| FOR IMMEDIATE RELEASE October 12, 2007 WWW.USDOJ.GOV/USAO/CAN |
SAN FRANCISCO – United States Attorney Scott N. Schools announced Louis Gonzalez and Katherine Paiz were recently convicted of conspiracy and wire fraud by two separate federal juries. Mr. Gonzalez’s jury, after deliberating for about a day, found that he worked with his wife, Ms. Paiz, to stage the theft and burning of their vehicle in order to obtain an insurance payout. Despite Mr. Gonzalez’s confession that he personally burned the car, the jury acquitted him of using fire to commit the insurance fraud. The guilty verdicts against Mr. Gonzalez on September 28, 2007 followed a one- week jury trial before U.S. District Court Judge William Alsup.
Ms. Paiz’s jury, after deliberating for a few hours, found that she worked with her husband, Mr. Gonzalez, to stage the theft and burning of their vehicle in order to obtain an insurance payout. Ms. Paiz’s jury also convicted her of using fire to commit the insurance fraud, adding a mandatory minimum consecutive ten years’ prison time to her sentence. The guilty verdicts against Ms. Paiz on October 9, 2007 followed a four-day jury trial before U.S. District Court Judge William Alsup. Mr. Gonzalez’s and Ms. Paiz’s convictions are the result of an investigation by the Federal Bureau of Investigation.
Evidence at the trials showed that Mr. Gonzalez, 27, and Ms. Paiz, 22, of Brentwood, found out from their car dealership that their six-month old Honda Accord had $6,000 to $7,000 worth of engine damage. Because the damage came as a result of owner abuse relating to over-revving and mis-shifting, it was not covered by the warranty. Mr. Gonzalez and Ms. Paiz were so upset about the damage they fled the dealership without paying an outstanding bill.
Several weeks later, the evidence showed that Ms. Paiz obtained comprehensive insurance on the Honda from Progressive Insurance, a type of insurance that covers loss related to both fire and theft. Nine days later, Ms. Paiz parked her car in a out-of-the- way area of her employer’s parking lot that was not covered by surveillance cameras. Mr. Gonzalez confessed that he picked up the Honda from the parking lot, drove it to a remote area of Contra Costa county near the Byron Airport, doused the car with gasoline, and set it on fire.
The next day, Ms. Paiz and Mr. Gonzalez called Progressive Insurance claiming that their car had been stolen and burned, and seeking full compensation for the vehicle.
In an “Affidavit of Vehicle Theft” completed by Ms. Paiz two days later, she falsely claimed that the Honda’s engine was in “Excellent” condition. Progressive representatives became suspicious, however, when Ms. Paiz turned in her key, her husband’s key, and a valet key to the car. Evidence at trial showed that Progressive representatives knew that 2006 Honda Accords cannot be hot-wired, and require a key to start. After insurance representatives found Mr. Gonzalez and Ms. Paiz stories to be inconsistent and incredible during the course of additional contacts with Progressive, agents of the Federal Bureau of Investigation became involved. Ultimately, both Ms. Paiz and Mr. Gonzalez confessed to perpetrating the insurance scam, and Mr. Gonzalez further confessed that he personally burned the car.
At his trial, Mr. Gonzalez presented the defense that his wife, Ms. Paiz, was responsible for the entire scam and that he played no role whatsoever in it. At her trial, Ms. Paiz admitted involvement in the scheme, but presented the defense that her husband, Mr. Gonzalez, got her involved, that he was responsible for burning the car, and that she played no role whatsoever in the arson.
Mr. Gonzalez and Ms. Paiz were indicted by a federal grand jury on October 26, 2006. They were charged with conspiracy to commit fraud, two counts of fraud involving interstate telephone calls (“wire fraud”), and using fire to commit wire fraud.
Mr. Gonzalez and Ms. Paiz are currently released on bond pending sentencing.
Their sentencings are scheduled for January 8, 2008 before Judge Alsup in San Francisco. The maximum statutory penalty for conspiracy to commit wire fraud in violation of Title 18, United States Code, Section 371 is five years, a fine of $250,000, plus restitution if appropriate. The maximum statutory penalty for each count of wire fraud in violation of Title 18, United States Code, Section 1343, is twenty years, a fine of $250,000, plus restitution if appropriate. The penalty for using fire to commit wire fraud, in violation of Title 18, United States Code, Section 844(h)(1) is a mandatory prison term of ten years to be served on top of any other prison term imposed. Any sentence following conviction would be imposed by the court after consideration of the U.S.
Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
William Frentzen and Robert David Rees are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of paralegal Kimberly Hopkins and legal technician Karem Alvarez. The prosecution is the result of a three-month investigation by the Federal Bureau of Investigation.
Further Information:
Case #: CR 06-710 WHA
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney’s Office should be directed to Natalya LaBauve at (415) 436-7055 or by email at Natalya.LaBauve@usdoj.gov.