Couple Pleads Guilty in $4M Arson, Insurance Fraud Case

The ringleader of a crew that bilked insurance companies by starting a dozen fires in Silicon Valley and the Central Valley has pleaded guilty in a $4 million fraud scheme.

Tyler Chen and his wife Kim Chen copped to multiple felony counts of arson and fraud in a hearing last week in a Santa Clara County courtroom. Prosecutors say the Chens and co-conspirators, including Ha Nguyen, also filed three false water damage claims for broken pipes and leaky roofs

The Chens and Nguyen are due back in court for sentencing on Jan. 3.

In a news release after the guilty plea, the California Department of Insurance (CDI) Commissioner Ricardo Lara applauded the undercover investigation—dubbed Operation Firebird—that brought the fraudsters to justice. “We stamped out this dangerous and costly scam thanks to the hard work of Department of Insurance detectives who pursued a tipster’s alert and launched a joint investigation,” Lara said. “Operation Firebird is a great team effort and shows how our department works with local investigators and district attorney’s offices to combat complex insurance fraud.”

The tip came in 2014 when someone accused Chen of orchestrating fires between 2011 and 2013, and of setting his sights on a new target: a house in Stockton. CDI then launched a joint investigation with the San Jose Fire Department and prosecutors in Santa Clara and San Joaquin counties.

Tyler Chen then orchestrated fires to make it look like they resulted from leaving frying chicken unattended. According to investigators, he planted smoke-damaged items in two homes where he claimed a cooking mishap occurred. But fire inspectors noticed a curious clue when looking into the incidents: the chicken wasn’t cooked through.

“The residence burns down but the chicken that's on the stove isn't as charred as you imagine it to be,” Deputy District Attorney of Santa Clara County Mattia Corsiglia said. He later added: “that demonstrates they were pouring grease and oil around in order to start the blaze.”

Chen and Nguyen also rented warehouses for an import-export business they owned together and even orchestrated some of the fires at those facilities.

Authorities say that in addition to roping in Nguyen, Chen recruited a family member and another local business owner to join their scheme—Trang Huynh, Sandy Ngo and Duyen Pham were also arrested for their alleged role in the fraud. According to investigators, Chen also drafted phony contracts and exaggerated values of burnt goods. One time, he blamed a homeless man for starting a fire in a warehouse. CDI added that two firefighters suffered superficial burns from Chen’s fires Fresno.

All told, the Chens and Nguyen attempted to claim nearly $5.7 million in damages, of which $4 million was paid out by five insurance companies.

“There are a variety of motivating factors and influences when someone commits a crime,” Corsiglia said. “In this instance, it was simply greed, which is often the case with white collar crime. At a time when people are saving money to be able to afford, rent and buy a house, the defendants are burning their homes down for profit.”

Nicholas Chan is a journalist who covers politics, culture and current events in Silicon Valley. Follow him on Twitter at @nicholaschanhk.

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