Convicted Lawyer Aids Investigation of Alleged Insurance Fraud Scheme

A lawyer convicted of insurance fraud who now is cooperating with investigators is accelerating a criminal probe into a group of Los Angeles-area lawyers, doctors and health clinics already accused in a civil suit of operating a major traffic accident insurance fraud ring.

The probe, law enforcement sources said, focuses to a large degree on 51 defendants named in a $208-million civil suit filed in 1984 by the Automobile Club of Southern California. The defendants were described in the suit, filed under civil racketeering statutes, as “perhaps the largest accident fraud operation in the nation.”

One of those defendants, attorney Ronald L. Goldman, is providing extensive information about the group’s activities under a plea-bargain arrangement in Los Angeles federal court.

Goldman, 44, pleaded guilty last October to one count of mail fraud in connection with a bogus traffic accident claim, and was sentenced Jan. 12 to five years in prison, a $1,000 fine and 200 hours of community service. However, the prison sentence was converted to probation because of Goldman’s agreement to cooperate in both the criminal investigation and civil case, according to Assistant U.S. Atty. Terree Bowers. Goldman, his wife and two children have been relocated and given new identities under the federal witness protection program.

Ron Warthen, chief fraud investigator for the state Department of Insurance, said investigators are reviewing the allegations in the Auto Club’s civil case. “Goldman is certainly an important witness,” he said.

But attorney Samuel Delug, lead defendant in the case, claimed that Goldman “had absolutely nothing to back up what he said.” Delug is Goldman’s former law partner.

The plea bargain encourages Goldman to lie, Delug said. “If he says the right things, he doesn’t go to jail. If he doesn’t say the right things, he goes to jail,” Delug said.

A 100-page filing by the Auto Club puts Goldman and Delug at the center of a massive fraud ring responsible for hundreds of bogus medical and car insurance claims. The suit alleges that the law firm of Goldman & Delug, formed in 1969, developed a specialty in bogus personal injury claims. The operation over the years mushroomed into a network of legal offices and medical clinics created expressly to commit insurance fraud, the suit claims.

Among the defendants are at least 5 lawyers, 10 medical doctors, 6 chiropractors, and several employees of law offices and medical clinics. Also named are individuals who allegedly recruited people to participate in fraud. Some have already been convicted in criminal cases.

Fraud was perpetrated in many ways, the Auto Club alleges. In some cases, for example, accidents were staged and drivers and passengers made claims for non-existent injuries.

In about 1974, the suit says, Goldman and Delug dissolved their partnership after the State Bar suspended their licenses for one year after an investigation into illegal solicitation of cases. Both continued to perpetrate the fraud, the Auto Club alleges.