Dead Carcasses Behind Auto Body Shop

Here is a great example of how auto body shops can be some of the most creative and prolific fraudsters around.  In Philadelphia, a $5 million operation that ran on fraudulent collision claims was uncovered when Ronald Galati Sr. was accused of insurance fraud.  There were apparently 41 people involved.

The latest story indicates that several members of Galati’s family were involved, and the crazy part is that some insurance adjusters were involved in the fraud as well. 

Actually, the crazy part involves the storage of dead deer carcasses at the rear of this body shop.  Can you imagine the smell? 

Apparently, this guy was storing dead deer to use their hair, skin and blood to stuff into cavities and smear on to body panels as evidence that the car hit a deer.  The body shop told customers that this way the insurance company would not put the claim down as an “at fault” accident on their records in order to avoid premium increases.

Makes me want to say “oh dear…”

Auto Insurance Fraud Ring Busted In Los Angeles

So far, 17 people have been arrested in California resulting from an investigation into a multi-million dollar insurance fraud operation.  The investigation took place over a four-year period in the Los Angeles area.

Law enforcement has commented that even more arrests are likely.  Auto dealers and insurance companies were the victims of this fraud, all of which were located in or near Los Angeles.  Although these were the targets, we all know that this type of activity affects all insurance customers by causing increased insurance costs.

This fraud involved the purchase of luxury vehicles such as Audi, BMW, Mercedes and Lexus cars with bank accounts and fraudulent credit cards.  The perpetrators would use fraudulent credit cards to make the purchases, or they would make payments for the cars using a bogus bank account, leaving the auto dealership in the red.

Once the purchase was complete, the new owners would then take out an insurance policy on the cars.  Since these are high value vehicles, they would stand to collect a lot of money on them if they were damaged and determined to be a total loss.  As it turns out, these crooks took the newly purchased cars and then deliberately crashed them.  They would then make an insurance claim and pocket the proceeds from the collision settlement.

This kind of activity is somewhat common but this Los Angeles case suggests that there was a wide ring of people involved.  They had developed a method of systematically committing fraud against car dealers and insurance companies.  In the end, consumers have to pay for this activity as the cost to pay the bogus claims, as well as the cost to investigate and litigate some of these claims are eventually passed on to the consumer.

Saints Row 2 – Insurance Fraud Guide?

Violent video games have long been a topic of controversy, particularly so after major video game publishers such as Sony and Nintendo were named in lawsuits stemming from the Columbine shootings of 1999.  Allegations were that the perpetrators of that horrible crime were regular game players of violent video games and now a video game called Saints Row 2 allows players to commit virtual insurance fraud.

Violence and Video Games

This begs the question; do violent video games inspire people to act with violence in real life?  If so, could video games cause people to commit non-violent crimes as well?  The Saints Row 2 video game in particular has a component that encourages players to commit insurance fraud in order to advance in the game and obtain bonus points.

The National Institute on Media and the Family estimates that today’s young people play video games for about 8 hours per week.  When you consider the conditioning that may occur during these games, its easy to consider that a person may be inspired to attempt to act out these fantasies at some point.

Insurance Fraud - A Game?

Saints Row 2 contains a feature that allows players to commit insurance fraud in order to build up an accumulation of money throughout the game.  The player’s cash is built up by jumping in front of vehicles, and the goal is to do this without really getting injured, and to do it in such a way that the player’s character can stand up quickly and move on through the game quickly.

Will video gamers be able to discern fantasy from reality?  What effect do these games have on young people?  While games like Saints Row 2 are not illegal, games that encourage or mimic law-breaking activities should be carefully regulated to ensure that young people do not get the wrong idea when it comes to violent or non-violent crimes.

