Cases closed in California fraud sweep : In June 2010, the Orange County District Attorney's (OCDA) office rounded up 53 California repair shop owners and other employees in a sweeping anti-fraud sting. Nine months later, the bulk of those cases have been closed, with divergent outcomes for many of those who were busted for adding pre-existing damage to estimates that were destined for insurance companies.
The defendants were arrested as part of Operation Straight Body, a five-month undercover operation conducted by the OCDA's Automobile Insurance Fraud Unit. Among those arrested were 24 shop owners, including Richard Evans of Huntington Beach Bodyworks, who was featured on the Speed Channel program "Chop Cut Rebuild."
The OCDA conducted 152 undercover operations in Orange County from January to May 2010, targeting shops that had been identified by the California Bureau of Automotive Repair (BAR) as having consumer complaints filed against them in the last three years. Additional shops included those referred by the National Insurance Crime Bureau (NICB), along with independent auto repair facilities that were not registered with the BAR.
Of the 53 arrested, 36 accepted an offer from the OCDA to have their charges reduced to a misdemeanor in exchange for paying a $1,000 fine and attending a fraud prevention class held by the California BAR and the OCDA's office. Provided they complied with the terms of the deal, their cases have been dismissed. An additional two cases destined for jury trails were dismissed by the court.
But another dozen or so defendants held out and had their charges dismissed on the merits. Another shop owner took his case to a jury and won.
In the sting operation, an OCDA investigator would bring a vehicle (either a Ford Expedition or Mercedes Benz) to the shop asking for a written estimate to repair damage caused by a recent collision. During the inspection, the undercover investigator would note that the vehicle also had some existing damage (either a missing bumper or a damaged fender, depending on the case), and ask if those repairs could be added to the estimate. They would then ask that the estimate be sent to an out-of-state insurance company called Mendota.
While the bulk of the repairers targeted in the sting declined to provide such an estimate, the OCDA says that those charged had agreed to provide an estimate with the knowledge that it would be used to commit insurance fraud.
The repairers originally faced felony fraud charges that carried a maximum sentence of five years in state prison.
The repairers who declined to accept the OCDA's deal, though, claimed that these estimates could not have been used fraudulently.
"If you called an insurance company, they would never have paid on just that estimate. They would have sent out their own adjuster, because these had more than $2,500 worth of damage," says Dyke Huish, a criminal defense attorney who represented several of the exonerated repairers, including Evans.
According to Huish, the estimates did not constitute fraud because there was never any claim made to the insurance company.
"The critical element is that what they did was not really a crime," Huish says. "Because they just gave estimates. They were not submitting false reports to the insurance company. They were not submitting false claims, they weren't claiming work that wasn't done. They were just asked to give an estimate by a guy who showed up and said, 'you know what, I didn't have a bumper on it. Can you give me an estimate?'"
Not guilty
Only one case actually made it all the way through a jury trial: that of Mike Rocha, owner of Placentia Auto Body, a small family-owned shop in Placentia, Calif. He, too, was approached by the "owner" of the Ford Expedition.
"I told him, 'You don't need an estimate, you need to choose a shop and let the insurance company know,'" Rocha says. When the owner persisted that he just needed two estimates to fax to the insurance company, Rocha told him that "it doesn't matter if I write an estimate, they won't honor it. They have an independent writer that comes to the body shop."
After going back and forth several times, Rocha finally offered to write an estimate that included used parts, noting that the subframe of the vehicle would need replaced. He also told the owner that the vehicle was likely going to be totaled.
"So I wrote an estimate with those parts, and said, 'Well, here's the estimate, but this is not going to fly with the insurance company,'" Rocha says.
After his initial arrest and release, Rocha hired an attorney and showed him the original paperwork. "I showed him a copy of the estimate," Rocha says. "There was no policy number, no insurance number, no claim number. Just a plain estimate."
At this point, Rocha was offered the same deal as the other defendants: to pay a fine and attend the BAR class in exchange for a dismissal. Because his attorney felt he had a strong enough case, Rocha decided to plead not guilty and move forward to the trial. A jury ultimately found him not guilty.
Vindication in court cost him $5,000 and a lot of time away from his shop. "I think I did the right thing," Rocha says. "I beat them. My record stays clean."
"It was devastating for my family and for my kids," Rocha continues. "I coach youth soccer. I've been involved as a volunteer at my church, and for my family to see all this and to see that I was arrested for something that they know I couldn't do – it was a big blow for them."
According to Huish, a number of defendants wound up being fired in the aftermath of the operation, including several who had their charges dismissed. "I think in the end the saddest thing is that many [people] lost their jobs over this, only to see their cases dismissed," Huish says. "That's really tragic and not what we want our government to be doing. We don't want the government inventing new ways to turn people into criminals."
The OCDA's office maintains that it accomplished exactly what it set out to do.
"The primary goal of the OCDA's office in pursuing this case was to protect the community and protect consumers, and we feel that it's been successful based on the results in terms of the completion of these classes by the defendants, and also based on the fact that the BAR has reported a significant drop in consumer complaints involving body shops since Operation Straight Body," says Farrah Emami, spokesperson for the OCDA’s office.
Lesson learned
While Rocha admits that he should have taken a harder line with the undercover customer, he is upset with the approach that the OCDA took in conducting the sting. "When I was talking to the different people who got arrested, a lot of them rejected the [investigator] that came in for an estimate the first time, and he just kept pounding them for it.
"The economy is not very good, and on top of that for them come in and drain you like this, it just puts you out of business," Rocha says. "They ruin your reputation, they play with your feelings, your family's feelings. They step on you. They don't care."
If the OCDA had hoped to teach shop owners a lesson, however, Rocha says they certainly succeeded. He's put up a sign in his shop letting customers know that he will not provide a written estimate without a claim number, will not waive deductibles and that unrelated damage will not be included in any estimate.
"That's the way I'm protecting myself," Rocha says. "That's what I told the jury. As soon as I walk in the door at 8 a.m., I'm a big target. People come in and try to get you to do something wrong. I'm definitely going to be more careful."
