Grand jury: Auto-insurance scam involved deer parts

Ron Galati, shop's ex-owner, one of 41 charged in the $5 million scheme.
Ron Galati, shop's ex-owner, one of 41 charged in the $5 million scheme.
Posted: May 30, 2014

People wandering through Ron Galati's South Philadelphia auto-body shop could be forgiven for thinking they'd stumbled upon an urban hunting lodge.

There were deer heads mounted on the walls and carcasses, fur, and blood stored in the back.

In reality, says Philadelphia District Attorney Seth Williams, the shop was an elaborate staging area for a $5 million scheme that defrauded auto insurance companies and involved a police officer and city worker.

Galati - an alleged mob associate awaiting trial for paying to kill three people - was in the business, according to a grand jury, of "fictitious deer accidents."

He is accused of having workers pull weeds from the river bands at Penrose Avenue to create what Galati called "Hollywood photos" of bogus crashes.

And deer weren't the only props used, the prosecutor said Wednesday. There were geese and dogs and chunks of metal and concrete, as well as hurtled cartons of fruit.

Galati favored creating single-vehicle accidents because insurance companies would consider them "no-fault" and pay the claims without raising the vehicle owners' premiums, Williams contended.

According to grand jury witnesses, Galati would say: "I live my life to cheat insurance companies."

Galati, 63, was one of 41 people charged in the fraud after a 16-month investigation by a Philadelphia grand jury. Also charged were his wife, Vicki, 59, and their son Ron Jr., 37, who since 2000 has been the legal owner of his father's American Collision & Auto Center at 1930 S. 20th St.

Galati Sr.'s attorney, Anthony J. Voci Jr., said he could not comment specifically on the charges because he had not seen the presentment.

Voci also represents Galati Sr. on two other pending cases: an alleged contract to kill a grand jury witness and his son, and federal charges that he ordered the Nov. 30 shooting of his daughter's boyfriend in Atlantic City.

Among others charged in the insurance scheme were a former Philadelphia police officer, Douglas DiEmidio, 50, and Robert Otterson, 48, an employee and mechanic with the city's Office of Fleet Management.

According to the grand jury presentment, DiEmidio created false accident reports to help Galati "legitimize" bogus accidents.

DiEmidio was fired last year after being charged in an unrelated case with stealing $10,000 worth of electricity by tampering with the meter on his South Philadelphia home. He pleaded guilty in December in Common Pleas Court and was sentenced to three years' probation.

Otterson, a $49,000-a-year city employee, allegedly enabled American Collision to obtain a $1.8 million city contract by falsely certifying that the body shop had a specialized welder needed to work on city police cars.

In December, the city ended its contract with Galati's company after the Daily News reported his arrests in the three contracted hits and the existence of the insurance fraud probe.

City Managing Director Richard Negrin confirmed that Otterson still worked for the city, "but not for long. We're moving quickly to terminate him. . . ."

The defendants were charged with counts alleging operating a corrupt organization, conspiracy, insurance fraud, bid-rigging, and theft.

Assistant District Attorney Dawn Holtz, the prosecutor in the case, said 14 people have surrendered and agreed to cooperate in the prosecution.

Williams said the investigation of Galati began when two insurance companies, Erie and Progressive, contacted his office about suspicious behavior by insurance adjusters.

Cheryl Stanton, 58, of South Philadelphia, an appraiser for Erie Insurance, was accused of accepting cash and gifts from Galati to inflate estimates of crash damage.

Arthur Juliano, 37, of South Philadelphia, an appraiser for Allstate, was also charged with accepting cash from Galati.

Galati's name and business also figured in the federal racketeering conspiracy case against reputed mob capo George Borgesi. Last year, star prosecution witness Louis "Bent Finger Lou" Monacello regaled a federal jury in Philadelphia with tales of two young mobsters in their youth.

He and Borgesi, Monacello said, were paid by Galati to vandalize the cars of his own customers.

Galati would copy keys to cars brought into his shop for repair, and Borgesi would later find them parked on the street, steal them, and crash them into the other vehicles owned by Galati customers, Monacello said. The purported point of their vandalism: to create more work and potential insurance paydays for American Collision, the mobster said.


jslobodzian@phillynews.com

215-854-2985 @joeslobo

www.inquirer.com/crimeandpunishment

Inquirer staff writer Jeremy Roebuck contributed to this article.

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