32 Arrested in Motorcycle Fraud Scheme

More than 30 outlaw motorcycle gang members were arrested Monday in four Southern California counties on suspicion of bilking insurance companies out of millions of dollars by claiming the thefts of exotic motorcycles, authorities announced.

The suspects typically acquired motorcycles--usually Harley-Davidsons--from co-conspirators, filed stolen-vehicle insurance claims, received the insurance payouts, and then changed the motorcycles’ identification numbers and resold them on the open market, authorities said.

In other cases, the suspects stole motorcycles outright, changed their identification numbers to match ones previously shipped to Japan--where identification numbers are not required--and then sold the stolen motorcycles with new numbers to unsuspecting customers, investigators said.

Thirty-five people were indicted by the Riverside County criminal grand jury on 125 felony counts, and most of them were arrested Monday in a series of early morning raids in Los Angeles, Riverside, San Bernardino and San Diego counties, investigators said.

The suspects were being held on $2 million bail each.

The indictments were sealed because some suspects were still at large, and the names of all the suspects will not be released until their arraignments, said Jay Orr, supervising deputy district attorney in Riverside.

The nine-month undercover investigation, led by the Riverside County Sheriff’s Department, “is one of the largest attacks on racketeering motorcycle clubs in Southern California in recent memory,” Orr said.

Among those arrested, he said, were national or local chapter officers of the Hessians, Vagos and Mongols motorcycle clubs, as well as “associates” of the Hells Angels.

The sealed indictment alleged 35 counts of receiving or possessing stolen property, 30 counts of vehicle theft, 15 counts of altering vehicle identification numbers, three counts of assault with a deadly weapon and one count each of robbery, kidnapping and torture. There were also accusations of operating “chop shops” where vehicles were dismantled and altered, and selling and transporting methamphetamine.

Details of the allegations were not disclosed.

“A widespread network of outlaw bikers and their associates, covering much of Southern California, worked together to acquire expensive Harley-Davidson motorcycles, either by theft or by conspiring with their legal owners to stage the theft of the vehicles, in order to collect the insurance money,” Orr said.

The suspects then disguised the stolen motorcycles by switching the vehicle identification numbers with properly registered ones that had been previously shipped to Japan, or by replacing the motorcycle frames or engine cases with ones with new numbers, Orr said.

The renumbered motorcycles would then be sold as Harley-Davidsons or other customized motorcycles for as much as 10 times the original value, Orr said.

The estimated loss to insurance companies, Orr said, exceeds $4 million.

Riverside County Dist. Atty. Grover Trask said the operation was remarkable because of the investigators’ success in infiltrating the clubs and “breaking the code of silence.”

Undercover agents also operated their own chop shop to track the flow of stolen motorcycle parts, Trask said. “We found out how they were doing business,” Trask said.

Sixteen bank accounts have been frozen and two prosecutors have been assigned to what is expected to be a months-long follow-up investigation, Trask said.

In addition to arresting 32 of the 35 suspects, the so-called Operation Outlaw task force--with 400 law officers from 21 county and state agencies--served search warrants at more than 40 locations throughout Southern California.

Pasadena, Pomona, Azusa, El Monte, West Covina, Glendora, Rosemead and Shadow Hills in Los Angeles County and Yorba Linda and Santa Ana Heights in Orange County were among the areas where warrants were served.

One typical business searched Monday was Custom Cycle Creations in the Riverside suburb of Rubidoux, where investigators found a dozen motorcycles in various states of reconditioning, some reduced to their frames. A preliminary search found at least two examples of vehicle identification numbers apparently having been rubbed off engine cases.

Behind a door in the business’ office was a loaded shotgun and, above it, a sign: “Parking for Harleys Only. Violators Will Be Shot.”