Vehicle insurance fraud is a broad term defined by different California Penal Codes. The exact definition of a crime will highly depend on the violated section. Generally, fraud is a crime of deception perpetrated against an insurance company for undeserved financial gain. It can involve exaggerating accident damages, false registration, vehicle dumping, etc. If you are accused of auto insurance fraud in Pasadena, turn to the Michele Ferroni Pasadena Criminal Attorney Law Firm for reliable legal counsel and representation. We can help clear your name or build a defense strategy likely to yield the best outcome.

An auto insurance fraud allegation puts your reputation and freedom at stake. Most crimes are felonies and carry a sentence of up to 5 years behind bars. This makes it imperative to seek legal aid right after an arrest or once you realize you are under investigation.

Auto Insurance Fraud Defined

Auto insurance fraud is a widespread white-collar crime that causes financial losses to vehicle insurance companies. Offenders can seek undeserved financial gains through various actions to receive fraudulent claim payouts.

There are two classifications of auto insurance fraud. The first is hard fraud which involves planning or inventing a loss to obtain a fraudulent and undeserved payout. Hard fraud includes crimes like planned vehicle thefts or staged auto accidents. These offenses will typically attract a jail time penalty.

Soft fraud, on the other hand, involves misquoting information when applying for auto insurance or exaggerating certain aspects of a legitimate claim. This type of fraud involves offenses like lying about your residence to benefit from lower insurance rates or over-reporting an accident to inflate the value of damages.

Under Penal Code Sections 548-551, any of the following actions constitute auto insurance fraud:

  • Hiding, abandoning, or destroying a car to profit from an auto insurance claim

  • Knowingly/willfully filing a deceitful vehicle insurance claim for theft, destruction, or damage to a car with the intent to collect undeserved insurance compensation.

  • Knowingly submitting more than one insurance claim for the same losses to fraudulently profit from the claims.

  • Causing, participating, or planning a car accident aimed at collecting compensation from an auto insurance company

  • Intentionally preparing or presenting a false statement, whether verbal or written, with the intent to profit from an undeserved insurance claim.

  • Lying about your residence when applying for car insurance to benefit from lower insurance rates

  • Aiding, abetting, conspiring, or soliciting another person to, trade, refer, or accept business from a person with aims to commit auto insurance fraud

  • Auto insurance adjusters, brokers, or agents accepting a commission or kickbacks from an auto repair shop owner or employee under an arrangement to refer policyholders to the shop.

California Penal Codes That Criminalize Auto Insurance Fraud

Numerous actions can constitute auto insurance fraud when seeking compensation for a fraudulent claim. Different Penal Codes criminalize these acts and define the proper penalty based on the magnitude of an offense and the losses incurred by victims.

The California Penal Codes that make auto insurance fraud an offense include:

Fraudulent Destruction of Insured Property — Penal Code 548

Under Penal Code 548, it is unlawful to willfully damage, destroy, hide, dispose or abandon your car with the intent of filing a fraudulent insurance claim. Under auto insurance fraud laws, this offense is also referred to as "staging an accident."

The elements of the crime are as follows:

  • You destroyed, disposed of, hid, damaged, or abandoned a vehicle with insurance coverage against damage or loss

  • You acted with the intent to defraud your insurer and obtain undeserved financial gain

"Intent to defraud" means that your actions were aimed at causing some financial loss. Even if a vehicle belongs to someone else or your plans fail, and your insurer does not suffer any loss, the court can still find you guilty of violating Penal Code 548.

Moreover, you can still face the penalty for auto insurance fraud under PC 548 if you go through with your plan only to establish that your insurance policy was invalid. The prosecution will still press charges if you believe the policy was valid and intended to collect undeserved compensation.

