Swoop and Squats

A car crammed with immigrants suddenly brakes in front of you on a freeway. Welcome to insurance fraud in the '90s.

To the rubberneckers on the Los Angeles freeway who slowed for a better look at the Pontiac Firebird crushed beneath a thirty-ton tractor-trailer, the sight of a woman pinned halfway out of the car's shattered window was a sickening reminder of our fragility as we hurtle along in steel-and-glass cocoons.

After rear-ending the Firebird, the eighteen-wheel rig had jackknifed and spilled its load of ten automobiles, making the accident look like a multicar pileup. Like so much else about the collision, its appearance was misleading.

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The battered black Firebird had been swerving into the truck's lane repeatedly, narrowly missing a collision several times. But when the car veered in front of the truck for the last time, near the Branford exit on the Golden State Freeway, fifteen miles north of downtown Los Angeles, there was nothing that experienced trucker Peter Liebich could do. His brakes squealed, his tires burned, and he felt the thud of impact. His rig whipped across four lanes of heavy traffic before upending.

Dazed, Liebich climbed through his splintered windshield, unsure of the Firebird's location, thinking it might somehow have made the nearby exit. Then he saw the mangled car, and he knew it was very bad.

Patrol cars and emergency vehicles arrived quickly. Rubidia Lopez, twenty-seven, hung helplessly out of the Firebird's window while rescue workers struggled to free her with power tools. One of the car's three other passengers was less fortunate. Jose Luis Lopez Perez, twenty-nine, a day laborer, was taken away in a coroner's van.



By the time night fell over Los Angeles, the accident had been cleared away. Traffic was flowing along the highway as densely as ever. But the reverberations from the rear-ender that looked like countless others were only beginning to be felt.

Over the past year, the accident has become known to insurance investigators and law enforcement officials as far away as Texas, Georgia, Illinois, Florida, and New York. The incident that took place on Golden State Freeway June 17, 1992, has brought to public attention the existence of organized crime rings that stage "swoop-and-squat" accidents, in which poor immigrants (or others in need of quick cash) are paid to place their bodies in the paths of cars and trucks, playing a kind of Russian roulette with their lives and those of unsuspecting motorists around them.

The crime rings generally consist of three different levels. At the top, there are the professionals--doctors or lawyers--who make the schemes profitable by diagnosing false injuries or filing fraudulent claims. Next are the "cappers" or "runners," the middlemen who obtain the cars to crash, farm out the claims to the professionals at the top, and recruit the bottom-rung participants--people desperate enough to be in the car when it actually wrecks. According to investigators, cappers usually hire within their own ethnic groups.

Participants in the swoop-and-squat settle on a story to tell the cops, then get on the freeway in search of a target, usually either a commercial vehicle or a late-model, expensive car--anything that looks to be well insured. Usually a ring will employ from two to four cars to stage a single accident. The "squat" car, loaded with passengers and maybe some blankets or tires in the trunk to cushion the impact, pulls in front of a target. The "swoop" car cuts in front of the squat car, giving its driver a plausible excuse for slamming on the brakes and being rear-ended. If there are additional cars, they get on either side of the target to keep it from changing lanes. (Whether or not cars other than the Firebird were involved in the June 1992 collision is uncertain, because both witnesses and participants tell conflicting stories.)

After a collision is engineered, the "victims" from the rear-ended car file an accident report with the appropriate authorities, get treatment for soft-tissue injuries--lower-back sprains and whiplash-- and file insurance claims with the attorneys.

In California, each accident usually nets approximately $20,000, with the lion's share going to the professionals involved. Cappers walk away with about $2,000, and the passengers from the rammed vehicle re-ceive up to $1,500.



To California Highway Patrol Officer Marco Ruiz, formerly of the now- defunct Staged Accident Division (its work recently was taken over by the State Insurance Department because of budgetary constraints), the fatal accident of last June had a familiar look.

The demolished Firebird was a piece of junk and had been weaving and braking in front of the big rig for a distance of five or six miles, evidently trying to force a collision. That the other vehicle was a commercial truck was also telling, as big rigs not only have a harder time stopping than passenger cars, but also carry more liability insurance, often as much as $1 million worth. Moreover, many trucking companies are self-insured and have no investigative units to look into fraud.

Since 1990, the California Highway Patrol has watched swoop-and-squats proliferate on the state's freeways. As Ruiz began investigating the June 1992 crash, investigators across California were already looking into some 350 freeway accidents they believed were staged, many of the more recent ones involving trucks. They believed dozens of independent rings, each involving hundreds of people, were operating on L.A. freeways.

