Illegal practice leads to big fines

BUFFALO, N.Y. (WIVB) - Luke Moretti first exposed a sweet deal between certain insurance agencies and auto glass repair shops.

Now the state has dropped the hammer and the illegal practice is costing some agents big fines.

Ralph Galluzzi from Bison Plate Glass said, "I made a lot of enemies out there and personally I don't care. I'm still in business. I'm still working every day."

Galluzzi blew the whistle on an illegal practice that involves referrals fees paid out by auto glass repair shops.

He said it's been going on for decades.

"Whoever paid the most, got the most. And it shouldn't be like that," he said. "People got rich over this. And a lot of people went broke over it. And there should be an impact."

State Insurance Examiner, Warren Lester explained that in this case, certain auto glass repair shops paid out gift cards in exchange for referrals from insurance agencies.

43 agents and/or brokers, located in Western and Central New York, have now been hit with fines ranging from $250 to $5,000.

Lester explained, "In some cases, they did not know it was going on and should've known it was going on. In some cases they did not know it was going on. And it was so clandestine. Some of the gift cards were sent to the people's homes. It would be difficult for them to know about it."

Galluzzi admits he paid out referral fees too.

And said when he stopped it, his auto glass business dropped dramatically.

In 2006 he went public and filed a complaint with the State Insurance Department.

"I'm happy that they finally got to it. But I'm disappointed in the state. Three years. It took three years. And in that three years, all these glass companies that were giving these kickbacks and the agents that were accepting them. They were still doing it," Galluzzi explained.

State insurance officials said the message is simple.

It's illegal for insurance agencies to accept referral payments by auto repair shops.