Violating Penal Code 548 is always a felony. The penalty for the offense includes:

  • A county jail sentence for up to 5 years, or

  • Felony probation instead of jail time

  • A fine not exceeding $50,000

Soliciting Or Referring Vehicle Insurance Fraud Business — Penal Code 549

Under Penal Code 549, it is a crime to participate in any of the following acts with knowledge of an ongoing fraudulent auto insurance claim:

  • Refer someone to an auto repair shop

  • An auto repair shop owner or employee soliciting business from someone

Violating Penal Code 549 is a wobbler offense. Whether the prosecution will impose misdemeanor or felony charges will highly depend on the severity of a case. Generally, you will face misdemeanor charges if an offense does not result in physical harm or significant financial losses. On the other hand, prosecutors will always impose felony charges when the aftermath of a crime is too severe for the court to impose misdemeanor penalties.

When a Penal Code 549 offense attracts misdemeanor charges, the penalty is as follows:

  • Incarceration in county jail for up to 1 year, or

  • Summary probation

  • A maximum fine of $1,000

Felony charges are punishable by:

  • Imprisonment for up to 3 years, or

  • Felony probation

  • A fine of up to $50,000

Submitting Fraudulent Insurance Claims — Penal Code 550

Under Penal Code 550, it is a crime for someone to present a fraudulent insurance claim. Submitting a fraudulent claim can involve:

  • Submitting multiple claims with the intent to recover double compensation for damages

  • Forwarding falsified information to support an auto insurance claim

  • Making untrue verbal or written statements when submitting a claim

  • Accident staging with the intent to collect an undeserved claim from your vehicle insurer

Because of the severity of violating Penal Code 550, the prosecution will always classify each act as one count under the statute. Therefore, a person who presents falsified information to support a claim and then submits the deceitful claim can face two separate charges.

Most acts stipulated under Penal Code 550 attract felony charges. The only exception is "making false statements to support an insurance claim, ” which is a wobbler offense. It attracts similar penalties as the other offenses if charged as a felony.

A felony conviction under Penal Code 550 is punishable by:

  • Imprisonment in county jail for up to 5 years

  • A fine not exceeding $50,000, two times the victim's losses, or whichever is greater

If you face misdemeanor charges for making false statements to support an auto insurance claim, a conviction will lead to the following penalties:

  • Up to 1-year incarceration in county jail

  • A $10,000 maximum fine

Kickbacks From a Vehicle Repair Shop — Penal Code 551

Penal Code 551 PC illegalizes criminal referrals to a car repair dealer (shop owner or employee). You are guilty of the crime if you engage in any of the following acts:

  • Offering an insurance agent a commission for referring insured car owners to a repair shop for services covered under their policy

  • Willfully offering a prospective customer a discount to offset a deductible on their auto insurance coverage.

The charges a prosecutor will impose will highly depend on the amount of money involved in auto insurance fraud when the amount does not exceed $950. On the other hand, if the amount exceeds $950, an offense becomes a wobbler charged as a felony or a misdemeanor.

A misdemeanor conviction attracts the following penalty:

  • Jail time for up to 6 months

  • A fine not exceeding $1,000

If you face felony charges for violating Penal Code 551, the punishment will include:

  • Up to 3 years imprisonment in county jail

  • A $10,000 maximum fine

Best Defenses to Fight Auto Insurance Fraud Charges

A skilled attorney will always attempt to defend your "intent" when fighting auto insurance fraud. Because the offense is a "specific intent" crime, the prosecution does not have a case if you did not knowingly or willfully intend to defraud your auto insurer for undeserved financial gain. Even though the prosecution bears the burden of proof, it takes a competent attorney to table the best defenses to win over such serious charges.

Here are some of the best defenses that can have you acquitted or your charges reduced:

Lack of Knowledge

One of the primary elements the prosecution must prove beyond a reasonable doubt is that you had the intent to receive benefits to which you are not legally entitled. Therefore, a lack of knowledge shows that your actions were not deliberate.

For instance, if you are charged for soliciting or referring vehicle insurance fraud business under Penal Code 549, your attorney can claim that you did not know that the person you referred intended to commit fraud. It could be that you just told them about an auto repair shop that genuinely provides top-notch services.

