Galati And Son Take Another Hit

By George Anastasia

For BigTrial.net

More bad news for Ron Galati, the South Philadelphia autobody shop owner with the Godfather complex.

The Philadelphia District Office announced this morning that it has expanded the insurance fraud charges against Galati and two of his co-defendants, his son Ron Jr. and Robert Otterson.

The new charges include allegations that the three set up a scheme that steered repair work on Philadelphia Police Department and other city vehicles to Galati's autobody shop where charges were inflated and repair work exaggerated. The DA alleges that the scheme netted the trio $400,000 in illegal funds.

Galati, his son and Otterson are among a group of defendants scheduled for trial in September. An original indictment alleged a $5 million insurance fraud scheme and included charges that Galati Sr. had hired two hitmen to kill two rival autobody shop operators who were cooperating in a grand jury investigation.

Galati, 65, is already serving a lengthy federal sentence following his conviction on charges that he hired the same two hitmen to murder his then estranged daughter's boyfriend. The boyfriend survived the shooting and the hitmen became cooperating witnesses.

  

“Ronald Galati, Sr.; Ronald Galati, Jr., and Robert Otterson thought that defrauding the people of the City of Philadelphia of over four hundred thousand dollars was a good idea; it wasn’t," District Attorney Seth Williams said in announcing the expanded charges. "And I can assure them that my Office and our partners in government will do everything we can to ensure that they are punished to the fullest extent of the law.”

The details of the scam were laid out by the DA who said Galati's company, American Collision, obtained a contract for work on city vehicles even though it did not legally qualify for the work. Otterson helped make that arrangement, Williams said.

Otterson, 50, was a city Fleet Management Team Leader and a licensed appraiser who, Williams said, "manipulated the bidding process" so that Galati's company would receive the work. Among other things, American Collision did not have the type of equipment, including an inverted squeeze resistant spot welder, that was required of any company bidding for the work.

Yet American Collision qualified as a secondary contract shop, the DA said, and Otterson steered city work to the shop.

Otterson, William said, would also "write the initial appraisal for each vehicle’s anticipated repairs, endorse and authorize any additional costs, and approve Galati, Sr.’s fraudulently inflated repair and labor costs. As payment, Galati, Sr. would then share some of the ill-gotten proceeds with Otterson."

In announcing the new charges, the DA's Office also alleged that:

-- The  labor hours listed on American Collision’s appraisals were often three times greater than the amount of labor hours anticipated by Fleet Management.

-- American Collision frequently billed for auto parts that Fleet Management had already provided to the shop for repairs.

-- A review of 182 repair jobs,  indicated that American Collision billed approximately two hundred hours of labor, at a rate of $30 per hour, for repairs to one city vehicle. Fleet Management estimated that the repairs should take fifty-seven hours.

-- Photographs of one damaged vehicle indicated that the car only had a few scratches to the rear bumper leading Fleet Management to estimate that it would take approximately sixteen hours to repair the vehicle. American Collision billed for 113 hours of labor for that job. American Collision also submitted a bill for $6,000 for parts  that had already been supplied and that cost $4,000.

The investigation indicated that Otterson routinely sent more work to American Collision, the secondary contractor, rather than Pacifico Ford, the primary contractor designated by the city. Between 2011 and 2013, Pacifico received 115 cars for repair work while American Collision received 192.

The Galati case is being prosecuted by Assistant District Attorney Dawn Holtz. The case grew out of an extensive investigation coordinated by Det. Robert DiFrancesco of the DA's Fraud Unit, and Trooper Michael Romano who is assigned to the Organized Crime Unit of the Pennsylvania State Police Bureau of Criminal Investigation.

Both investigators also worked the murder-for-hire cases that are now pending and the case that was tried in federal court in Camden that resulted in a 23-year sentence for Galati Sr.

The new insurance fraud charges include an allegation that Otterson, who lived in the 1900 block of South 30th Street,  would burn the inflated estimates he submitted in a fire pit in his backyard "after he had provided the amount to Galati Jr. Investigators recovered charred paperwork and receipts for a $2,000 watch, new awnings valued at $2,000, a water heater worth $2,000, new carpets valued at $700, new windows worth $8,000 and a Harley Davidson motorcycle valued at $9,000. 

Those purchases, the DA alleged, were made at least in part with the cash Galati shared with Otterson as part of the insurance fraud scheme.

Galati, who served 37 months after being convicted in a 1995 federal insurance fraud case, has long been identified as an associate of high level South Philadelphia mob figures, include Joseph "Uncle Joe" Ligambi, George Borgesi and Joseph "Skinny Joey" Merlino.

The autobody shop owner appeared to be enthralled by his mob connections and was fascinated, according to those who know him, by mob movies, frequently quoting lines from The Godfather and Goodfellas.

Investigators have long believed that mobsters used Galati's autobody shop to cut holes into a stolen van that became a "hitmobile" during a bloody mob war in the 1990s. Then mob boss John Stanfa was ambushed while riding in a car on the Schuylkill Expressway when a van, with portholes cut in its side, pulled alongside his car in the midst of rush hour traffic. Two shooters pointed machine pistols out of the portholes and strafed the Stanfa car. Stanfa's son, Joseph, riding in the back seat, was wounded in the failed hit.

Galati, according to investigators, has denied knowing anything about the van or its refitting. Authorities hope the new charges will put additional pressure on him -- his wife and son are also facing potential prison time if convicted in the pending case. Thus far, Galati has rejected any offer to cooperate.

"He's being a standup guy," said one investigator, noting that he could be standing up for the rest of his life behind bars.

George Anastasia can be contacted at George@bigtrial.net.