Spat Breaks Up Suspected Car Insurance Scam

It was a bitter marital dispute with a child involved. Each spouse threatened to turn the other in to authorities. Finally, one did, leading both to confess, and the scam unraveled.

That was the break that led to the arrest Tuesday of 28 alleged members of an auto collision insurance fraud ring in the first phase of a major state anti-fraud operation that Insurance Commissioner Chuck Quackenbush called the biggest in his department’s history.

Seventeen of those accused are still at large. Authorities believe that more than 200 suspects will eventually be charged in “Operation MedPay,” a six-month probe of a ring of attorneys and chiropractors accused of orchestrating phony fender-benders and filing up to $5 million in false claims.

“Fraud rings operating here in California should heed this warning: We know who you are and where you are,” Quackenbush promised. “We will find you and you will go to prison.”

Officials said the 45 named in warrants staged six of the ring’s 55 false “accidents,” all in Van Nuys. Those arrested face felony charges including insurance fraud, conspiracy, grand theft, extortion and forgery. If convicted, they could each spend up to 10 years in prison.

Some could get off with probation, “depending if they’re willing to let us put our tentacles into other rings,” said Harvey Giss, a Los Angeles County deputy district attorney. “This is a very pervasive crime that has its tentacles everywhere in Southern California,” he said.

Insurance fraud costs California $4 billion a year--about $200 per household in inflated insurance bills, according to Quackenbush. He said current insurance rates could be slashed by a third if authorities could contain the fraud.

“This is robbery of our consumers as sure as if they had reached into their back pockets and grabbed their wallets,” Quackenbush said at a news conference announcing the arrests.

Insurance agents and Los Angeles County sheriff’s deputies swooped down on the suspects at dawn Tuesday, according to department spokeswoman Dana Spurrier.

Among those arrested early Tuesday were two chiropractors, Richard Monoson of Woodland Hills and Keith Ohanesian of Sherman Oaks, who are believed to be ringleaders of the scam, she said. Those who are still fugitives include a San Fernando attorney who allegedly pursued some of the fraudulent claims, she said.

Typically, participants in the ring bought insurance policies with ample medical coverage and then staged collisions a few months later, officials said.

Most were back-alley wrecks staged “in the dead of night,” often without the appearance of the co-conspirators who later claim medical injuries, said Dick Ross, a deputy commissioner of the California Department of Insurance. The chiropractors and lawyers are “at the top of the food chain” of the ring, he said.

The rings are becoming more dangerous as more criminals are drawn to the lucrative racket, Quackenbush said.

Several years ago three innocent motorists burned to death on the Long Beach Freeway in an accident staged by another fraud ring. Those responsible are now in prison, officials said.

In the home of one suspect arrested Tuesday, authorities found a weapon they believe was used in a murder.

“This is becoming a very dangerous crime,” Quackenbush said.

Officials said they have operatives inside the rings and expect to have charges for the remaining suspects soon.

“This should send a message this is not a crime people can get away with,” said Ross. “It’s all a question of illegal greed. And this greed is taking money from the honest law-abiding policyholders in California.”

Officials refused to provide additional details on the warring couple who brought the insurance fraud’s house of cards tumbling down. But Quackenbush said both were involved in the scam and both ended up providing authorities with the critical information.