Arrests Made in California ‘Family and Friend’ Auto Insurance Fraud Ring

An alleged “family and friend” organized auto insurance fraud ring in California was seemingly broken up by the Urban Automobile Insurance Fraud Task Force when seven people were arrested on Wednesday in connection to the case.

In total, 23 individuals face felony counts of insurance fraud and conspiracy.

Alleged ringleader, Gerson Castro Martinez, 34, of San Jose, was arrested on eight felony counts. Castro allegedly involved family and friends in a fraud scheme that netted defendants more than $174,000.

An investigation reportedly uncovered 33 claims that contained a similar modus operandi, where repeat damage claims were made, insurance policies purchased either with fictitious identities or involved parties that knew each other but reported claims as though they were strangers and had been involved in a loss.

The ring reportedly used at least 40 different vehicles, some purchased with damages on them, and some sustained damages in staged collisions.

They ring apparently ran the scheme for four years.

According to California Department of Insurance detectives, the fraud was uncovered when Rene Murillo Hernandez, 43, of Santa Clara, alleged he hit a parked vehicle after his vehicle was struck by an unknown driver. Murillo left a note with his insurance information on the parked vehicle he struck.

Investigators say that when the owner of the parked vehicle, another alleged member of the fraud ring, turned in a claim to the insurer, the investigation showed the damages were inconsistent with the two vehicles colliding with each other.

Further investigation revealed the damages allegedly sustained in this incident were previously reported in a prior loss under different ownership, and that the P.O. Box address being used was used in several other similar claims by other individuals all claiming the same address was the address where their vehicles were housed, investigators say.

The claims were investigated by the Urban Automobile Insurance Fraud Task Force, made up of the California Department of Insurance, Santa Clara County District Attorney Investigators, the California Highway Patrol and the National Insurance Crime Bureau.

The arrests were carried out by detectives with the CDI, the Santa Clara County District Attorney’s Office, California Highway Patrol, Santa Clara County Sheriff’s Office, and San Jose Police Department.

The case is being prosecuted by the Santa Clara County District Attorney’s Office.