41 Charged with Multi-Million Dollar Insurance Fraud Scam

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May 28, 2014: District Attorney R. Seth Williams has charged Ronald Galati, Sr. and his co-conspirators for a nearly 5 (m) million dollar insurance fraud scheme. These charges are the result of a sixteen-month Grand Jury investigation of American Collision and Auto Center located at 1930 S. 20th Street in Philadelphia, Pennsylvania. The Grand Jury found that Galati and his confederates, which included a Philadelphia Police Officer, a city official, insurance company adjusters and tow truck drivers, engaged in an elaborate scam to defraud both insurance companies and Philadelphia taxpayers.
The investigation revealed that the Galati family used American Collision and Car One Rental as corrupt organizations from which to file fraudulent insurance claims for financial gain. During the past four years, victim insurance companies issued payments totaling over $2,311,288 in connection to fraudulent claims submitted from American Collision. The shop also received over 1.8 million dollars from the City of Philadelphia by fraudulently obtaining a contract with the Office of Fleet Management in February of 2011. Assistant District Attorney Dawn Holtz and Detective Robert DiFrancesco, both of the Philadelphia District Attorney’s Office Insurance Fraud Unit, were assigned to this investigation in conjunction with Trooper Michael Romano of the Pennsylvania State Police, Bureau of Criminal Investigation, Organized Crime Division. Both Progressive and Erie Insurance Companies provided referrals and documentation which first brought American Collision’s suspicious claims to light.
American Collision established a pattern of filing fraudulent claims with insurance companies that would routinely fall into one of the following five scenarios: fictitious deer accidents, vandalism, vehicular damages due to falling objects, enhanced damages that compensated for waived deductibles and the use of luxury cars in staged collisions in order to generate large settlement checks. When crafting bogus accident claims, Galati favored deer hits, vandalism and vehicular damages from trajectory objects because each could be categorized as a non-fault accident for which the insured would not be held liable. In one particular situation, Galati coached a customer to report to his insurance company that he had struck a deer rather than admit that he had hit another car so that his insurer would assume responsibility without raising his rates. Multiple Grand Jury witnesses testified that Galati stored deer blood, hair and carcasses in the back of his shop. These deer remnants, along with weeds which American Collision employees were instructed to fetch from the Penrose Avenue river banks, served as props for what Galati deemed “Hollywood Photos,” or deceptive pictures of alleged vehicular damages which were submitted as part of insurance claims. In addition to deer hits, American Collision customers also filed claims alleging to have inadvertently collided with geese, dogs, cartons of fruit, flying metal and falling concrete.
Not only did Galati create imaginary accidents but he also deliberately staged collisions in order to generate business for his shop and to make money for his own personal benefit. Perhaps the most insidious of fraudulent claims filed at American Collision involved intentional vandalism orchestrated by Galati and conspirator tow truck drivers. Galati supplied local drivers with a list of vehicles owned by previous customers and would instruct the drivers to damage these cars in the early morning hours in order to create and secure business for his shop. Some clients were aware that the vandalism was deliberate, such as one cooperator who testified that he filed eleven fraudulent claims in conjunction with American Collision, nine of which were fabricated vandalism claims. In addition to vandalizing cars, Galati would also purchase luxury vehicles and pay his associates to deliberately crash cars into his parked BMW or Corvette. Galati discovered that financing these luxury vehicles through insurance fraud was an effective way to make car payments.
Galati achieved such success with filing fabricated claims due to his knack for designing creative accident scenarios and his network of rogue professionals who conspired with him to legitimize these claims. Galati enlisted the assistance of Philadelphia Police Officer Douglas DiEmidio, Erie Insurance Company adjuster Cheryl Stanton, Allstate Insurance Company adjuster Arthur Juliano, and local South Philadelphia tow truck drivers in order to substantiate his claims. Officer DiEmidio, who was stationed in the First District prior to his termination due to unrelated criminal charges, would write fraudulent Philadelphia Police Accident Reports for Galati so that American Collision could include district control numbers on claims submitted to insurance companies. Former adjusters Stanton and Juliano would write inflated estimates and submit paperwork for claims they knew were fictitious in exchange for cash, meats or other gifts. During the course of the investigation, eleven deer accident claims that had been approved by Stanton were submitted to Lange Technical Services for a Collision Damage Analysis. The report concluded that all eleven claims were fraudulent.
Galati also conspired with a City of Philadelphia Office of Fleet Management employee, Robert Otterson, who helped him fraudulently procure a lucrative city contract by falsifying documents, even though American Collision did not meet all contract requirements. All shops competing for a contract to repair city vehicles had to own a squeeze type resistance spot welder by the time its bid was submitted. The welder was required due to the composite metals which were used to manufacture City of Philadelphia Police Department Chevrolet Impalas. Despite the fact that American Collision did not own this welder at the time of the bid, they were awarded the contract and began to repair city vehicles, including the police cars. The investigation revealed that although Galati later purchased the welder, he never commissioned the electrical work necessary for the machinery to operate. Therefore, Galati never used the required welder at any point during his contract with the City of Philadelphia.
In addition to insurance fraud arrests, this investigation also resulted in uncovering a stolen boat which Philip Sessa and Galati took from a marina in Somers Point, New Jersey, and in the discovery of stolen funds which had been misappropriated from an elderly gentleman’s Bank of America account. Galati and three other men were also charged with attempted murder in December 2013 following a murder for hire that targeted Grand Jury witnesses. In spite of testifying in front the Grand Jury that he and his wife only earned two hundred and fifty dollars a week, Galati cashed over 1.2 (m) million dollars’ worth of checks at Whitman Check Cashing in South Philadelphia over the course of several years. Galati used the proceeds from his corrupt organization to throw elaborate parties at his shorefront properties and to fund expensive dinners at local restaurants. Cooperating conspirators from American Collision stated that Galati could often be heard repeating his favorite mantra: “I live my life to cheat insurance companies – my high every day is to cheat insurance companies.” The investigation revealed that Galati certainly did cheat insurance companies, as well as the City of Philadelphia, out of over two million dollars.
To date, fourteen persons have been arrested and charged with Insurance Fraud and related crimes in connection to American Collision. Many of those arrested and charged have agreed to cooperate with the ongoing investigation and have agreed to testify against Galati. We are in the process of arresting an additional twenty-seven involved in the conspiracy, for a total of forty-one arrests.

