by Len Lear
On May 28 of this year, Philadelphia District Attorney R. Seth Williams charged a South Philadelphia auto body shop owner named Ronald Galati, Sr. and a group of 40 co-conspirators in a nearly $5 million insurance fraud scheme. These charges were the result of a 16-month Grand Jury investigation of American Collision and Auto Center at 1930 S. 20th St. According to prosecutors, Galati would stage single-vehicle accidents because insurance companies consider them “no-fault” and routinely pay the claims without raising the car owners’ premiums. According to Grand Jury witnesses, Galati would say, “I live my life to cheat insurance companies.” Among those arrested were a former Philadelphia police officer, Douglas DiEmidio, and a mechanic with the city’s Office of Fleet Management, Robert Otterson.
Upon reading this story, I could not help but reflect on an episode in my own background that was a virtual carbon copy (remember carbon copies?) of this one. It took place around 1972, when I was a reporter for the Philadelphia Tribune, the nation’s oldest African-American newspaper. I had written several times about an insurance agent in West Philadelphia named Warren Scruggs, and he would occasionally call me with suggestions for legitimate human interest stories.
Warren always dressed in expensive suits, drove high-octane cars and generally gave the impression of being a mover-and-shaker. He was always dropping the names of “friends” who were highly connected politicians, athletes, business executives, media personalities, etc. He ran for City Council himself once as a Republican but lost badly.
He and his model-thin lady friend, Barbara, took my wife and me out to dinner a few times to an upscale steak-and-seafood restaurant on City Line Avenue, where he handed out big tips to valet parkers, servers, managers, etc., as if they were after-dinner mints. Naturally I assumed Warren, who was a big guy with a big personality — always laughing, slapping you on the back, etc. — was mega-successful as an insurance agent.
Then one day Warren called me and said he had a proposal for me. “I know you don’t make much money there at the Tribune, and I know you put in long hours,” he said. (At the time I was paid about $150 a week before taxes, and I was working at least 50 hours a week.) “Well, I have a way for you to make about a couple months’ pay or more, and it will require very little work, just a few hours. I have quite a few other people involved, and I thought you deserve to be in on it, too. Want to hear more about it?”
Does a giraffe have a long neck? How could I say no? So here is the gist of what Warren said:
“All you have to do,” he said, “is drive down Chestnut Street between 52nd Street and 30th Street on the day and time that I tell you to do it. You will come to a stop at a red light. Another driver will come up behind you and hit your car but not very hard, just hard enough to put a small dent in your car. You will exchange information with this person, who will be insured by the John Hancock Insurance Company.
“A couple days later a claims representative for John Hancock whose territory is West Philly will come to see you to ask you questions about the accident. He will recommend that you take your car to a particular repair shop to be fixed. You will tell him that you have low back pain since the accident, and you will also call a particular chiropractor whose name I’ll give you to get a series of treatments for your back.
“After you go for a few visits, the claims adjuster for John Hancock will offer you a settlement, maybe $3,000 to $5,000 or even more if you sign away any future claims against them. And they will pay your chiropractic treatments and the car repair shop, of course, and they will be very glad to do so. A low back pain case can drag on for years and possibly cost them a fortune, so they will be delighted to offer you the settlement to get the case off the books. Then you can go to Hawaii and splurge, which you can’t do on your newspaper salary!”
Warren pointed out that the car repair guy, the claims adjuster and the chiropractor were all in on the deal, of course, and all would get a cut of the action. I would be lying if I said that I was not tempted to get in on it, too, but of course I said no. I told my wife about the proposal, and she insisted that she would not have much fun in Hawaii if I was sitting in a jail cell in Philadelphia.
I did not think any more about it until about 10 months later when the “Big Story on Action News” was a press conference called by then-District Attorney Arlen Specter to announce the arrest of 23 people, including insurance agents, claims adjusters, auto repair shop owners, chiropractors, a medical doctor, etc. Specter said his office had broken up a massive ring of insurance scammers, and he would do his best to make sure they all did jail time. (Not many did.)
If I remember correctly (I could not find anything about it on the internet since it happened so long ago), Warren Scruggs did about six to nine months in jail. After he came out, he opened an insurance agency on Chelten Avenue near Pulaski in Germantown. I remember visiting him there a couple times. The office was big and beautifully decorated, and Warren was as well dressed and ebullient as he had ever been. “It was just a bump in the road,” he insisted about the phony accident scheme. “I’m back on my feet and doing just fine.”
Several months later I was watching Action News at 11 p.m. and again heard Warren’s name mentioned. “An insurance man, Warren Scruggs, was found murdered, gangland-style, in back of his apartment in East Falls when he was putting out the trash this morning,” announced anchorman Larry Kane. He went on to say that Scruggs had been shot in the back of the head by an unknown assailant.
In the days that followed, I wrote about Warren’s murder in the Tribune. I kept in touch with Captain Art Matthews, who was a police detective at the time and who insisted that the murder was being thoroughly investigated. Finally, Matthews said to me, “This is going to be a very hard case to crack because the first thing you look for in a murder investigation is a motive, and in this case we have found so many people with a possible motive to want to kill Warren. That makes it really tough.”
As it turned out, no arrest was ever made in the case.
I can’t say I have any sympathy for the 41 people charged on May 28 with staging bogus crashes and engaging in insurance fraud, but as sleazy as that behavior is, I hope they wind up with a little better fate than Warren Scruggs did.
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