Proving that you did not act with malicious intent can be challenging. This makes it imperative to trust your case with a seasoned attorney with a proven track record. The expert will use various strategies to cast doubt about your actual intent and prove to the court that an incident was merely an honest mistake or an accident.

Entrapment

Another defense with the potential to have your case dropped is claiming entrapment from insurance adjusters. It could be that they were out on a witch hunt and compelled or coerced you to commit auto insurance fraud. Again, you need a competent attorney to sway the opinion of the judge and jury. Note that the court will always seek to hold defendants accountable for their actions.

Your attorney can table facts to prove you were entrapped. It could be that the surveillance at your auto shop picked footage of an insurance agent coming to your shop, flaunting the idea of bringing in customers for a small commission. Therefore, you only committed the crime because the agent coerced or persuaded you, only for the police to come knocking a few hours later.

Another defense that works similarly to entrapment is that you were under duress. You can avoid penalties by proving that you only committed the crime because you felt under pressure or even suspected the threat of physical harm.

Insufficient Evidence

In any criminal case, the burden of proof that the prosecution must meet is "beyond a reasonable doubt." In fraud cases, it is nearly impossible for a prosecutor to have a strong case without sufficient evidence. Moreover, your lawyer can file motions to suppress any illegally obtained evidence.

When a case revolves around a complex set of facts, a skilled attorney will proactively find evidence that works in your favor. The idea is to table evidence indicating your innocence that will water down any shaky proof that the prosecutor presents. This may include proof in the form of circumstantial evidence, intricate paper trails, or conflicting testimonies.

Mistaken Facts

Fraud cases often attract federal-level penalties. Investigations are often time-intensive and expensive, and the authorities could rush the process to beat the statute of limitations. As a result, it is not uncommon for the prosecution to present incorrect facts.

For instance, you could be facing charges where the prosecutor makes you guilty by association. Legally, you are not guilty of auto insurance fraud merely because one of your employees discreetly committed the crime. An attorney can overturn your charges by proving that you cooperated with investigations and gave all practical information to help unveil the actual offender.

An Expired Statute Of Limitations

The statute of limitations for most insurance fraud offenses in California is 5 years. If the time between an alleged violation and an arrest is more than 5 years, the government can no longer prosecute you. Experienced lawyers will always be keen on the dates and ensure your case is dropped if the statute of limitations is expired.

Auto insurance fraud is a significant problem in California, and the U.S. Prosecutors will always put their best into investigations and build the most robust case against defendants. Also, insurance companies enjoy enormous political power, forcing the authorities to prosecute aggressively and bring fraud perpetrators to book. You cannot underestimate the need to have an attorney that can help you formulate a winning defense strategy.

Related Offenses

The prosecution can impose charges under various statutes when accused of auto insurance fraud. The charges you will face will depend on the actions involved during the commission of an offense. Apart from Penal Codes Sections 548-551, defendants can also face charges under the following statutes:

Petty Theft & Grand Theft — Penal Code Section 484(a), & 487

The prosecution can opt to charge you with petty theft instead of auto insurance fraud. The law defines Penal Code 484(a) as the unlawful stealing or taking another person's property, labor, or money whose value does not exceed $950.

If the value of the fraudulently obtained money in an auto insurance case exceeds $950, the prosecutor can impose grand theft charges under Penal Code 487. Unlike petty theft, a misdemeanor, grand theft is a wobbler offense. Both grand and petty theft can be accomplished through the following acts:

  • Theft by trick

  • Theft by embezzlement

  • Theft by fraud

The prosecution must prove four critical elements beyond a reasonable doubt to charge you with petty theft. These elements include:

  • You took property or money owned by another person

  • You did not have the property owner's consent

  • When you took the property, you intended to deny the owner of it permanently

  • You moved the property, irrespective of the distance, and kept it for some time, regardless of the duration

There are two essential terms you must understand. "Moving of property or money" during an auto fraud case merely implies that the fraudulently obtained cash was served from the victim's possession into the complete ownership of the defendant.

