A workers’ compensation applicant attorney from Orange County has been sentenced to four years in state prison and ordered to pay over $700,000 in restitution to seventeen different insurance carriers for participating in two separate insurance fraud referral schemes.
Jon Woods, 61, of Cypress, was convicted in August of 37 felony counts of insurance fraud along with an aggravated white-collar crime sentencing enhancement, the Orange County District Attorney’s Office announced Friday.
District Attorney Todd Spitzer said his office is “committed to ensuring a level playing field for business owners and insurance companies. By prosecuting bad actors and recovering fraudulently paid funds, we are helping business owners remain competitive and protecting consumers from increased premiums.”
Woods was one of 10 similar attorneys charged in June 2017 as a result of a complex insurance fraud investigation. Charges were also filed against Carlos Arguello, Fermin Iglesias, and Edgar Gonzalez, along with four chiropractors, and several employees working for Arguello.
Arguello, his employees and Iglesias have all pleaded guilty in their Orange County Superior Court cases. Arguello and Iglesias were also charged in federal court for violating federal laws related to their scheme with medical providers, resulting in a four-year federal sentence for Arguello and a five-year federal prison sentence for Iglesias, according to the Orange County DA’s Office.
Prosecutors said that from 2011-16, Woods paid Arguello for workers’ compensation clients procured through Arguello’s attorney marketing business, Centro Legal International, and later Tu Justicia Legal, as well as Centro de Abogados.
Targeting mainly Hispanic neighborhoods across the state, Arguello’s business handed out more than four million flyers per month to attract prospective clients for Arguello’s scheme. The flyers contained different toll-free numbers that all rang to a call center located in Tijuana, Mexico, where operators served as a sales force, dispatching a “sign-up” representative from Arguello’s network to the caller’s home within 24-48 hours to sign legal paperwork to hire the law firm and start the injury claim.
In addition to paying a monthly fee for obtaining clients, Woods also sent records subpoena work to companies controlled and operated by Arguello, in an amount equal to the number of clients he received from Arguello, prosecutors said. These companies billed the workers’ compensation insurance policy of the worker’s employer for all the records subpoena services they provided for Woods, because the law requires that cost of an injured worker proving his/her workers’ compensation claim must be paid by the employer’s workers’ compensation insurance — including expense for obtaining records through subpoenas ordered by the injured worker’s lawyer.
Arguello’s scheme required that all clients procured through Arguello’s marketing would be sent to clinics chosen by his organization, prosecutors said. Like the lawyers participating in his scheme, a group of doctors or chiropractors were also paying Arguello for workers’ compensation patients, they added.
Woods was also found guilty of participating in a second fraud scheme in which he referred additional records subpoena work to USA Photocopy, a subpoena company owned by Edgar Gonzalez. Gonzalez paid various business expenses for Woods’ law firm as a bribe to receive the firm’s records subpoena work, according to the DA’s Office.
Arguello and Gonzalez’s records subpoena companies had offshore offices in El Salvador, where employees reviewed subpoenaed records to identify more businesses that they can serve with more records subpoenas on Woods’ behalf. These companies billed workers’ compensation insurance companies for each individual subpoena.
Senior Deputy District Attorney Noor Hasan of the Insurance Fraud unit prosecuted the case.