Chalfont garage owner accused of billing insurers out more than $400K

The owner of a Chalfont body shop is accused of fraudulently collecting more than $400,000 in fraudulent insurance payouts after he intentionally damaged cars brought in for repairs or created an appearance of damage where none existed.

Newtown Township resident John Reis, 56, recently was arrested on four felony charges including insurance fraud and theft by deception last month following a four-year investigation involving nearly 300 false insurance claims at his business, Chalfont Collision in the 70 block of Park Avenue.

His attorney, David Mischak, described his client as a "very well respected" business owner who has responded in a "very cooperative manner" with the investigation "to resolve all issues."

"Mr. Reis has an outstanding reputation in the community and is dedicated to maintaining an excellent business along with his continued good service in the community," Mischak said Tuesday via email.

The Bucks County District Attorney's Office Insurance Fraud Unit began investigating Reis in 2018 after receiving a referral from Erie Insurance Company's special investigations unit, according to a press release.

Chalfont Collision was a direct repair center for Erie Insurance and other insurance companies meaning that the garage's credentials had been verified by insurers and they were authorized to write estimates and complete repairs and submit estimates and bills for insurance company customers.

Erie Insurance reported it had received an anonymous tip that Reis was seen "numerous times" wiping a compound mixture onto the body of vehicles and used a sledgehammer to create damages and inflate his estimates and bills, authorities said.

The tipster claimed the mixture gave the appearance of "additional damage" that did not exist; the compound did not damage the car and was easily wiped off.

The District Attorney's Office alleges Reis collected $426,000 in fraudulent payouts between 2014 and this year, according to the release.

In addition to Erie Insurance, investigators learned that at least three other insurance companies — CSAA Insurance Group, Liberty Mutual Insurance and Nationwide Insurance — were also victims of the alleged fraud.

Authorities said they found 185 of the 289 allegedly fraudulent or inflated estimates were submitted to Liberty Mutual, totaling more than $310,000.

Bucks County Detectives, along with the Pennsylvania Attorney General's Office and the Central Bucks Regional Police Department, executed a search warrant at Chalfont Collision earlier this year, seizing evidence that included photographs, files, and computers.

In an interview, one employee told investigators that he observed Reis apply paint marks to car panels and strike vehicles with a sledgehammer in places on vehicles where there was no previous damage.

Authorities also recovered an item that was used to create the illusion of damage to the exterior of a vehicle where none existed. The phony damage was then photographed and added to the estimate to inflate the bill, according to an affidavit of probable cause.

In some cases, Reis reused the same damaged auto parts in photographs, allowing the garage to bill for the same part in numerous estimates, investigators said.

Investigators also allege they found nine phony invoices that were submitted to Liberty Mutual.

Six of the receipts for items purchased between 2018 and 2020 were purported to be from South End Auto Parts in Morrisville, though the company went out of business in 2017, according to authorities.

Three additional parts receipts dated from last year came from a Chalfont business that told investigators they stopped doing business with Chalfont Collision in 2019.

According to authorities, in an interview with investigators in May, Reis admitted that he falsified about 200 insurance claims after his business slowed down in 2018. He claimed he falsified most of the claims by putting compound mixture onto the sides of vehicles to make it appear there was damage.

Reis allegedly told investigators he typically applied the compound mixture to cars insured by Erie or Liberty Mutual because the companies did not send a "re-inspector" to the shop to inspect the damage, according to the probable cause affidavit.

He also allegedly admitted that he created duplicate blank receipts from the business by applying Whiteout to legitimate receipts he had previously received. He would then write phony receipts and submit them to the insurance company for billing.

Reis is free on $150,000 unsecured bail, meaning he didn't have to post money.