Four men, including three chiropractors, arrested on suspicion of bilking millions from auto insurance companies

Investigators on Thursday arrested four Bay Area men, including three chiropractors, in connection with a suspected auto insurance fraud ring believed to have staged more than 100 auto collisions in the Bay Area.

The bogus accidents resulted in losses of $2.3 million in phony claims for insurance companies, according to investigators with the state's Department of Insurance and the Bay Area Auto Fraud Task Force.

"The scheme allegedly used by these suspects is the poster child for insurance fraud," Insurance Commissioner John Garamendi said in a written statement. "The claims were faked, and the chiropractic bills and property damage were faked, but the financial losses are very real for the consumers who picked up the tab."

The suspects went to remote locations such as little-used parking lots and bumped one car into another, said Michael Oppido, an investigator with the Alameda County District Attorney's Office who was assigned to the task force. The fraud suspects took pains to ensure the vehicle damage was superficial.

Authorities say the ringleaders, as part of the scam, recruited people with bodily injury policies to crash their vehicles into each other. The head of the fraud ring also would recruit more people to falsely claim they were passengers who were injured in the fake accidents.

In one case, the suspects staged an accident at a parking lot in East Oakland and then called in the "accident" as if it had occurred in Union City, Oppido said.

"This causes huge increases in our insurance bills," Oppido said. "Insurance companies try to accommodate their customers and do the right thing. Sometimes they get taken advantage of."

On average, the false claims ranged from $10,000 to $15,000, "conservatively," Oppido said.

The four suspects were booked into Alameda County Jail on suspicion of insurance fraud, grand theft and conspiracy. The quartet included the leader of the alleged ring, Norberto "Chito" Diaz Mora, aka Chito Mora, 52, of Daly City. The chiropractors arrested were Marcello Mehmandoust, 39, of Alameda; David Wu, 37, of San Francisco; and Reza Aliakbar, 39, of San Jose.

Each suspect could be fined up to $50,000 and could receive five years in prison, or could be charged double the value of the fraud.

About two years ago, an undercover investigator for the California Highway Patrol infiltrated the ring, Oppido said. The undercover officer helped stage some crashes. Those fake collisions resulted in total losses of $75,000, which included chiropractic bills, legal fees and property damage insurance claims.

The arrests were made after investigators raided chiropractic offices, law offices and a residence.

"I would hope this kind of fraud is not common, but it seems it might be," Oppido said.

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By George Avalos
CONTRA COSTA TIMES

George Avalos covers the economy, financial markets, insurance and banks. You can reach him at 925-977-8477 or gavalos@cctimes.com.

Copyright 2006 Contra Costa Newspapers.