Also, if auto insurance fraud happens multiple times, each theft incident constitutes a separate offense.

If charged with petty theft, the penalty includes:

  • Jail time for up to 6 months

  • A fine not exceeding $1,000

Grand theft attracts a higher penalty even when charged as a misdemeanor. A misdemeanor conviction is punishable by:

  • Imprisonment in county jail for up to 1 year

  • A fine of up to $1,000

If convicted of felony grand theft, the penalty will include:

  • Maximum jail time of 3 years

  • A $10,000 maximum fine

False Report of Auto Theft— Vehicle Code 10501

Under Vehicle Code 10501, it is a crime to file a fraudulent or false report of vehicle theft with the intent to deceive. If you face serious auto insurance fraud charges, a skilled attorney can negotiate to reduce the offense to a "false report of auto theft."

There are three essential elements the prosecution must prove to obtain a conviction:

  • You prepared or filed a fraudulent or false report with a law enforcement agency

  • You reported the theft of a car verbally or in writing

  • You willfully or purposefully made the report with the intent to defraud

First-time offenders of VC 10501 face misdemeanor charges. a conviction attracts the following punishment:

  • Jail time for up to 6 months

  • A fine not exceeding $1,000

If you violate VC 10501 again, the second or subsequent offenses will be subject to higher penalties. The crime becomes a wobbler where the prosecution can impose misdemeanor or felony charges depending on your criminal history and the facts of a case. A misdemeanor conviction attracts a sentence of one year in county jail, while a felony conviction is penalized by incarceration for up to 3 years.

Health Care Fraud — Penal Code 550(a)

Penal Code 550(a) makes it a crime to submit or solicit the submitting of fraudulent medical claims to an insurance company or government agency. The offense involves schemes designed to obtain undeserved benefits from an insurance program.

You are guilty of health insurance fraud in participating in any of the following acts:

  • Submitting claims for benefits you did not pursue (exaggerated claims)

  • Submitting a falsified or fraudulent claim for damages not suffered

  • Filing more than one claim for the same damages

  • Submitting false information to support a fraudulent claim

When accused of auto insurance fraud, the prosecutor will consider the facts of a case before choosing the befitting charges. Sometimes, you can face auto and health insurance fraud charges, especially if you claim compensation for vehicle damage and medical bills.

Health insurance fraud is a wobbler offense. The prosecution can impose felony or misdemeanor charges based on the severity of facts unveiled during investigations and a defendant's criminal past. Another aspect that will help determine the befitting charges is the amount of money involved.

Generally, if a fraudulent claim's value does not exceed $950, the prosecution will charge the offense as a misdemeanor. A conviction will result in the following punishment:

  • Imprisonment for up to 6 months in county jail

  • A fine of no more than $1,000

When the value of a fraudulent claim exceeds $950, the offense can attract a felony penalty. The punishment will include:

  • Jail sentence for up to 5 years

  • A maximum fine of $50,000, two times the defrauded amount or whichever is greater

Auto insurance fraud can be committed by or against insurance companies or policyholders. Even though soft insurance is the most common, hard fraud attracts more significant legal trouble. Irrespective of the severity of the charges, you have a good chance of enjoying a better outcome if you talk to a skilled attorney sooner rather than later.

Find an Pasadena Criminal Lawyer Near Me

An auto insurance fraud allegation can leave you behind bars, paying hefty fines, or both. If your vehicle insurer or the California Department of Insurance is investigating you regarding suspect activities on your claim or policy, you must act fast. You require a competent criminal defense attorney in Pasadena who can start building the best defense to fight your charges. At Michele Ferroni Pasadena Criminal Attorney Law Firm, we have a team of seasoned attorneys who can help ensure the best possible outcome. Call us at 626-628-0564 for more information about auto insurance fraud or to speak to an experienced fraud attorney.