New Florida Law Now In Effect

As of 1/1/2013 Florida, lawmakers are getting tough on auto/motor insurance
fraud. A new law designated as House Bill 119 is designed to address
weaknesses in their Personal Injury Protection (PIP) program and it
goes into effect this year. Personal Injury Protection pays for
medical bills, lost wages and certain other expenses incurred by those
injured in an auto accident. When it comes to auto insurance costs,
PIP coverage is mandatory for drivers in Florida, and it accounts for
about 20 percent of the total premium depending on the type of
coverage you may have.

This new law defines insurance fraud as "knowingly presenting a PIP
claim to an insurer for payment or other benefits on behalf of a
person or entity that committed fraud when applying for health care
clinic licensure, seeking an exemption from clinic licensure, or
demonstrating compliance with the Health Care Clinic Law."

PIP fraud occurs largely with the help of hospitals, doctors, or
clinics that are billing for false treatments, or which are providing
bogus medical reports outlining injuries that never really existed.
As part of the new law, certain types of treatment will no longer be
covered under Florida's PIP program, such as massages or acupuncture.
There is also a much lower cap on payments for non-emergency
treatments from $10,000 down to $2,500.

The new laws allows for the punishment of those who submit false PIP
applications for benefits. While this is already illegal in Florida
under other insurance fraud statutes, the new law focuses on PIP
benefits and serves to reiterate the penalties for false motor insurance applications.

Compare Car Insurance Fraud

If we compare car insurance fraud to other types of fraud we find that according to the Insurance Research Council automobile insurance fraud added between $4.8 billion and $6.8 billion to auto claim payments in 2007.  This staggering figure pales in comparison to insurance fraud across the U.S., which costs the industry over $30 billion per year.

There are significant dangers involved with those who commit car insurance fraud.  If we compare car insurance fraud to medical insurance fraud, we find that the only real harm in medical cases is financial.  The chances of someone being injured are far less in this type of fraud.

If we compare car insurance fraud to homeowner’s insurance fraud we find that there are significant dangers in both, especially when you consider the danger to life and property caused by arson.  Incidentally, a large proportion of fraudulent claims involving automobiles involves arson as well.

Car insurance fraud that involves arson and staged accidents cause more issues than just financial damages.  This type of fraud places people in danger of being injured.  If you compare car insurance fraud to other types of insurance fraud, it will stand out as one that poses more dangers to the public than other types of insurance fraud.

Not Fraud

But a safety issue nonetheless.

Please do not drink and drive. Drunk driving killed 37,261 people in 2008 according to the National Highway Traffic Safety Administration.   

This is equivalent to over 100 people every day.

Mustang Collision Did Not Injure Her Back

Linda Ann Rose of King County, Washington was ordered to pay $300,000 in restitution after it was determined that she faked an injury from a minor fender bender in Issaquah, Washington near Seattle.

The accident involved a minor collision between an SUV and Rose’s car, a rented Ford Mustang.  She claimed severe back injuries and sued the driver of the SUV.  A demand of over $650,000 was made against the SUV driver’s insurance company.

It was later found out that Rose had prior back injuries and altered medical reports that were provided to her own attorney.

The $300,000 restitution involved a repayment of $250,000 to Progressive Insurance, $25,000 to MetLife and she had to forfeit $25,000 of a structured settlement that had not yet been paid to her.

Rate Evasion Constitutes Insurance Fraud

Criminal charges have been filed against Philadelphia insurance agent Paul Franck Baptiste along with Daniel Charles, also of Philadelphia and Bernard Pierre of Brooklyn, NY arising out of an elaborate scheme to defraud insurance companies according to a report by Gantdaily.com.

The scheme involved rate evasion whereby 22 residents of New York filed false applications for insurance claiming they were residents of Pennsylvania because auto insurance rates are lower there.  In many cases, applicants not only falsified their address but they also provided false information to the Pennsylvania Department of Transportation in order to obtain Pennsylvania State Driver’s licenses.

