Fraud Crimes in Los Angeles and Orange County: Insurance, Check & Securities Fraud

Introduction

Fraud crimes are aggressively prosecuted in California—especially in high-density jurisdictions like Los Angeles and Orange County. These offenses often involve complex investigations, large financial losses, and sophisticated prosecutorial strategies. Whether you are facing allegations of insurance fraud, workers’ compensation fraud, check fraud, or securities fraud, it’s critical to understand how these cases are built and the potential consequences.

I. Insurance Fraud (California Penal Code §§ 550, 1871.4)

Insurance fraud occurs when someone knowingly submits false or misleading information to obtain insurance benefits to which they are not entitled. This crime can be charged as a misdemeanor or felony and often involves:

• Filing false insurance claims (e.g., claiming damages for an accident that never occurred)
• Staging car accidents
• Exaggerating the extent of injuries or property damage
• Billing for services never rendered

Real Example (Los Angeles):

In a recent high-profile case, the L.A. District Attorney prosecuted a group that staged car accidents and billed insurers for non-existent injuries. Surveillance footage contradicted medical reports, and a cooperating witness (a passenger in one staged crash) helped unravel the scheme.

Penalties:

• Up to 5 years in state prison
• Fines up to $50,000 or double the fraud amount
• Restitution to the insurance company
• Probation with mandatory anti-fraud classes

II. Workers’ Compensation Fraud (Ins. Code § 1871.4; Lab. Code § 3700.5)

Workers’ compensation fraud can be committed by employees or employers:

• Employees may fake or exaggerate workplace injuries.
• Employers may underreport payroll or misclassify employees to avoid premium payments.

Common Prosecution Evidence:

• Surveillance videos showing claimants performing physical tasks inconsistent with their alleged injuries
• Doctor depositions uncovering inconsistent medical histories
• Payroll audits exposing wage discrepancies or off-the-books labor

Example (Orange County):

A Newport Beach construction firm owner was charged for failing to report more than $2 million in payroll to his workers’ compensation carrier. A routine audit triggered the investigation, followed by undercover interviews with workers on job sites.

Penalties:

• Felony charges
• State prison time
• Significant fines and back payments
• Revocation of professional licenses

III. Check Fraud (Penal Code § 476)

Check fraud involves knowingly writing, altering, or presenting a fake or unauthorized check. It’s considered a wobbleroffense in California, meaning it may be charged as either a misdemeanor or felony depending on the amount and circumstances.

Types of Check Fraud:

• Forged signatures
• Altering the payee or amount
• Using closed or non-existent accounts
• Check kiting (floating checks between banks to artificially inflate funds)

Common Evidence:

• Bank surveillance
• Signature analysis
• Electronic check tracing
• Witness interviews from financial institutions

Example (Los Angeles):

A defendant used stolen checkbooks to issue over $75,000 in fraudulent checks at multiple banks across Los Angeles. Investigators traced the fraud through bank timestamps and security footage, and a teller’s recollection of the suspect’s behavior helped link the events.

Penalties:

• Misdemeanor: Up to 1 year in county jail
• Felony: Up to 3 years in state prison
• Restitution, probation, and a criminal record

IV. Securities Fraud (Corp. Code § 25400, § 25541)

Securities fraud involves misleading investors in connection with the sale or purchase of securities. It is frequently investigated by both state authorities and federal agencies like the SEC and DOJ.

Examples of Securities Fraud:

• Ponzi schemes
• Insider trading
• Misrepresentation or omission of material facts
• Pump and dump schemes

Prosecutorial Tools:

• Subpoenaed communications (emails, text messages, Slack)
• Bank and brokerage records
• Expert analysis of trading patterns
• Victim testimony and financial loss analysis

Example (Orange County):

In a well-known case, a Costa Mesa-based financial advisor was indicted for misleading elderly investors into buying fake annuity contracts. Authorities uncovered falsified marketing materials and doctored account statements during a raid on the advisor’s office.

Penalties:

• Felony charges
• Up to 20 years for federal securities fraud
• Civil penalties and asset forfeiture
• Lifetime ban from financial industries

V. How Prosecutors Build Fraud Cases

California prosecutors and investigators use a wide array of tools to build white-collar cases:

• Paper trails: Financial records, insurance forms, payroll data
• Surveillance: Videos, photography, GPS records
• Witness testimony: Colleagues, customers, or co-conspirators
• Undercover stings: Especially common in staged fraud or insider deals
• Search warrants: To seize computers, phones, and records

Prosecutors in Los Angeles often work with agencies like the California Department of Insurance, while Orange County frequently collaborates with the District Attorney’s White Collar Crime Unit.

VI. Defense Strategies

A skilled criminal defense attorney can attack the prosecution’s theory from multiple angles:

1. Lack of Intent

Fraud requires willful misconduct. If the act was accidental or due to clerical error, charges may be reduced or dropped.

2. Insufficient Evidence

Without concrete proof—such as recorded admissions, multiple witnesses, or ironclad paper trails—prosecutors may have a weak case.

3. Entrapment

In undercover operations, if a government agent induced the illegal act, entrapment may be a valid defense.

4. Duress or Coercion

If the defendant was pressured into participating in the fraud under threat, that context can negate criminal liability.

VII. Local Considerations: Los Angeles and Orange County

• Los Angeles: Fraud charges are common due to the region’s size and diverse industries. The DA’s office has a specialized Healthcare Fraud Division and often partners with federal agencies.
• Orange County: Known for prosecuting professional license holders and real estate fraud, especially in wealthier communities like Irvine and Newport Beach.

Both counties have aggressive white-collar crime task forces, which underscores the need for experienced counsel from the moment of investigation.

VIII. What to Do If You’re Under Investigation

If you suspect you’re being investigated for fraud—even if no charges have been filed—take the following steps:

1. Do not speak to investigators without counsel.
2. Preserve all documents and communications.
3. Avoid deleting emails or wiping devices.
4. Contact a criminal defense attorney with experience in fraud.

Pre-filing intervention is often the best opportunity to avoid formal charges or to negotiate for reduced consequences.

Fraud crimes involving insurance, workers’ compensation, checks, or securities are treated as serious offenses by prosecutors in both Los Angeles and Orange County. The financial stakes are high, and so are the legal penalties. If you or a loved one is being investigated or charged, early legal representation is your best protection. Contact a qualified lawyer today for a free consultation.