Auto Insurance Fraud Case Reveals Bold Alleged Scams
When investigators got to the bottom of the largest auto insurance fraud case in California history, they found a welter of transactions that were often stunningly dumb.
Hriyer Khachatoorian of Glendale, for example, allegedly took out insurance on his used Jeep Grand Cherokee in August 1995, according to his indictment. The following February, he reported it stolen from a street in Santa Ana, and in March he received a check for $10,501 from 20th Century Insurance Co.
But on May 8, 1996, less than two months after being compensated for the car’s theft, Khachatoorian called his insurance company again, the indictment alleges, to report that his stolen Jeep had collided with another car in Glendale. Khachatoorian received a check for $3,122.
Khachatoorian, indicted on conspiracy and insurance fraud charges, is one of 86 people accused of trying to bilk more than $30 million from 21 insurance companies by filing phony accident and theft claims.
Most were arrested early Wednesday morning in a sweep by police and fraud investigators and will be arraigned in two groups beginning Thursday. Some were released on their own recognizance while others, attempting to arrange bail, were still in custody on Friday. A few remain at large.
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Led by the California Department of Insurance, 15 agencies and police departments spent two years untangling what they see as a massive conspiracy in which the accused employed a variety of schemes to defraud the insurance carriers.
They found instances in which luxury cars allegedly were smashed with sledgehammers, then repaired at shops in which alleged members of the fraud ring had a financial interest.
When the time came to finally shut the ring down, prosecutors and insurance investigators called in the state’s top auto crash experts, the California Highway Patrol’s MAIT, to unmask the accident claims as phonies.
For months, veterans from the CHP’s highly respected--though bureaucratic-sounding--Multidisciplinary Accident Investigation Team pored over hundreds of photographs and files from purported auto collisions.
The MAIT members are “just excellent,” said Dave Petrelli, supervisor of special investigations for State Farm Insurance Cos., the nation’s largest home and auto insurer. “They do a lot to deter not only auto theft but insurance fraud in general.”
Added Kenneth Chinn, the senior deputy district attorney who presented the case to the grand jury, “We’re grateful to the CHP for making them available because they filled in some important pieces of the puzzle for us.”
The team was formed in 1978 after a school bus from Yuba City overturned on a bridge in Contra Costa County in Northern California, killing 28 high school students and a chaperon on their way to a choir competition. It was the worst bus crash in U.S. history at the time.
“Because of the magnitude and high-profile nature of the collision, the CHP found that it [couldn’t simply] . . . investigate in a normal manner” and needed to develop greater expertise, Sgt. Jim Waterbury said, explaining the team’s origins.
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Burrowing into an enormous fraud case was a slightly new experience for the elite team, whose principal mission is determining the causes of multiple-fatality crashes and recommending ways to prevent them.
Almost immediately after officers began sifting through collision photos, said Waterbury, a 15-year member of the team, “it was apparent this was a fraud case.”
Waterbury runs the CHP’s border division unit in San Diego, which oversees Orange County. Officers Jeff Perez, Elaine Hudson and George Luce were assigned to help nail the case down.
Perez, a veteran investigator of more than 750 automobile crashes before he joined the team, spent six weeks last fall testifying before the grand jury.
Building the cases often was tedious work, Perez said. It often required studying old and occasionally black-and-white photographs to see whether the statements made in accident claims were consistent with the evidence.
“We kept seeing the same kinds of inconsistencies,” Perez said, such as paint not matching on cars that supposedly had collided, areas of damage not corresponding to the height of the vehicles and claims in which heavier vehicles purportedly fared worse in crashes with lighter cars.
Perez saw repeated claims for the same car, with identical damage each time. From one accident claim until another, Perez said, some of the cars “were never even moved, yet damage was added. It was obvious something wasn’t right there.”
That was equally plain to criminal investigators who studied the claims filed with insurance companies by members of the group. For one thing, many of them appeared to have in common a relationship or dealings with Amir Nateghi, a Mission Viejo man who once owned a Garden Grove auto repair shop called Panther Auto Center.
As the ring’s alleged mastermind, Nateghi was named in 127 fraud-related counts, including 35 counts of conspiracy. Prosecutors sought bail of $915,000.
One of the indictments describes Nateghi’s alleged central role. On April 1, 1994, Jose L. Macias reported to Sterling Casualty Insurance of Newport Beach that his 1993 Toyota had collided with a 1991 Nissan belonging to Younes Nateghi, the brother of Amir Nateghi. Younes Nateghi was paid $14,872 for damage to his car.
Two days later, according to the indictment, Amir Nateghi wrote a check for $433 and noted on it that the money was intended “to pay off Jose Macias.”
Several months later, on Oct. 8, 1994, according to the indictment, Amir Nateghi, using the alias Allen Russell, wrote a $1,000 check to Jose Macias.
Although working the fraud case was a change of routine, Waterbury said, “it was gratifying to see the culmination of all our efforts. But it was also frustrating because we know it was only one needle in the haystack.”
