"Our fraud investigators have prevented an additional $2.5 million in fake claims as a result of this investigation and arrests," said Insurance Commissioner John Garamendi. "This staged accident ring was busted with the assistance from the multi-state fraud divisions of several municipalities. We are proud to report that these elaborate schemes have been discovered and eliminated."
Doctor Paul Lee Guidry, Jr., 41, of Los Angeles, Attorneys Curtis Mitchell Shaw, 61, of Beverly Hills, and Keith Darran Washington, 41, of Reseda all pleaded guilty in July for their participation in the fraud ring. Dr. Guidry pleaded guilty to one count of Penal Code Section 549 (false or fraudulent claims against insurers; solicitation, acceptance or referral of business) and was ordered to pay a $1,000 fine, $100 restitution, serve 100 hours of community service, and 24 months of summary probation for his involvement in the well-organized fraud ring.
Shaw, who resigned from the State Bar of California when he was charged in 2003, pleaded guilty to one count of conspiracy to commit insurance fraud, three counts of filing false insurance claims and one count of failing to file state tax returns from 1998 to 2000. He may be ordered to pay up to a $10,000 fine, serve two to three years in state prison, and pay $1.5 million restitution to the victimized insurance companies. Sentencing for Shaw is scheduled for October.
Washington, who still practices law, pleaded guilty to one count of Penal Code Section 549, (false or fraudulent claims against insurers; solicitation, acceptance or referral of business). He was scheduled to be sentenced on September 15, 2005, facing a possible year in county jail, and will be ordered to make restitution of $364,000.
The other 18 professional defendants in the case including: former attorney Linda Gudz, Ahmed Entezami, D.C., Gregory Ball, D.C., Marc H.P. Nadreau, D.C., and Adrienne Alston, M.D., pleaded guilty and are either serving sentences or awaiting sentencing.
According to investigators, this fraud ring consisted of licensed medical doctors (one was previously convicted for insurance fraud), licensed chiropractors, attorneys, several office employees, and other co-conspirators from Los Angeles and Phoenix. The ring netted approximately $2.5 million by submitting phony medical bills and reports from 1993-2000 to numerous insurance companies. Fraud-ulent documents were created and provided by the doctors and chiropractors employed by the law office. More than 110 collisions were identified from the legal files seized from the Law Offices of Curtis M. Shaw & Keith D. Washington.
The ring utilized rental vehicles using a driver from Phoenix to stage the traffic collisions primarily in the San Fernando Valley. During the course of the investigation, Fraud Division investigators learned that the law office was managed by two non-attorney brothers, Ahmed Khan and Munir Sharif. The brothers leased the law office and medical clinic in agreement with the licensed professionals and jointly hired the staff to run the operation.
Investigators say the scheme consisted of Ahmed Khan and Munir Sharif traveling frequently to Phoenix to recruit drivers to stage the rear-end collision with the rental vehicles containing three to four passengers. The insurance policies were recently obtained and the vehicles were rented mainly from Burbank, LAX and Van Nuys airports just hours before the ring staged the collisions. Khan and Sharif would pay for the insurance policies, travel expenses to California, hotel accommodations and the cost of the rental vehicle.
The drivers of the rental vehicle were instructed to purchase additional insurance called Med-Pay or PAI (Personal Accident Insurance) in order to collect additional payments for the phony injuries. The evidence revealed the participants in the staged collisions never received medical treatment, however the medical reports and bills submitted to the insurance companies by the law office of Curtis M. Shaw and Keith D. Washington indicated the participants received physical therapy multiple times.
This investigation was completed with the assistance of the Arizona Department of Insurance, Fraud Division, the California Highway Patrol, the National Insurance Crime Bureau, the Franchise Tax Board and the Los Angeles County District Attorney's Office, Auto Fraud Division.
LA woman scams State Farm
Paula Serese Teate, 35, pleaded guilty in Los Angeles Superior Court to one felony count of insurance fraud and was sentenced to serve two years in state prison and ordered to pay $6,500 in restitution to State Farm Insurance Company following an investigation by the CDI. She was also given a $200 parole revocation fine, a $200 fine and ordered to submit a DNA sample.
"When a person defrauds the system - acting solely on greed, it is an added and unnecessary cost that hurts all businesses in California," said Garamendi. "Our department is particularly disappointed when people try to rip-off insurance companies for personal gain. My investigators worked closely with the businesses involved to end this scam, and we won't stop there in our efforts against insurance fraud."
According to CDI investigators, Teate, a public relations director for Roscoe's House of Chicken & Waffles filed a bogus $9,616 claim with State Farm Insurance Company, in Culver City. Teate purportedly placed after-market custom tires and chrome wheels on her vehicle and claimed it was stolen from the parking lot of Roscoe's and subsequently destroyed by fire.
However, the salesperson at the store Teate claims to have purchased the after- market accessories stated he gave her a written quote only. The investigation showed Teate altered the quote to look like she bought the tires and chrome wheels when in fact she did not. Additionally, during the post prosecution phase of the investigation, it was revealed that the OZ Comanche wheels and tires she purportedly purchased in September 1999 hadn't even been manufactured yet.
Investigators say Teate made inconsistent statements involving the alleged theft of her 1999 Cadillac Escalade, the purchase of the after-market custom tires, chrome wheels, her criminal and civil history and financial status. Investigators also found Teate was delinquent in her vehicle lease payment and the lien-holder was in the process of repossessing her vehicle.
3 marines charged with fraud
Three United States Marines based out of 29 Palms have entered pleas of not guilty to felony charges of insurance fraud and a misdemeanor count of filing a false police report, announced the California DOI.
James Joseph Quiroga, 22, was charged with two counts of automobile insurance fraud and filing a false police report. Nicholas Vega Jr. and Shawn Paul Burrel, both 21, were both charged with one count of automobile insurance fraud and one count of filing a false police report. All three defendants voluntarily surrendered themselves to the Joshua Tree District Superior Court.
The California Department of In-surance Fraud Division's Inland Empire Urban Auto Fraud Task Force conducted the investigation and the San Bernardino County District Attorney's Auto Fraud Unit is prosecuting the case.
Investigators explained that the charges are based upon incidents that happened in October and November of 2004. First, an automobile insurance claim was submitted to Progressive Insurance for an auto collision that occurred before the policy was acquired. Additionally, subsequent attempts were made claiming that the vehicle had been stolen and vandalized, when in fact the defendants had allegedly concealed and damaged the car themselves. Although no money was paid by Progressive, its exposure to losses could have been approximately $20,000.
"All of us in society must abide by the laws that protect us from fraud, or else face the consequences," Garamendi stated. "These arrests send a strong message that this department's fight against crime extends to anyone who would break the law, regardless of their position."