In less than a month, Ruiz's investigation led to the Beverly Hills office of attorney Gary Miller. Although the three surviving participants in the collision were already in custody, Ruiz saw a rare opportunity to do something almost unheard of: charge the lawyer he believed to be at the top of the ring with a crime.

"It's difficult to prosecute attorneys," Ruiz says, "because their defense is always, 'I didn't know it was a fraudulent accident.' However, when you see an attorney taking the same kind of case again and again, and if you can prove he's buying cases, and if you can prove there's always three or four people in a car getting rear-ended by a big rig, well then . . . "

Although a search of Miller's office provided evidence suggesting that Miller had been accepting fraudulent claims for several years, Ruiz's big break came when insurance investigator Hollis Spillman offered to wear a wire to a meeting with Miller. Spillman testified that Miller tried to convince him to intervene with the district attorney on his behalf. He also testified that Miller confessed his knowledge of the fraudulent claims at the meeting.

In October, Miller was indicted for conspiracy to commit insurance fraud and for murder in the death of Lopez Perez. He pleaded not guilty to all charges. He is free on bail, but the state bar association has ordered him not to practice law until further notice. He did not return our phone calls.

Miller generally cleared between $12,000 and $20,000 for a four- passenger accident by settling his clients' claims of soft-tissue injuries, which are hard to disprove. The Los Angeles Times reported that, during a bail hearing, Miller's wife said his gross income from his law practice increased nearly fivefold in two years, to $1.64 million in 1991. "He had more referrals," she testified. "There were just more people out there."

Police seized files on approximately eighty cases from Miller's office. According to Ruiz, who has since been promoted to sergeant, if Miller was involved in insurance fraud, he still was only a "mom-and- pop"-sized business. Others deal in more cases.

"Staged accidents are only lucrative if you deal in high volume," Ruiz says. "The higher the volume, the more money you're going to make. So a lawyer can afford to drop any one case where the insurance company, instead of just settling, says, 'Wait a minute, there's a problem here.'"

Also indicted on murder and conspiracy charges was Filemon Santiago, the alleged capper. Check stubs seized from Miller's office indicate that over two years he paid Santiago $20,000 or more for at least seven accidents. Santiago, according to grand jury testimony, then paid the crash participants out of his share. Santiago is believed to have fled the country.

The driver of the Firebird and the two surviving passengers--Rubidia Lopez and a Salvadorean man who had only been in the country for a few days at the time of the crash--were also charged with murder and conspiracy, although the murder charges against Rubidia Lopez and the other passenger have since been dropped. All face prison terms if found guilty. Each was allegedly promised about $1,000 for sitting in the path of a thirty-ton truck barreling along a freeway.



Marco Ruiz believes the prosecution of Gary Miller has been salutary, since his general sense is that attorneys are backing off such cases. Other staged-accident investigators agree.

But L.A.'s good fortune might be the rest of the country's bad luck. For as insurance investigators and law enforcement officials in California have become savvy to swoop-and-squats, the rings that perpetrate them have begun moving elsewhere. Whatever the word on the street and among police and industry officials, until now the movement of these rings eastward across the U.S. has been unreported.

In Houston, Timothy McGriff, an investigator for the National Insurance Crime Bureau, says he can identify "five major crime rings that have moved in from L.A.," bringing body shops and medical providers with them and setting up shop with local attorneys. McGriff says the migration came about "because there's too much heat in L.A."

So far the Houston investigation has not unearthed big-rig accidents (though one of McGriff's informants says some rings have been trying to recruit people to stage them), but only the more traditional forms of auto insurance fraud. Some accidents exist only on paper. Others involve low-speed crashes set up on city streets. But McGriff believes he has identified the first few swoop-and-squats on Houston's freeways.

Furthermore, McGriff, who tracks claims in a database maintained by the insurance industry, says that some Filipino rings are now apparently shifting operations still further east. Some of the same names he knows from prior claims in Texas and California have started to show up in suspect accident claims filed in Atlanta and Florida.

"My investigator says [rings are] recruiting like Amway," says Wayne Whitaker, spokesman for the Georgia insurance commissioner.



One reason auto-fraud rings break down along ethnic or racial lines is because they spread by word of mouth. Cappers recruit among people who need money, know each other, speak the same language--either literally or figuratively--and share a feeling of being outsiders. The fraud rings need to produce both a high volume of accidents to maximize profits and a constant supply of fresh names to avoid attracting suspicion.

