates ranging from $2,000 – $4,386 in 19 separate occurrences
BUTTE & SHASTA â€“ Insurance Commissioner John Garamendi today announced the arrests of 19 suspects 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.
During April and May 2006 in Shasta, and during May 2006 in Butte, the California Department of Insurance (CDI)â€™s Fraud Division, with assistance from the Butte and Shasta County District Attorneyâ€™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.
â€œI commend the investigative work of our units and the Butte and ShastaCountyDAâ€™s offices,â€ said Commissioner Garamendi. â€œInsurance fraud is an economic burden upon our entire state and we will continue to work to bring perpetrators to justice.â€
Using information from various sources, including the National Insurance Crime Bureau (NICB), the Bureau of Automotive Repair (BAR), the Butte County District Attorneyâ€™s office, and licensing data and public business directories, officers visited the shops in Butte and ShastaCounties.
In ButteCounty, 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 â€œlegitimateâ€ 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&Dâ€™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 Attorneyâ€™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 Company assisted the CDIâ€™s Fraud Division and the Butte County District Attorneyâ€™s office in this investigation.
In Shasta Countyâ€™s investigation an undercover officer visited 31 body shops, contacting owners and estimators at each place. He told them that he was involved in an auto accident. The officer explained to the auto body shop owners and estimators that his car had damages to the right side as a result of the â€œlegitimateâ€ accident and that this damage would be covered under an existing auto insurance policy. Other damage existed on the left rear bumper which the undercover officer said was unrelated to the car accident and had already been there when he purchased the vehicle. The undercover officer informed the owners/estimators that the pre-existing damage was not covered by the existing auto insurance policy. The undercover officer further asked if it would be possible to combine the insured damage with the uninsured damage and present both to the insurance company under one claim.
The investigation resulted in 13 body shops providing the undercover officer with a fraudulent repair estimate. The Shasta County District Attorneyâ€™s office filed charges in 12 of these incidents.
The fraudulent estimates were for the damage the undercover officer said was not part of the collision and occurred before insurance coverage was in place. The bogus estimates ranged from $2860.62 to $4386.24. In one case, the owner of Mikeâ€™s Body Shop in the city of Anderson allegedly applied sheetrock chalk between the two questioned damages in order to make the claim appear more legitimate. The owner illegally tried to show that both damages occurred at the same time.
The Shasta County District Attorneyâ€™s Office has filed charges against 12 people for felony counts of insurance fraud. Of the 12 suspects, nine are owners and three are employees.
The NICB, BAR and Liberty Mutual Insurance Company assisted CDIâ€™s Fraud Division and the Shasta County District Attorneyâ€™s office in this investigation.