Others indicted by the Grand Jury:

Ronald Galati, Sr. of 2500 block of S. Garnett St – 63 years old
Corrupt Organizations (F1)
Dealing in Proceeds of Unlawful Activities (F1)
Conspiracy (F) 141 counts
Insurance Fraud (F3) 135 counts
Theft by Deception (F3) 133 counts
Attempted Theft by Deception (F3) 2 counts
Bid-rigging (F3)
Securing Execution of Documents by Deception (M2)
Obstructing Administration of Law/Governmental Functions (M2)
Tampering With Public Records or Information (F3)

Vicki Galati of 2500 block of S. Garnett St- 59 years old

Corrupt Organizations (F1)
Conspiracy (F) 3 counts
Dealing in Proceeds of Unlawful Activities (F1)
Insurance Fraud (F3)
Theft by Deception (F3)

Ronald Galati, Jr. of 2500 block of S. Garnett St- 37 years old

Corrupt Organizations (F1)
Dealing in Proceeds of Unlawful Activities (F1)
Conspiracy (F) 4 counts
Perjury (F3)
Bid-rigging (F3)
Obstructing Administration of Law/Governmental Functions (M2)
Tampering with Public Records or Information (F3)
Securing Execution of Documents by Deception (M2)

William Reed of 1200 block of S. Newkirk- 36 years old

Conspiracy (F)
Insurance Fraud (F3)
Theft by Deception (F3)

Joseph Clark of 2500 of S. Garnett- 57 years old

Conspiracy (F) 2 counts
Insurance Fraud (F3) 2 counts
Theft by Deception (F3) 2 counts

Troy Nixon of Yeadon- 42 years old

Corrupt Organizations (F1)
Conspiracy (F) 3 counts
Insurance Fraud (F3) 3 counts
Theft by Deception (F3) 3 counts

Ronald Soffian of 1900 block of S. 20th- 66 years old

Corrupt Organizations (F1)
Conspiracy (F) 18 counts
Insurance Fraud (F3) 17 counts
Theft by Deception (F3) 17 counts
Theft by Unlawful Taking (F3)