Baptiste actually provided a fake address for many of the applicants.  They used one of his own properties in Philadelphia.  Some used an address in Clarion, PA on a street that does not even exist, and others used addresses in Philadelphia, Allentown and State College.  The investigation revealed that non of the fraudsters lived at any of these addresses, but instead most came from Brooklyn, NY and surrounding areas.

The charges for insurance fraud alone could mean up to 7 years in prison and $15,000 in fines.  Baptiste and others also face charges for corruption, criminal conspiracy, filing false title application, and unsworn falsifications to authorities, which adds thousands in fines and several years in prison.

East Orange, NJ Cop Committed Insurance Fraud

In March 2010 East Orange police officer Kareen Spence was arrested on three counts including aggravated arson, insurance fraud and attempted theft by deception.  The arrest resulted from an investigation into a fire that destroyed his 2002 Cadillac Coup DeVille.  

 

Spence had been a police officer for about six years and he plead guilty to intentionally burning his Cadillac.  His reason for doing so was that it was continually overheating.  The car had 122,000 miles and owed $8,000 on the car.  He had taken the car to Irvington and lit it on fire in order to make an insurance claim and collect the cash.

As part of the deal, Spence pled guilty to insurance fraud and the arson and theft by deception charges were dropped.

Spence will face 3 to 5 years in prison when sentenced on February 4, 2011.

Successful Fraud Strategies 101 - Get Your Story Straight!

Two people in Lawrence, MA lied to investigators about the facts of an accident that was alleged to have occurred in 2003.  They had incongruent stories about the weather, the location and things that they had done prior to the accident.  The discrepancies tipped off the insurance company who notified the Insurance Fraud Bureau of Massachusetts.  

After some additional investigation, one passenger confessed and the house of cards came toppling down.  Soon after that another confession came along and now two arrests have been made and two individuals are being sought.

http://www.eagletribune.com/punews/local_story_082061912.html

Former Mayor, State Trooper, Insurance Fraud Investigator, and basketball coach stands accused of insurance fraud

Doug Merino of Westport, Washington was all of the above and was recently sentenced, fined, and ordered to pay restitution in a classic car scam that involved a fraudulent photograph and a pile of classic car parts. The original plan was a bogus claim submitted to his insurance company, Farmers Insurance which totaled about $60,000. His partners in crime, one of which happens to have died recently, also were accused, and one of the plead guilty to attempted first degree theft.

http://www.insurancejournal.com/news/west/2007/08/27/83027.htm

http://www.theolympian.com/570/story/198676.html

http://www.thedailyworld.com/articles/2008/03/21/local_news/03news.txt

Man stages a car theft/vandalism incident for insurance money

David Iknaian, a 19 year old from Waltham, MA has plead not guilty to charges of insurance fraud involving his automobile. He stands accused of having the car stripped, then staging a theft of the vehicle in order to collect just over $7,000. He had purchased the car with the intent to sell it, and had difficulties doing so. A conviction for this offense could lead to 5 years in prison.

http://www.dailynewstribune.com/news/x1094246577

Ringleader of auto insurance scam shut down

The ringleader of a 24 person operation involving auto accident scams was charged with insurance fraud and grand theft in Florida. It is believed that this individual may have been responsible for as many as 90 staged accidents.

http://www.insurancejournal.com/news/southeast/2008/03/20/88414.htm

A typical auto insurance scam

Check out the anatomy of an motor insurance scam. Click
here.

Auto Scammers Caught!

A group of about 40 scam artists in Los Angeles allegedly worked together over a period of about 8 years to collect $512,000 from motor insurance companies for fake auto accidents, fake injuries, and fake collision repair costs. In the early hours of Thursday March 6, 2008, the good guys won. Our hats are off to Juan Camacho and Ronald Vega, two Los Angeles Police Department detectives who work in the Commercial Crimes Division. They worked very hard over a long period of time to catch the bad guys.

http://www.latimes.com/news/printedition/california/la-me-fraud7mar07,1,2095221.story