Somebody is apparently benefiting from Pennsylvania’s no-fault auto insurance system: the Mafia. Car insurance fraud in the Keystone State has become so lucrative that the mob has gotten into it in a big way.
An alleged Philadelphia wise guy named Ron Galati Sr. is accused of orchestrating what might be the most elaborate auto insurance scam ever. Philadelphia District Attorney Seth Williams claimed that Galati and his crew turned an auto body shop into a sort of movie studio in which they staged fake car accidents.
The reputed Mafiosi used special effects worthy of a Hollywood movie to create fake accident scenes. They killed deer, geese, and dogs, and then scattered their parts around fake crash scenes, The Philadelphia Inquirer reported. The alleged fraudsters also threw fruit at wrecked cars to enhance the realism.
The gang allegedly took pictures of the fake wrecks and filed them with insurance claims. Under Pennsylvania’s new fault insurance system, it was cheaper for insurance companies to simply pay the bogus claims. The cost of the claims was then passed onto the drivers of Pennsylvania.
What Galati and his crew were doing was taking advantage of new fault insurance. Under no-fault insurance, everybody’s at fault, so there’s no incentive for anybody to investigate accidents. No-fault works by trying to spread the cost of insurance out to all drivers.
Scam Allegedly Netted $5 Million for Mob
The scam allegedly brought in $5 million for Galati and his associates, a grand jury alleged. The grand jury also accused a former Philadelphia police officer and a mechanic with the city of participating in the reputed racket.
To make matters worse, Galati’s company, American Collision, actually had a city contract to work on Philadelphia police cars. The contract was cancelled after The Philadelphia News revealed that Galati was a suspect in three alleged mob hits.
Some of the hits involved witnesses who were squealing about the scam to a Grand Jury, Philadelphia TV station, Channel 29 reported. Galati’s son, Ron Jr. was also arrested in connection with the investigation.
Insurance Appraisers In On the Scam
The grand jury also charged two insurance company appraisers with taking cash and gifts from Galati. In exchange for the bribes, the appraisers allegedly inflated estimates of crash damage to increase the amounts Galati billed the insurance companies.
The scam also targeted average people who were Galati’s customers. The mobsters allegedly copied their customers’ car keys when their vehicles were in the shop for work. Once the vehicles were returned, the crooks would steal them and crash them into other vehicles to create more insurance claims and more “work” for American Collision.
Judging by this case, it might be a good idea to pay close attention to your auto body shop the next time you need work. You never know what might be going on there. You should also question insurance claims and appraisals. They might reveal more than you realize.
It looks like there might be more corruption in the auto insurance industry than we think. Perhaps the people of Pennsylvania need to look at reforming their state’s auto insurance system to keep the mob from exploiting it at the expense of law abiding citizens.