Philip Sessa of the 2300 block of S. 30th- 44 years old

Conspiracy (F)
Receiving Stolen Property (F3)

Douglas DiEmdieo of the 1600 block of S. 12th- 50 years old

Corrupt Organizations (F1)
Conspiracy (F) 4 counts
Insurance Fraud (F3) 3 counts
Theft by Deception (F3) 3 counts
Obstructing Administration of Law/Governmental Function (M2) 3 counts
False Reports to Law Enforcement Authorities (M3) 3 counts

Cheryl Stanton of the 1700 block of Packer- 58 years old

Corrupt Organizations (F1)
Conspiracy (F) 37 counts
Insurance Fraud (F3) 36 counts
Theft by Deception (F3) 36 counts

Arthur Juliano of the 2900 block of Juniper- 37 years old

Corrupt Organizations (F1)
Conspiracy (F) 8 counts
Insurance Fraud (F3) 7 counts
Theft by Deception (F3) 7 counts

Jerome Johnson of the 5500 block of Upland- 45 years old

Corrupt Organizations (F1)
Insurance Fraud (F3) 3 counts
Theft by Deception (F3) 2 counts
Conspiracy (F) 4 counts
Attempted Theft by Deception (F3)

Anayat Hosein of the 2000 block of Mercy- 56 years old

Corrupt Organizations (F1)
Conspiracy (F) 4 counts
Insurance Fraud (F3) 3 counts
Theft by Deception (F3) 3 counts

John Finch of the 1600 block of Annis- 57 years old

Conspiracy (F)
Insurance Fraud (F3)
Attempted Theft by Deception (F3)

Robert Otterson of the 1900 block of S. 30th- 48 years old

Conspiracy (F) 4 counts
Bid-Rigging (F3)
Perjury (F3) 2 counts
Obstructing Administration of Law/Other Governmental Function (M1)
Tampering with Public Records or Information (F3)
Securing Execution of Documents by Deception (M2)

Joseph Fina of Williamstown, NJ- 67 years old

Corrupt Organizations (F1)
Insurance Fraud (F3) 6 counts
Theft by Deception (F3) 6 counts
Conspiracy (F) 7 counts
Perjury (F3)

Steven Ligambi of the 3100 block of S. 17th- 28 years old

Conspiracy (F)
Insurance Fraud (F3)
Theft by Deception (F3)

William Weathers of the 1500 block of S. Opal- 36 years old

Conspiracy (F) 14 counts
Insurance Fraud (F3) 14 counts
Theft by Deception (F3) 14 counts

Andre Speller of the 700 block of S. Marvine- 55 years old

Corrupt Organizations (F1)
Conspiracy (F) 17 counts
Insurance Fraud (F3) 16 counts
Theft by Deception (F3) 16 counts

Victor Harry of the 1200 block of N. 58th- 45 years old

Corrupt Organizations (F1)
Conspiracy (F) 11 counts
Insurance Fraud (F3) 10 counts
Theft by Deception (F3) 10 counts

Stephanie Dykes of the 1500 block of Opal- 55 years old

Conspiracy (F) 4 counts
Insurance Fraud (F3) 4 counts
Theft by Deception (F3) 4 counts

Eric Dykes of the 2500 block of S. 75th- 58 years old

Conspiracy (F) 7 counts
Insurance Fraud (F3) 7 counts
Theft by Deception (F3) 7 counts

Reynalda Dykes of the 2500 block of S. 75th- 54 years old

Conspiracy (F)
Insurance Fraud (F3)
Theft by Deception (F3)

Renee Taliaferro of the 1400 block of N. 29th- 57 years old

Conspiracy (F) 2 counts
Insurance Fraud (F3) 2 counts
Theft by Deception (F3) 2 counts

Courtney McClees of the 7300 block of Meadow Lark- 45 years old

Conspiracy (F) 5 counts
Insurance Fraud (F3) 5 counts
Theft by Deception (F3) 5 counts

Donna Willis of the 4400 block of N. Gratz- 50 years old

Conspiracy (F)
Insurance Fraud (F3)
Theft by Deception (F3)

William Pomarico of the 1200 block of Mckean- 60 years old

Conspiracy (F)
Insurance Fraud (F3)
Theft by Deception (F3)

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