Ex-CHP officer guilty of insurance fraud | TahoeDailyTribune.com
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Ex-CHP officer guilty of insurance fraud

B.H. Bose

A jury has found a local retired California Highway Patrol officer and his wife guilty of submitting a fraudulent insurance claim and making false statements regarding an insurance claim.

As a result of Tuesday morning’s verdicts, Kathleen and Charles Chapman could face up to five years in state prison. The probation and sentencing is scheduled Aug. 20 at 1:30 p.m. at the South Lake Tahoe municipal courtroom.

“We believed they were guilty and that is why we went forth with the case,” said District Attorney Paul Sutherland. “It was really a wild card. We had law enforcement as the defendant and an insurance company as the victim, so you never know what a jury will think. I am relieved with the verdict, but it is still always sad when it comes down to this (a guilty verdict).”



The Chapmans, longtime South Lake Tahoe area residents, were paid approximately $50,000 from the California State Automobile Association after a fire on March 9, 1996 destroyed their mobile home at the Tahoe Verde Mobile Home Park at 1080 Julie Lane.

After the Chapmans received the money, it was reported that Sandra Woodward started calling the insurance company complaining that the Chapmans didn’t live at the mobile home at the time of the fire and that they claimed lost items that were not theirs. The complaints prompted an investigation by the CSAA.



It was discovered that the Chapmans had an “owner-occupied” insurance policy, which meant they had to be living at the mobile home in order to make a claim on lost property or loss of use (money for lodging and items needed immediately following a fire). Woodward, who had put down a $5,000 deposit and was in the process of buying the home, actually lived at the residence with her boyfriend and two children when the fire broke out.

Despite the policy, the Chapmans submitted an itemized list of items, and were paid by the CSAA for the mobile home itself, and loss of use.

Believing she might be able to get something for her losses, despite the fact that she carried no insurance, Woodward submitted a list of lost items to the Chapmans.

“At one point, Mrs. Chapman said to me, ‘We might have some insurance to cover your losses,'” Woodward testified.

The Chapmans submitted a list that supposedly included mostly Woodward’s items, and so the list became a crucial part of the district attorney’s case.

After Woodward submitted it to the Chapmans, it was rewritten on a formal CSAA sheet and sent to the insurance company by Kathleen Chapman. While it was not established that the Chapmans specifically said the items were theirs, all of the agents who testified said they believed they were.

Defense Attorney Monte Reece tried to establish that the Chapmans did not realize claiming somebody else’s items was fraudulent and that they were never informed that they had to be living at the mobile home to claim any loses. All the agents answered “no” when asked: “Did you ever ask the Chapmans if they were living at the mobile home at the time of the fire or if the contents were theirs?”

When Charles Chapman took the stand, he basically confirmed the items were not his family’s.

“I am saying the (CHP) uniforms on the list are mine, but everything else is not,” he said.

In other testimony, Chris DeVito, a CSAA special investigator with home claims, tried to clarify the policy by explaining that the most money the Chapman’s should have received was $5,000. According to DeVito, the mobile home was sold to Woodward by the Chapmans for $17,500. Since Woodward put down a $5,000 deposit, and because there was already a previous owner who still had a $7,500 investment on the mobile home, there was only $5,000 left to be claimed by the Chapmans on the loss of the structure.

No loss of use or lost items could be claimed since the Chapmans were not living at the residence. However, DeVito said, the Chapmans received $26,000 for the loss of the structure (the actual loss of the mobile home), $19,904.30 for the loss of personal property, and $531.76 in loss of use.

In closing statements, Sutherland urged the jury to come back with a guilty verdict on both counts.

“I just want to make one point,” he said. “Sandra Woodward is not the victim. She bought the house and didn’t get insurance. The insurance company is the victim. The Chapmans knew they didn’t have insurance to cover the loses, but they submitted a claim anyway. It is just bizarre to think they had a claim on Woodward’s items.”

In defense, Reece stressed that fault was with the insurance company, and not the Chapmans.

“This looks like grasping at straws, Monday morning quarterbacking,” he said in closing. “They (insurance agents) realized they paid out on an insurance policy they shouldn’t have and are now claiming insurance fraud to make up for it. I asked each adjuster if they asked the Chapmans if they lived there (at the mobile home) at the time of the fire and they all said no. They write the policies. The logical explanation is that when they passed this policy around, they dropped the ball.”

Judge Jerald Lasarow, who presided over the four-day trial, will sentence the Chapmans on Aug. 20. While they face a maximum punishment of five years in state prison, the punishment, said Sutherland, likely will be less severe. Sutherland has yet to decide what he will ask for, but he is fairly certain he will request custody, which basically means asking the judge for some jail time.

Fines, community service, restitution (paying back the insurance company), and house arrest are all other options Judge Lasarow may choose.

Tahoe Daily Tribune E-mail: tribune@tahoe.com

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