Allstate Insurance tried to Hire a Thief
Tempe, AZ 05/21/01 - Last Thursday (05/17/01) a post was made on a major collision industry discussion board. The post was made anonymously under the name "Reporter". The subject line of that post was "Allstate Hires Burglar to Rob Insured's Home". Click Here to read the post. That post recounted events that seemed a throw-back to 1994 when Allstate used a phony civil engineer (convicted felon) to provide bogus reports attesting to the lack of damage to insured's homes after the Northridge Earthquake (that story was broadcast by ABC 2020 on 10/14/98). The events depicted in that post were so outrageous we had to do a follow-up investigation. Sad to say, the story was true !
. . . Got a Sheriff's Deputy Instead !
The Story . . .
Here are the highlights of the story. On January 14, 1997 Thomas Ivers' 5,200 square foot home in Shingle Springs, California burned to the ground. The apparent cause was roaming goats having entered through an open door into the basement billiards room and knocking over a kerosene heater. The damage exceeded $1 Million. The property was insured by Allstate.
Allstate rejected the claim saying their investigator, working with a state fire marshal, had determined the cause to be arson. The insured hired attorney Glenn W. Peterson of McDonough, Holland & Allen and filed a Bad Faith suit against Allstate in El Dorado County Superior Court in 1998. Allstate hired Richard J. Edson of Edson, LaPlante & Spinelli to defend against the Bad Faith action.
As a matter of course, Defense Counsel hired a private investigator to collect information to see if they could discredit the insured and force Mr. Ivers to drop his suit. The private investigator hired by Allstate's defense counsel was Charles Lee O'Neal. Mr. O'Neal's report to Allstate's defense counsel included the fact that Mr. Ivers had been convicted of conspiracy to distribute cocaine some 15 years previously. This lead to unfounded allegations that Mr. Ivers had also been convicted of arson, possession of a firearm by a felon, was under investigation by the Washington State Gambling Commission for bingo fraud and had bilked an elderly relative of comedian Foster Brooks out of money invested in a phony scheme.
These allegations prompted the insured to bring a separate civil suit against Mr. O'Neal (the private investigator) and Mr. Edson (Allstate's defense attorney). Richard J. Edson's name has been dropped from that suit based upon a confidential settlement. The civil case against Mr. O'Neal is still pending.
Stay With Us . . .
This story gets even better (or worse, as the case may be). It became apparent that Allstate's insured seemed to have an extraordinary knowledge about what their defense team was doing. Frustrated by these events, Allstate's defense team commissioned O'Neal to "Acquire" copies of everything the insured had on their computer. To this end, O'Neal made contact with what he thought was an under-world type to perfect the acquisition. Unfortunately (for Mr. O'Neal), the mafia contractor he thought he was talking to (about making the acquisition) turned out to be retired Sacramento County Sheriff's Captain Ernest "Bernie" Buda, playing "Sal", a "hit man from San Jose". "Sal" was "wired to the hilt" as the clandestine conversation took place in a restaurant parking lot on July 22, 1999.
A Criminal Trial . . .
Mr. O'Neal was arrested and charged with soliciting the commission of a crime and soliciting to receive stolen property. Mr. O'Neal's criminal trial was held in Sacramento County Superior Court. Judge John J. Gallagher presided. The case number is 99F07652.
The clear and convincing evidence notwithstanding, the jury failed to reach a decision after 3 days of deliberation. Judge Gallagher dismissed the jury and dismissed the case for "Insufficient Evidence" on April 18, 2001.
In an interview with I-Can, Deputy District Attorney Christopher Ore advised us their office has decided to not re-file charges. Mr. Ore regards this lack of decision as a classic example of "jury nullification".
The Bad Faith Case . . .
The Bad Faith litigation had been set for trial on June 30, 2001. However, because of the complications related to Mr. O'Neal's criminal charges, it has been continued to March, 2002. Allstate's defense counsel has recused himself as has Mr. Ivers' original attorney. Mr. Ivers is now represented by Glenn S. Guenard of Laskin & Guenard.
Mr. Guenard told I-Can he expects to depose Mr. O'Neal, Mr. Edson, Capt. Buda ("Sal") and all other participants involved in the above illegal scheme activity. A Criminal prosecution requires proof "Beyond a Reasonable Doubt". The Civil Bad Faith prosecution requires only a "Preponderance of the Evidence" burden of proof.
We Share This Story Because . . .
Last week's I-Can Press Release dealt with Allstate's acquisition of Sterling's chain of 39 collision repair facilities and the potential consequences thereof. That Press Release referenced Allstate's possible Motives and Methods and expressed concerns over how this dominance over a vertical relationship would impact Consumers and the Collision Repair Facilities that seek to serve them.
That Press Release can be accessed by clicking on this Index link.
When one considers Allstate's use of a convicted felon / phony engineer, to defraud their policyholders after the Northridge Earthquake, and the fact that Nine (9) State Attorneys General are investigating Allstate for violations of Consumer Protection Laws (click here), one can begin to understand the concerns expressed in last week's Press Release. Now, with this sorted story coming to light, it only serves to call Allstate's Motives and Methods further into question.
Power Corrupts . . . Absolute Power Corrupts ABSOLUTELY !
I-Can again expresses our admonition that Allstate's absolute authority of their Vertical Relationship with Sterling's chain of collision repair facilities should be closely examined by the Mainstream Media and Federal Authorities. It is I-Can's Opinion that such a Vertical Relationship violates both the letter and intent of the McCarran-Ferguson Act as well as the provisions of the 1963 Consent Decree.
Recommendation . . .
Until Allstate's motives have been examined, and the legality of their conduct has been examined, we at I-Can recommend Allstate policyholders "Shop" for a replacement auto policy when their current policy comes up for renewal. We see some very real "Pot Holes" down this road Allstate has chosen to travel.
Next Week . . .
Wreck Check has examined literally 1,000's of Consumer's vehicles repaired within the typical DRP structure and has documented the safety defects and fraud related thereto. I-Can has invited Wreck Check to express their observations relative to Allstate's absolute dominance over their wholly-owned Sterling collision repair facilities. Next week's I-Can Press Release will include the observations of James Lynas, President of Wreck Check.
The Insurance Consumer Advocate Network is an InterNet based consumer advocacy effort designed to Increase Consumer Awareness as to Insurance Related Issues, Encourage Consumer Involvement with Insurance Related Efforts and Facilitate Consumer Contact with Pro-Consumer Entities.
The InterNet web site for the Insurance Consumer Advocate Network is www.iCan2000.com.