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Imagine never having to buy auto insurance – until you have an accident. Then imagine being able to simply walk into a California insurance agency and “fill in the blank” with a policy effective date of your own choice.
Unbelievable? Not so! An indictment unsealed in Los Angeles County early in June charged 46 people with fraud for participation in just such a scheme.
Most of those charged were applicants who were willing to pay up to $1,000 for the bogus policies. They were alleged to be participants in a scam estimated to have cost insurance companies more than $410,000.
Also charged were Khatchik Sahakian of Glendale and Samuel Nadjarian of North Hollywood, who are alleged to have started the sale of back-dated auto insurance policies in late 1991.
The investigation was hindered by the fact that the “victim” company was the CAARP—that’s the California Automobile Assigned Risk Plan. The way the plan works includes accepting applications at a central location and then assigning each risk out to an automobile carrier writing business in the state of California. Companies have a “quota” in the state and must accept an assigned risk book of auto business based on a ratio of how much preferred auto business they write.
Because California has so many companies writing this mandatory assigned auto business, tracking fraudulent patterns posed a special difficulty.
The CAARP rules state that the plan is for high-risk drivers. Some instances discovered in the investigation led authorities to believe some of those arrested for buying the backdated policies had lied in reverse about their driving records—making them out to be worse than they actually were—so that they could qualify as a bad driver and be accepted into the plan.
Investigation has revealed bogus claims dated as far back as October 1991, with claim amounts ranging from slightly over $1,000 to a high of $35,000 and generally involving uninsured motorist coverage. Most of the bogus claims were for medical bills (UMBI) and a few paid for vehicle damage (UMPD).
The $410,000 total figure quoted includes only those claims that have been linked to the scam so far. When other claims are eventually connected, the totals are expected to significantly rise.
Nadjarian found himself in some additional hot water after search warrants were executed at his home and office. Investigators found over 50 weapons at his home, including Uzi and M-16s, firearms, knives, illegal explosives, brass knuckles and more.
Sahakian was ordered held on $200,000 bail after he was charged with insurance fraud, perjury and conspiracy.
Nadjarian was charged with the same three counts plus one more. Violation of probation was added to his list of charges when investigators discovered he was on probation for a concealed weapons charge, which, by the way, made it illegal for him to possess his home cache of weapons. No bail was set.
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