San Jose-based attorneys Charles Kavalaris of San Jose, and Rene Fernando of Danville, were arraigned on a consolidated multiple-count criminal complaint listing Unlawful Insurance Claim Referrals (commonly referred to as “capping”), Conspiracy, Grand Theft, and Money Laundering. The two surrendered to authorities on Nov. 28, 2002, following issuance of arrest warrants. Bail on both warrants was initially set at $170,000.
The arrest warrants and subsequent surrenders of Kavalaris and Fernando were related to charges filed Nov. 18, 2002, against one of their former employees, Hector Delao of Santa Clara. Delao, who was already in custody on Vehicle Code violations, was charged with Unlawful Insurance Referrals, Conspiracy, Grand Theft and Money Laundering.
The complaint, filed by the Santa Clara County District Attorney’s Office, alleges that attorneys Kavalaris and Fernando violated Insurance Fraud Code Section 750(a), Unlawful Insurance Fraud Referrals, by employing Delao to recruit insurance claimants for the law office. The complaint follows a lengthy investigation by the Santa Clara County-based Organized Auto Insurance Fraud Task Force, which discovered evidence that Delao was allegedly paid over $100,000 by Kavalaris and Fernando for referring an insurance claimant.
The investigation further revealed that most of the alleged referral payment, made to Delao in or around September 2000, was then used by Delao to purchase two automobiles for over $100,000 in cash. Following a discovery that Delao was in arrears for child support payments in both Santa Clara County and San Mateo County the automobiles were seized through civil actions filed by both counties in lieu of the outstanding child support payments.
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