Arrests Over $2 Million Cellphone Insurance Fraud

Published on: 28th May 2008

Last month, nearly a dozen people were arrested in California on charges of involvement in a US$2 million mobile phone insurance fraud. Wireless phone dealers, employees and customers were arrested for their purported involvement in the insurance scam.

"When scam artists cheat the system, everyone suffers," said Insurance Commissioner Steve Poizner. "Businesses that defraud insurance companies to earn an extra dollar are not playing fairly and are undermining the integrity of a free marketplace."

The California Department of Insurance (CDI) Fraud Division, with assistance from the California Highway Patrol and the Santa Clara County District Attorney's Office, launched investigations into several Bay Area cellular telephone stores in 2005 after insurance administrator Asurion Corporation (previously lock/line) reported suspected fraudulent claims.

The CDI investigation revealed that Nikki Tang and Bao Vu Ha both of San Jose, the owners of Streetel One in San Jose, were engaging in dealer fraud. The investigation further revealed that store employee Xuan Tran and former store employee Natalie Huynh, both of San Jose, also allegedly engaged in multiple counts of insurance fraud. Streetel One customers Douglas Duong and Khang Truong, both of San Jose, were also arrested for their alleged involvement in insurance fraud.

Dealer fraud occurs when a customer purchases a policy on a wireless phone to cover against loss, theft or damage. After selling a wireless phone to a customer, a store employee, associate, or owner will file a claim with the insurance company for a lost or stolen phone. After the insurance company sends a replacement cellular phone, the dealer sells or gives away the replacement phone free to a new customer. This scheme is often repeated on new wireless phone accounts, without the original customer's knowledge that an insurance claim was made on his or her account.

CDI's investigation uncovered approximately two million dollars worth of replacement wireless phones that were shipped out by Asurion as a result of this fraud scheme. This investigation continues and CDI expects to make more arrests.

 

Tags: [california]  [insurance]  [fraud]  [asurion]  []