Five locals charged with insurance fraud

December 5, 2017

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Five South Valley men, including two from Gilroy and two from San Martin, were charged with running a $235,948 insurance scam where they faked 18 car accidents and billed insurance companies for work that was never done.
Brothers Angel Topete, 36, and Joshua Topete, 34, both of San Martin, Eric Harrison, 33, and Gregory Carl Harrison, 53, both of Gilroy, as well as Hugo Lua, 39, of Hollister, were also arrested in connection with the auto insurance scam, which involved 22 people, 18 of whom have been arrested. They will appear in Morgan Hill’s Superior Court this week.
Most were friends or family members and at least one is charged in a previous fraud ring.
Investigators were tipped off to the ring by an insurance investigator with Farmer’s Insurance, who noticed some of the same vehicles were involved in accidents repeatedly.
As part of the scam, members of the ring would buy cheap cars that had been salvaged and damage them. Many times they bought insurance policies weeks before they reported the accidents, according to Deputy District Attorney Charlotte Chang, who has been prosecuting insurance fraud for the county for a decade.
They would then fix the cars cheaply at body shops involved in the ring, or not fix them at all and just collect the money, she said. The highest amount paid for a car’s fake damage was $37,723 and the cars included BMWs and Cadillacs.
The group had made 18 claims on fake collisions between 2012 and 2015.
The Farmer’s investigator noticed that the father of one of the claimants filed the exact same claim on the same car at the same body shop months apart. Some of the claims said the drivers were parked and damaged by hit-and-run drivers.
“You get greedy,” said Chang. “You do it once and you don’t get caught. You do it four to six times and eventually someone will catch on.”
She said the ring’s leaders enticed friends and family to join in, claiming they would never get caught or punished.
In some cases, suspects purchased insurance policies and then intentionally crashed cars into one or more vehicles owned by co-conspirators. All parties then filed fraudulent claims, which resulted in insurers paying the full value of the vehicles after they were declared a total loss.
“When false claims are paid out by insurance, losses are passed along to consumers who pay hard-earned premiums to cover real accidents,” Chang said.
It was hard to break the ring, she said, because the people were related and didn’t want to talk.
Over the past two years a county auto insurance fraud unit has prosecuted four large rings made up of 33 suspects, who billed for $1 million in false accidents, Chang said.
One of the defendants, Gerardo Ivan Espinoza Martinez, who owns Auto Parts USA, was arrested on an earlier case, which hasn’t yet come to trial and is charged again on this one.
“This large ring of family and friends allegedly conspired to defraud insurers out of hundreds of thousands of dollars,” said Insurance Commissioner Dave Jones. “The cost of insurance fraud is shouldered by consumers who pay higher premiums when insurers pass along their losses. Working with our task force partners is critical in combating the multi-billion dollar problem of insurance fraud.”
Silicon Valley Automobile Insurance Fraud Task Force investigators initially received information about the crime ring in 2015. The two-year investigation revealed the Topete brothers conspired with family, friends and associates who posed as insurance consumers and filed fraudulent claims with six different insurers for collisions that were either staged or never occurred at all.
Some of the cars and two San Jose auto shops—Espinosa Body Shop and Auto Parts USA—were used repeatedly in the scams.
To date, 18 of the 22 suspects have been arrested and booked. Some of the defendants will be arraigned in the South County Courthouse in Morgan Hill this week on insurance fraud charges. They face jail time and will have to pay restitution to the victim insurance companies, if convicted.
The Silicon Valley Automobile Insurance Fraud Task Force, which is comprised of investigators from the California Department of Insurance Fraud Division, the Santa Clara County District Attorney’s Office and the California Highway Patrol, investigates crimes involving organized automobile insurance fraud in Santa Clara County.
If convicted the suspects could face a maximum of five years in prison for each count and will also have to make restitution to the insurance companies.
Those arrested in this scheme are: