New Jersey’s Attorney General Peter Harvey announced that the Division of Criminal Justice – Office of Insurance Fraud Prosecutor has obtained criminal indictments against 38 North Jersey residents as a result of an eight-month undercover sting operation and related investigations that targeted the “give-up” and/or theft of late model, luxury automobiles by owners and lessees in order to fraudulently collect insurance monies.
Harvey said that the Division of Criminal Justice – Office of Insurance Fraud Prosecutor, in concert with the Insurance Council of New Jersey and other insurance industry representatives, implemented Operation “Give & Go” as part of an investigative strategy targeting the practice of automobile “give-up” by vehicle owners and lessees and various other auto theft schemes.
A vehicle “give-up” occurs when the vehicle owner or lessee seeks to avoid costly monthly lease and/or purchase payments, insurance payments and related expenses such as mileage charges and other lease close-out costs, by “giving-up” the vehicle to a “middleman” or broker who then sells the vehicle “on the street” as part of the underground black market. Following a “give-up,” the vehicle owner files a false police report and auto insurance claim in an effort to collect insurance money or, alternatively, to have the vehicle loan or lease paid by the insurance carrier.
“The targets of this undercover operation were the owners of luxury automobiles who arranged to have their vehicles “stolen” or “disappear” in order to collect insurance money and, as significantly, the middlemen who traffic in both “give-up” and stolen vehicles,” Harvey said.
Operation “Give & Go” and related Office of Insurance Fraud Prosecutor investigations targeting the trafficking in stolen automobiles, resulted in 22 separate State Grand Jury indictments and charged 38 defendants. Operation “Give & Go” targeted 28 defendants in 18 indictments. The charges vary depending on the participant’s alleged role in the “give-up” or stolen automobile theft scheme. The charges for each alleged “give-up” vehicle owner include conspiracy, theft by deception and tampering with public records or information (for the filing of a false police report). The charges for the alleged “middleman” include conspiracy (if any vehicles were received from an owner as a “give-up”), theft by deception (as an accomplice for the “give-up” vehicles), and receiving stolen property (for the stolen vehicles).
In addition, four separate and unrelated indictments charged 10 persons with conspiracy, receiving stolen property, tampering with public records, altering motor vehicle identification numbers and simulating a motor vehicle insurance identification card for their alleged participation in unrelated automobile theft schemes.
State investigators from the Office of Insurance Fraud Prosecutor set up the undercover sting as Santos Wholesale Auto Detailing in a leased garage located on Tonnele Avenue in Jersey City. Within several months, individuals or “middlemen” involved in the stolen automobile black market spread word on the street that the Santos garage was in the business of purchasing “give-up” automobiles from anyone who owned or leased a vehicle and/or wanted to get rid of a vehicle to avoid purchase or lease payments or because of extensive damage and costly repairs. After “giving-up” the vehicle, the owners would, in most instances, report the car stolen to police and submit a false insurance auto theft claim in anticipation that the insurance company would pay the theft claim.
During the course of the eight-month investigation, state investigators from the Division of Criminal Justice purchased 46 late model, luxury automobiles and SUV’s in amounts ranging from $800.00 to $1500.00 per vehicle. The purchases included 14 “give-up” vehicles purchased directly from the owner or from a middleman who had obtained the “give up” automobile from the owner so the vehicles could be reported stolen and 34 vehicles that had been stolen for purposes of “give-up.” The market value of the 46 vehicles recovered by Office of Insurance Fraud Prosecutor exceeds $1.1 million. The vehicles will be returned to the insurance companies or to the legitimate holder of title to the vehicle.
Fraudulent automobile insurance theft claims were reportedly submitted to 18 insurance carriers, including First Trenton Indemnity; Ohio Casualty Insurance Company; Allstate Insurance Company; Metropolitan Property and Casualty; New Jersey Manufacturers Insurance Company; Progressive Insurance Company; Liberty Mutual Insurance Company; State Farm Insurance Company; Hanover Insurance Company; Prudential Insurance Company; USAA Insurance Company; State and Country Fire Insurance Company; AIG Insurance Company; Rutgers Casualty Insurance Company; Travelers Insurance Company; Selective Insurance Company; Erie Insurance Company and Penn National Insurance Company.
More than 32 automobile theft insurance claims were submitted to the 18 insurance companies. Approximately $662,300 in insurance claims were paid for the phony auto insurance theft claims and some $48,056 in claims were not paid, either because the insurance company was suspicious of the claim or the Office of the Insurance Fraud Prosecutor’s investigation interrupted the claims process.
In addition to Operation “Give & Go,” the Office of Insurance Fraud Prosecutor obtained four separate State Grand Jury indictments against 10 individuals on charges related to stolen automobiles, automobile “give-up” schemes, and the filing of fraudulent automobile insurance claims.
Two indictments allege that between November, 2001 and August, 2002, four automobiles were “re-tagged” by the defendants in order to conceal the true identity of the car, its owner and the fact that the vehicle had been “given up” to facilitate the filing of a fraudulent auto theft insurance claim.
The indictment charges eight persons with conspiracy, altering motor vehicle trademarks and identification numbers, receiving stolen property, theft by deception and tampering with public records or information. A third indictment charges several defendants with receiving stolen property and simulating a motor vehicle insurance identification card for possessing a phony insurance identification card. The fourth indictment charged the defendant with possessing a stolen 2003 Mercedes Benz allegedly stolen from a Mercedes Benz dealership in Pa. by means of a “key swap” or theft that occurs when a person, posing as a customer, enters an automobile dealership and takes a test drive. During the test drive, the genuine ignition key is “swapped” for a fake key and the vehicle is stolen off the dealership lot by use of the genuine ignition key.
Second degree crimes carry a maximum penalty of up to 10 years in state prison and a fine of up to $150,000; third degree rimes carry a maximum penalty of up to five years in state prison and a fine of up to $15,000, and fourth degree crimes are punishable by up to 18 months in state prison and a $15,000 fine. Each of the defendants also face the possibility of the imposition of civil insurance fraud fines pursuant to the Insurance Fraud Prevention Act.
The indictments were handed up to Mercer County Superior Court Judge Linda R. Feinberg, the Assignment Judge in charge of the State Grand Jury, on June 12. The indictments were sealed pending the arrest of nine defendants. The cases will be venued for trial in the Essex, Passaic, Union, Bergen, and Hudson County Superior Courts.
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