$1-Million Insurance Scam Nets Man 20 Years

The leader of a San Francisco Bay Area gang that burned homes, wrecked cars and committed mail fraud in a $1-million insurance scam was sentenced to 20 years in federal prison Friday.

U.S. District Judge John Coughenour gave Leroy Knockum, 39, of Oakland, the maximum penalty possible for his guilty plea to one count of racketeering.

LaMarr Mims and Andre Nibs, two other members of the gang known as “The Family,” have already received 10-year prison sentences and a fourth member, Laurel Hedley, received an 18-month prison term. Mims and Nibs also have been ordered to pay restitution to defrauded insurance companys.

Off the Streets

Assistant U.S. Atty. Portia Moore said any time Knockum serves in prison “is a guarantee that he is off the street and not using other people for his schemes.”

The federal prosecutor’s office had said that Knockum, in his quest for receiving insurance money, had prostitutes pose as victims of accidents or arsons to collect the benefits.

Although Knockum specifically denied the allegation, the prosecutor’s office incorporated the charge of white slavery in the racketeering case filed against him in Seattle.

In addition to the 20-year prison sentence, Coughenour ordered Knockum to reimburse the estimated $600,000 he illegally received from insurance companies and forfeit all the property--expensive cars and homes in Oakland and Seattle--he purchased with the money.

Estimating Value

“We are still trying to estimate the value of the forfeited property,” Moore said, “but it won’t come anywhere close to the money he received illegally.”

She said The Family operated in Oakland, Seattle and Portland but prosecutors were never able to uncover the reason why the California gang chose the Northwest cities as their secondary base of operation.

“The Family wasn’t really known to law enforcement officials until investigators from the federal Bureau of Alcohol, Tobacco and Firearms, the Seattle police and Oakland police did a good job of putting together what seemed to be isolated incidents and kept seeing the same names pop up,” Moore said.

According to court documents, the gang would take out multiple insurance policies for a Cadillac, then wreck it and collect on the accident several times over.

Burned Homes, Trailer

In another scam, The Family members burned three houses in Oakland and a trailer home in Seattle to collect on the insurance.

In addition, prosecutors alleged the members engaged in white slavery by inducing women to cross state lines for purposes of prostitution and also were forced to pose as the victims of the fires or accidents.

The court records showed the gang was involved in five arsons, three staged auto accidents and a number of phony vandalism reports over a six-year period--netting its members approximately $1 million in insurance payoffs.