"Once it gets out on the street about the accidents," says Ruiz, "word gets around, because a friend tells a friend who tells a friend."

In L.A., there are Central American and Filipino staged-crash rings, and investigators have evidence of Armenian-American and Korean- American rings as well. In nearby Orange County, a Vietnamese-American ring has been identified. In New York there are rings made up of Russian-Jewish immigrants and other Eastern Europeans; in Florida, Haitian and Jamaican rings are becoming predominant.

The vocabulary of staged accidents varies from region to region--a swoop-and-squat in Los Angeles is like a zoom-and-squat in Philadelphia, and California's capper is Ohio's chaser--but the modus operandi of the setups remains remarkably consistent. In Chicago, insurance crime bureau agent Lisa Polk has been probing a ring of African-Americans for two years, without so far having indicted anyone. Among the 150 claims she's tracked, most have occurred on expressways such as the Dan Ryan. "At first the ringleaders would pick any truck," Polk says. "But now they have a [better] idea who's self- insured: moving companies, grocery lines."

Polk suspects doctors and lawyers in Chicago are also involved, but, like their peers in L.A., they are insulated from prosecution by the cappers, office administrators, and paralegals who handle all the arrangements.

Everywhere the insurance fraud rings exist the reasons are similar, and many of them stem from the flood of desperately poor, often illegal immigrants--a flood that is fast becoming a major political issue of the 1990s.

"These rings prey on these people," Ruiz says. "These are people living six or ten in a room; these are people just up from Central America. The offer of $1,000 would be so overwhelming that it would blind them to the reality that they can be killed."

"The reason fraud is popular here," says Don Garrard, a Los Angeles lawyer who defends insurance companies against fraudulent claims, "is that there are a lot of people from poor backgrounds and from areas where corruption runs rampant from the government on down. People don't see insurance fraud as morally corrupt. It's just another way to get money."

And it's not just immigrants who share that view. The insurance industry's own polling shows that the number of Americans who think it's acceptable to bilk insurance companies now totals close to one in five Americans.

State Insurance Commissioner John Garamendi says staged accidents in California are costing $1.5 billion to $2 billion a year in insurance payouts. The insurance industry sets the national figure for auto insurance fraud losses at $8 billion.

"The magnitude of these cases is so great," says Don Garrard, "that it is difficult for the insurance companies to deal with. If they tried to litigate all of them, the insurance industry would grind to a halt." One industry study estimated that a full 25 percent of all accident claims were to some degree fraudulent. Insurers calculate that more than fifteen cents of every liability premium dollar goes to settle fraudulent claims.

This past June, insurance companies, some consumer and public-policy groups, and government agencies combined resources to form the Coalition Against Insurance Fraud. It is the most recent response to the emerging realization of the growing scope and nature of the problem.

Unfortunately, the consumer-cost argument is not likely to have much effect on participants in the rings if the sight of a big rig in the rear-view mirror doesn't.



It would be easy to dismiss swoop-and-squats as a criminal fad like the carjacking incidents that caused so much middle-class handwringing last year.

But those were the isolated acts of young hoodlums. Swoop-and-squats are just the opposite. They are the result of clear criminal thinking by organized rings in cahoots with crooked doctors and lawyers.

So long as there are criminals and a steady supply of people at the bottom of the American economy, any scheme that returns large profits, no matter how dangerous, will be hard to deter. "It was worth coming here," says Rubidia Lopez, who is still facing a charge of conspiracy for her part in the June 1992 collision. In spite of everything--the crash and her entrapment halfway out the car window, the ten months she spent in prison charged with murder, the one-room apartment she shares with her husband and two sons--she does not regret having left her family in El Salvador. "Here," she says, "there are opportunities for progress."

If the rings are as well organized as investigators believe, and if they are moving from city to city with impunity, the prospects of stamping them out are about as good as they are for the international drug trade.

"If it's hot in one city," says Susan Mustaffa, criminal investigator with the California Department of Insurance, fraud division, "they're going to move somewhere else. If they want to make money, they'll go where law enforcement is oblivious to it."

Right now that could be almost anywhere. The next time you see a crowded older car driving erratically on a freeway near you, you may not be watching a drunk driver. You may be seeing a squat car seeking a well-insured target.

Ashley Craddock is an intern at Mother Jones. Mordecai Lawrence is a Bay Area writer.

