California Department Insurance Investigation Led to Dozens Implicated in Fraud Scheme

A California Department of Insurance-led investigation with assistance from the California Department of Justice has resulted in the arraignment of 12 suspects on more than 110 felony counts including conspiracy, insurance fraud, and grand theft for their alleged involvement in a disability fraud scheme, which reportedly netted the suspects more than $450,000 from insurance carriers and more than $60,000 from the COVID-19 Relief Program.

CDI detectives conducted numerous search warrants and interviews and reportedly determined the alleged ringleaders, a husband and wife from Rancho Cucamonga, used “shell” companies to apply for short-term group disability policies offered by private insurance carriers and through the COVID-19 Relief Program. They would then recruit individuals to be fictitious employees and would file fraudulent disability claims under those fictitious employees.

The CDI opened an investigation in 2020 after receiving several suspected fraud referrals from multiple insurance carriers claiming numerous individuals applied for disability insurance policies using fraudulent information or filed fraudulent disability claims using fraudulent information.

This alleged fraud scheme resulted in a loss of roughly $458,732 to the insurance carriers. The ringleaders collected most of the profit from the scheme and would give those they recruited a percentage of the proceeds for their participation.

Suspects were arrested throughout the state on April 6 and April 7.

The Office of the Attorney General is prosecuting the case.

Topics California Fraud