Fraud ring made up accidents, reports

More than $700,000 paid in two area 'fatalities'

By J. Harry Jones
UNION-TRIBUNE STAFF WRITER

December 19, 2002

One of the biggest local insurance fraud rings of its kind used phony police reports to substantiate payments of more than $700,000 for two traffic deaths that never occurred, San Diego prosecutors said yesterday.

An Allstate insurance claims adjuster, two other men and a woman were being sought by police last night on $1 million arrest warrants, according to court documents.

The scam was so complex that fictional children were created and the lives of real and imaginary people were intertwined, according to the charges. Falsified police reports bear the names of real deputy sheriffs who never responded to such accidents. Real doctors are discussed in reports as having treated the children. Witnesses who never existed confirmed the facts of the accidents.

Prosecutors say the checks sent to two supposedly bereaved parents are among the biggest such payouts ever investigated by the District Attorney's insurance fraud division. Both were approved by Allstate claims adjuster Gaylan Sweet, one of those charged in the case, according to authorities.

The ruses, authorities say, were elaborate.

In one case, 11-year-old Ruther Brown Jr. was supposedly struck and killed by a car while walking across an Encinitas intersection last year, as Ruther Brown Sr. watched helplessly.

Police reports professionally detailed the fatality and put a drunken driver arrested soon after the accident at fault.

But Ruther Brown Jr. never existed. Nor does the intersection of Mission and Crest in Encinitas where he was supposed to have been run down. Nor does the drunken driver.

Nevertheless, Ruther Brown Sr. of Oklahoma got $500,000 early this year through an Allstate policy issued five months earlier.

Another case involved San Diegan Leigh Anne Sanders, who was paid $210,000 two years ago in an Allstate settlement over her claim that her son, Timothy, was killed by a hit-and-run driver.

There never was a Timothy, and the Encinitas intersection in which that fatality supposedly occurred also doesn't exist, investigators said.

Grand theft and other charges were filed this week against the adjuster, Sweet, 34; Brown, 33; Sanders, 32; and Kion Gould, 33, who authorities believe concocted the schemes with Sweet.

San Diego Deputy District Attorney Terry Cannon said Sweet, Brown, Gould and Sanders know each other, but their relationships are unclear. The men played basketball with each other for years, Cannon said, and with the exception of Brown, all have lived in San Diego most of their lives.

Arrest warrants were issued yesterday and Sweet and Gould were arrested in their Linda Vista homes. Officials were still seeking Brown and Sanders last night.

For an insurance adjuster to attempt an insurance scam on this scale is very rare, said Cannon, who has been a prosecutor in three California counties.

"Low-level crimes of opportunity are not uncommon at all," he said. "But they generally top out at $10,000 or $20,000. But when you talk about high-dollar, go-for-broke schemes like this that are set up months in advance, they are extremely rare. It's the biggest case of its kind, as far as I know, that we've ever had (here)," he said.

If convicted, Sweet could be sentenced to prison for more than eight years. The others face a maximum penalty of 7 years.

The case was developed by investigators in the fraud division of the California Department of Insurance, who got involved after Allstate security contacted them several months ago. Even though Sweet has been under investigation for some time, he continued to work at Allstate until last week, when he was fired.

According to investigators, Sweet usually handled smaller claims. The Brown claim became Sweet's responsibility because he substituted for a vacationing colleague. Investigators believe the timing of the filing was not coincidental.

The Leigh Anne Sanders claim was filed in March 2000, also while Sweet was acting as a vacation backup. When the regular adjuster returned, investigators said, Sweet persuaded his supervisor to let him continue to handle the Sanders case because he said he had developed a rapport with the grieving mother.

Investigators said the Brown and Sanders files at Allstate have disappeared. But investigators recovered a laptop computer owned by Sweet and extracted some of the falsified police reports, they said.

Some of the language in the two reports was identical. For instance: "a roll of 35mm color film was taken by Deputy D. Mahar. It was entered into evidence at the Encinitas Sheriff's Station."

Deputy Dennis Mahar told investigators he did not shoot photographs at either accident because they never happened.

Authorities say the case came to their attention last June when Ruther Brown withdrew $245,000 from his credit union account in a check payable to himself. That same day, a person purporting to be Brown in San Diego called the credit union saying that he didn't authorize any withdrawals. Officials still are not clear about the dynamics of those events.

The suspicious activity prompted an investigation by a credit union supervisor, who alerted Allstate, which then notified California authorities.