New charges in fraud at Galatis' body repair shop

A reputed mob associate, in prison for trying to have his daughter's boyfriend killed, has been slapped with new charges, as have his son and a former city employee in an insurance fraud scheme that netted them $400,000 from the city's Office of Fleet Management.

Officials said Ron Galati Sr., 65, and Ron Galati Jr., 38, who operated an auto-body repair shop in South Philadelphia, colluded with Robert Otterson, 50, a Fleet Management team leader, to carry out the fraud.

They are charged with three counts each of theft, one count each of conspiracy, and 178 counts each of tampering with public records.

The charges were added to an indictment against the Galatis in another fraud scheme.

In this case, the Galatis' American Collision Inc., 1930 S. 20th St., won bids along with Pacifico Ford in 2010 to repair city vehicles by colluding with Otterson to "manipulate the bidding process."

The Galatis then overbilled the hours needed to repair city cars and split the proceeds with Otterson, said District Attorney Seth Williams. In one of the more glaring examples, Galati's company billed the city for 113 hours of labor to repair a scratched rear bumper that Fleet Management estimated should take 16 hours.

Investigators found that Otterson, after paying the invoices, then burned the inflated estimates in a fire pit in his backyard, according to the indictment.

Detectives also found receipts showing Otterson had gone on a spending spree, paying cash for a $9,000 Harley-Davidson motorcycle, $8,000 in new windows, awnings worth $2,000, a $2,000 watch, new carpets worth $700, and firearms.

The Galatis and 40 codefendants were first indicted for insurance fraud in January 2013. In that case, Galati Sr. allegedly directed accomplices including his wife, son, daughter, insurance adjusters, tow truck drivers, and a city police officer to falsify insurance claims by creating phony stories of crashes caused by falling objects, deer, and other animals to boost insurance claims.

That indictment accused Galati of conspiring with Otterson to obtain a $1.8 million contract with the city, even though his garage did not have welding equipment required under the agreement. That prompted the city's fleet management officials to do an internal audit, in which the alleged additional thefts were uncovered, Williams said.

Galati Sr. was sentenced last year to 22 years in prison for sending hit men after his daughter's boyfriend. Galati Jr. and Otterson remain free on bail. The case is set for trial Sept. 7.