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Seven Southwest County residents are among the 38 people arrested during a five-month sting operation in Riverside and San Bernardino counties involving alleged auto insurance fraud, authorities said Thursday.

Those arrested are accused of making false insurance claims, which leads to huge increases in policies for everyone who drives in the state, Insurance Commissioner John Garamendi said during a press conference in Rancho Cucamonga announcing the arrests.

At least two more people are expected to be arrested soon, authorities said. One man is arranging to turn himself in and another is on vacation, investigators said.

This is the first time an insurance fraud sting operation has been conducted in the Inland Empire, Garamendi said. Stings in Northern California led to dozens of other arrests.

Over the five months of this sting, undercover investigators with the state's Auto Insurance Fraud Task Force went to 66 auto body shops in the two counties. Investigators told estimators or employees at the shops about false insurance claims they would be making to get new, complete paint jobs on vehicles, authorities said.

Investigators said they would be coming back to get the car painted once their claim had been "cashed out" by the insurance company ---- a term used for paying the insured person directly instead of the repair facility once an estimate is done.

Some of those arrested coached the undercover investigators how to make the damage worse on the vehicle so the insurance company would have to pay to have the entire vehicle painted, authorities said.

Garamendi cited one case in which there was no damage on the vehicle so the employee went around with a hammer and dented it.

"This is a very real problem," Garamendi said. "There is no way we can allow this to go on."

He said studies done over the past few years show that anywhere from 15 percent to 20 percent of an insurance policy's cost is to offset the cost of fraud in the industry.

Of the 66 body shops visited by investigators, 30 had employees who allegedly were willing to file a false claim, authorities said. Five of the 30 shops are located in Southwest County.

All but one of the 38 people arrested were taken into custody at their workplace.

Georgia Shutes, 41, of Winchester, was arrested at her home because the Temecula body shop where she worked is no longer in business, said Ingrid Wyatt, spokeswoman for the Riverside County district attorney's office.

Other local arrests announced by authorities are:

Zenia Amezquita, 19, of Quail Valley; Bill Carroll, 40, of Menifee; Francisco Diaz, 22, of Lake Elsinore; Javier Renteria, 50, of Quail Valley; Gustavo Rodriguez, 43, of Murrieta; and Dario Seniguar, 37, of Murrieta.

All 38 people ---- 20 of whom are from Riverside County ---- were arrested over the last five days on suspicion of filing a false insurance claim and, if convicted of that charge, face up to five years in state prison and fines of up to $50,000, authorities said.

Most of those arrested were estimators at the business where the alleged illegal activity happened, authorities said. However, three of the local people arrested were owners of body shops, investigators said.

Amezquita and Renteria own California Style Body Shop in Hemet, and Rodriguez is the owner of Valley Collision Auto Body in Murrieta, investigators said.

All of those arrested locally were booked at Southwest Detention Center in French Valley.

Riverside County District Attorney Grover Trask said the investigation shows this is a widespread problem that must be addressed.

"The only way to stop this is with this sort of sting operation," he said. "There is no question, in the cases we've reviewed, that a crime was committed."

"These individuals are ripping off the public," Trask added.

"Once the word's out (from such stings), this practice which has become rather usual will become more unusual," he said after the press conference.

Details of the various investigations will be turned over to the state Bureau of Automotive Repair, Garamendi said.

"Depending on what happens there, some of these businesses could lose their licenses," he said.

The bottom line is, according to Garamendi, "if you do this, we're going to catch you and the DA will prosecute.

"Any auto body shop in California should be looking over its shoulder," he continued. "We might be there."

Contact staff writer John Hall at (951) 676-4315, Ext. 2628, or jhall@californian.com.