Twenty-five Suspects Indicted on Fraud by California Department of Insurance

Twenty-five suspects in connection with a major insurance fraud investigation dubbed “Operation Cashout” have been indicted, according to the California Department of Insurance. Twenty suspects were arrested Thursday morning, and five suspects remain outstanding.

The Urban Organized Auto Fraud Task Force consists of investigators from the California Department of Insurance’s Fraud Division, the Santa Clara County District Attorney’s Office and the California Highway Patrol.

All 25 suspects were charged with felony insurance fraud. Khai Van Nhin, 39, of San Jose, the main suspect and orchestrator of the scheme, was charged with 14 felony counts of insurance fraud and two felony counts of forgery. Many of the suspects have been arrested this morning by task force investigators.

“Operation Cashout” involved a ring of suspects who conspired to report auto accidents that never occurred to file false insurance claims, CDI said. The suspects would typically claim they were driving on a freeway when another vehicle changed lanes striking the suspect’s car, forcing him or her into a guard rail. Both vehicles reportedly involved in the claim were usually owned and driven by the ring members. They would file false vehicle damage claims and “cash out” the settlement, thereby taking the money but not repairing the vehicle. They would then use the same damaged vehicle to make repetitive false claims with different insurance companies. Often, the driver and passengers would also submit false bodily injury claims as part of the phantom accidents in order to obtain additional insurance proceeds, CDI said.

The felony charges stem from 22 phantom accidents involving 12 cars. Various insurance companies became suspicious after noting some suspects were using the same addresses and vehicles in claims dating from 2000 through August 2005. This fraud ring was brought to the attention of the task force by Farmers Insurance, State Farm and Safeco Insurance companies. The charged claims involved approximately $400,000 in insurance payments.

The indictment was returned by the grand jury after the presentation of more than 50 witnesses including individuals from the Special Investigative Units (SIUs) of several insurance companies and attorneys. Warrants remain outstanding for Khai Van Nhin and Mason Son Trans, 38, of San Jose, the other primary suspect. Nhin’s bail was set at $1,000,000. Bail for Trans was set at $75,000. Anyone with information concerning the whereabouts of suspect Nhin and Trans should contact the Department of Insurance’s Fraud Division at 408-779-7200.

Also providing information were the SIUs of State Farm, Progressive, AAA, Hudson, Farmers, Safeco, Qestrel, David Morse and Associates, 21st Century, Western General and Western United Insurance Companies. The Santa Clara County District Attorney’s office is prosecuting the case.

If convicted, Nhin faces a maximum sentence of 18 years in state prison. The other suspects face maximum prison terms ranging from five to 10 years.

Source: CDI