Fraud News: Accident Schemes on Both Coasts, Agent’s Workers’ Comp Scam

The owner of a San Jose, Calif., body shop, his wife, and sixteen others have been charged with an insurance fraud scam during which they staged 15 car accidents to collect about $150,000 in fraudulent claims.

The ring intentionally damaged cars, using some models several times. One aging Pontiac was used in three separate “accidents” over a single year. The defendants face felony fraud charges and could face prison time, if convicted.

Gerardo Ivan Espinosa Martinez, 31, who owns Espinosa Body Shop in San Jose – alone
faces 15 counts.

Espinosa Body Shop was involved in 7 of the 15 different false claims.

With some variations, the scam operated like this: a suspect would purchase an insurance policy shortly before the alleged accident. Then suspects would intentionally damage or crash the car into one to two other vehicles, owned by co-conspirators. The owners of the vehicles would contact the insurance company and report the same details of the “accident”.

In most cases, the vehicles were written off as totaled by the insurance companies who paid the owners the full value of their cars. Many of the vehicles were used in the scheme numerous times.

An insurance company investigator grew suspicious when the claimant of such a crash turned out to be Martinez, the owner of the body shop where the other party in the accident reported she took her car to be repaired. After the insurance company reported suspicious circumstances involving damages on vehicles that did not match, they contacted National Insurance Crime Bureau (NICB), who referred the case to the Silicon Valley Auto Insurance Fraud Task Force, comprised of the California Department of
Insurance, California Highway Patrol, and the Santa Clara County District Attorney’s Office.

The lead investigators from C.H.P. and the District Attorney’s Office uncovered the pattern of scams with this ring after noticing that numerous auto crash claims involved the same vehicles/suspects and insurance policies that were bought shortly before the alleged “accidents”.

Two brothers who organized a scheme to recruit motor vehicle accident victims as patients for chiropractic facilities they controlled have been sentenced to more than six years in state prison.

The sentences imposed last month also require that 54-year-old Anhuar Bandy and his 55-year-old brother, Karim Bandy, each pay a $100,000 fine and $50,000 reimbursement to insurance companies that paid thousands of fraudulent claims over a four-year period.

Their sentences were made public Monday.

The brothers, who live in Colts Neck, pleaded guilty in July 2015 to insurance fraud.

Authorities say the brothers paid “runners” up to $1,000 for each patient they could bring in for treatment. The runners obtained police reports under the state’s public records law and visited patients’ homes to urge them to get care.

Authorities say neither brother is a licensed chiropractor or medical doctor.

A Lake Stevens, Wash., man who claimed he was too disabled to work at the same time he was running his own insurance agency has been charged with felony theft. James C. Kooy pleaded not guilty to first-degree theft last week in Snohomish County Superior Court. His trial is scheduled for Sept. 28.

The Washington Attorney General filed the charge based on an investigation by the Washington State Department of Labor & Industries (L&I). L&I administers the workers’ compensation system that provides medical, vocational and other services to help injured workers heal and return to work.

Kooy filed several injury claims with L&I over the years, including one in January 2008 for a knee injury he suffered while working as a heavy equipment operator. Two years later, he filed a claim for a repetitive-motion injury to his shoulders and hands in the same job. He began receiving wage-replacement checks from L&I in 2008.

According to the criminal charges, in June 2010, Kooy opened By the Lake Insurance Inc. in Lake Stevens, selling policies through a national insurance company. He listed himself as the company’s president, registered agent and 50-percent owner.

His lawyer notified L&I that Kooy had started the business, and L&I stopped providing the wage replacement benefits. The department later reinstated the benefits after the lawyer said Kooy discovered he was unable to work, and was selling the business.

In 2015, the department investigated Kooy after learning that he never sold the company and was likely working. The investigation found that Kooy had actually continued to operate the insurance business, which generated more than $800,000 in revenue from mid-2010 to mid-2015.

According to the criminal charges, Kooy sold insurance policies; personally communicated with clients, vendors and marketing companies; and appeared at sales and corporate meetings.

Meanwhile, he failed to tell his physicians and vocational counselor he was working, and falsely declared on L&I forms that he was not working, charging papers said. From August 2010 to April 2015, he received more than $233,000 in wage replacement payments.