The suspects allegedly crashed older-model cars on purpose and collected roughly $500,000 across 28 insurance claims.
A total of 33 people were each charged with felony insurance fraud in the operation dubbed “Coffee Break,” in which the suspects allegedly reported that they accidentally spilled coffee on themselves, lost control of the cars and crashed, Deputy District Attorney Charlotte Chang said.
The suspects allegedly crashed older-model cars on purpose for the sake of collecting insurance and collected roughly $500,000 across 28 claims, she said. Chang said the alleged car crash ring was “very complex and very organized” compared to other cases she has worked on.
The group consists of family members, acquaintances and friends, Chang said. Many of the suspects were recruited from two apartment complexes in San Jose, according to Chang.
Ten of the 14 defendants in custody appeared at the South County Courthouse in Morgan Hill Thursday afternoon, Chang said.
Those suspects were identified as San Jose residents Ramon Lujano Arreguin, 63; Oscar Escobar, 37; Oscar Diaz Landa, 45; Vicente Dominguez Ojeda, 32; Jose Santos Salazar, 52; Jorge Salazar, 53; Irma Rodriguez, 34; Maria Barragan Corral, 34, of Gilroy; Santos Escobar Alvardo, 35, of Redwood City; and Rodolfo Guillen Alvizar, 31, who has no known city of residence.
One of the 10 defendants, Jorge Salazar, was arraigned and pleaded not guilty to a felony count of insurance fraud, according to Chang. His next scheduled court appearance was set for Tuesday.
The other nine defendants still need to be assigned an attorney and are scheduled to be arraigned on Tuesday, Chang said.
The other suspects in custody were identified as San Jose residents Eduardo Ayon, 37; Beatriz Chavez, 34; Rene Partida Delgadillo, 45; and Sergio Diaz Landa, 46, of Stockton, prosecutors said.
A California Highway Patrol investigator discovered the alleged scam in which the suspects bought insurance policies shortly before they filed multiple car crash claims between 2010 and 2012, according to prosecutors. A majority of the accidents happened within Santa Clara County and the suspects allegedly used false names or aliases in the claims, prosecutors said.
In some of the claims, the suspect allegedly bought an auctioned or salvaged car and intentionally crashed it into one or two other cars owned by other people who were also part of the scam, prosecutors said.
The car owners then allegedly claimed losses with insurance companies, which in most cases determined the vehicles, were totaled, according to prosecutors. The owners or lien holders were paid back the full value of the cars, prosecutors said.
The suspects allegedly had some of the cars repaired and crashed them again to collect more money from the insurance companies, according to prosecutors. Each defendant faces up to five years in prison if convicted of the felony insurance fraud count, Chang said.
Detectives from the state Department of Insurance and its Urban Organized Auto Insurance Fraud Task Force, CHP and District Attorney’s Office investigated the case for three years.
Some of the companies that fell victim to the alleged scheme include Farmers Insurance Group, State Farm Mutual Automobile Insurance Company, Infinity Insurance, Progressive Casualty Insurance Company and Personable General Insurance Agency, Chang said.
“Insurance fraud costs are passed along to everyone who pays an insurance automobile policy. These are loses that directly affect us,” she said.
“California is ground zero for staged auto collisions, which costs the insurance industry billions in losses every year,” state Insurance Commissioner Dave Jones said in a statement.
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