South Philly mechanics charged in insurance fraud scam that cost city over $400K

The city has charged three contracted-out mechanics with bilking the Office of Fleet Management out of hundreds of thousands of dollars in padded invoices, inflated repair costs and overcharged labor on city cars, District Attorney Seth Williams announced Wednesday morning.

Ronald Galati Sr., Ronald Galati Jr. and Robert Otterson, mechanics from South Philly, are charged with scamming the city out of more than $400,000 over the course of several years, according to an indictment handed down Wednesday.

All three are charged with theft, criminal conspiracy, receiving stolen property and tampering with public records.

Williams, along with Assistant District Attorney Dawn Holtz, described the nature of the scheme, which started when the Galatis were hired by the city to work on city cars that get damaged on the job.

“The original case started several years ago when we started investigating American Collision for insurance fraud for staging accidents, for enhancing damages and padding invoices,” said Holtz.

An investigating grand jury found that in 2010, the city’s Office of Fleet Management solicited a bid for automotive repair shops to receive overflow repair work the city couldn’t handle on its own.

Williams said Otterson worked for Fleet Management and was the point man who would help the Galatis win bids to receive overflow repair work for their South Philly auto body shop, American Collision.

In January 2013, Galati Sr. and junior were indicted and charged with operating a large insurance fraud scheme at American Collision. The case is part of a larger insurance probe the Galatis and possibly 40 others are involved in going back three years ago.

Galati Sr. remains incarcerated without bail, serving a sentence of 21 years on a federal case where he put a hit out on someone in Atlantic City. Galati Jr. and Otterson are currently out on bail awaiting a Sept. 7 trial and have waived their preliminary hearings. All three have agreed to have these new charges added to their existing cases.