Top 10 Canadian Insurance Crimes of the Year: Insurance Bureau of Canada pursues changes to Criminal Code & Youth Criminal Justice Act

Top 10 Canadian Insurance Crimes of the Year: Insurance Bureau of Canada pursues changes to Criminal Code & Youth Criminal Justice Act

TORONTO, Dec. 13/04 — Insurance crime is serious and costly and makes victims of us all. Not only do insurance fraud and auto theft cost Canadians billions of dollars every year, these insidious crimes often result in innocent victims being seriously hurt or killed.

This has been made all too clear in recent weeks with the tragic and violent deaths of Theresa McEvoy in Halifax, Pattie Lee Kibbee in Edmonton and RCMP Auxiliary Constable Glen Evely in Vernon, B.C. All three were killed in collisions with stolen cars.

“And not simply because they were in the wrong place at the wrong time,” said Rick Dubin, Vice-President, Investigations with Insurance Bureau of Canada. “These people are no longer with us because of the inadequacy of our laws to address the violent and serious nature of the crime of auto theft.”

IBC is urging the federal government to change the Criminal Code and the Youth Criminal Justice Act to make specific mention of auto theft as a separate, violent and indictable offence with strict penalties – requiring minimum jail time which increases with each occurrence or where injury or death occurs. Nova Scotia Minister of Justice Michael Baker has recently joined this effort and will be bringing the message to his federal, provincial and territorial counterparts when they meet in late January 2005.

Under Canadian law, auto theft is simply treated as a property crime subject to minor penalties. Sentencing depends on whether it is theft over $5,000 or theft under $5,000. Many auto thefts involve youths that are released from custody under the Youth Criminal Justice Act only to go out and steal another vehicle. They can only be held in custody if the legislation is amended so that auto theft is classified as a violent and indictable offence.

“You can’t treat car theft the same as stealing a television,” said Dubin. “It doesn’t matter what the value of the car is when it’s screaming down the highway at 160 km/hr endangering lives. In the hands of a car thief, it’s a lethal weapon.”

IBC is releasing its annual Top Ten Insurance Crimes list, highlighting some of the strangest and most callous insurance frauds and auto thefts uncovered this year by investigators at IBC and its insurance company members.

And while the list occasionally pokes fun at the brazen and hare-brained schemes concocted by some criminals, it must be stressed that the purpose of the list is to raise awareness of these crimes, not to trivialize their occasionally devastating impact.

Insurance Bureau of Canada is the national trade association of the private property and casualty insurance industry. It represents more than 90% of the non-government home, car and business insurance in Canada.

Para Illegal

Paralegals are supposed to be an inexpensive alternative to lawyers, but for the clients of one paralegal it proved to be a very costly choice. The paralegal claimed to be a “specialist” in settling auto insurance cases. Indeed, he turned out to be very successful in settling claims. The problem was he didn’t share the good news with his clients and, instead, pocketed their money. Not that he was always indifferent to his clients’ suffering; sometimes this thief would give clients half of their settlement and keep the rest. Eventually, investigators caught on and the jig was up. No wonder the Law Society of Upper Canada has said it will take on the responsibility of controlling the conduct of paralegals!

Rock Heads

This rock band wasn’t particularly successful but its members, unlike most starving musicians, weren’t prepared to suffer for their art. Instead, some of them decided to make insurance companies and their policyholders do the suffering. They decided to stage a car accident. They deliberately inflicted vehicle damage in an underground garage, then they told a tale of pain and suffering that started the claim money rolling in. They were all represented by the same paralegal and collected more than $150,000. Meanwhile, their music career took a sudden upward turn when they scored a great gig. This would prove to be their downfall. The insurance companies noticed that they were being billed for treatments the claimants were supposedly receiving in Toronto while, in fact, the rockers were jumping up and down energetically onstage out of the province.

Massaging the Numbers

Health Care practitioners are skilled and honest professionals, which is why it comes as a shock to occasionally discover a rehabilitation clinic that appears to be more interested in fixing the books than patients’ injuries. Insurance industry investigators have uncovered a few scams where those in
charge of billing were submitting invoices to insurers for more than sessions were worth, or charging for sessions that never took place. The greedy math adds up to serious fraud and police are now investigating.

Chop-Shop Couple

The husband-and-wife team ran a large auto repair facility and the profits were rolling in. It turned out that the main reason the margins were so good was that the facility’s owners were able to keep costs down by using stolen auto parts. In fact, they turned out to be at the centre of a huge auto theft ring and chop shop operation. When police and insurance investigators searched the couple’s property, they found seven stolen cars, over a hundred hot parts and an operation they estimated to be worth more than $5 million dollars. It was one of the largest such busts in Canadian history, resulting
in the couple being charged with possession of stolen property, and a reminder of just how widespread is the often violent business of stealing cars. The couple may remain in the car business, but now they’ll likely be making license plates.

All in the Family

This group of criminals had a simple motto: If it worked once, try it again…and again. The first accident seemed straightforward enough. Two cars had collided and the insurance companies paid out almost $50,000 in accident benefit claims to the apparent victims. A month later, the unlucky woman who was in the first accident was involved in another, along with family members of other people involved in the first accident. Then, just two months later, another accident produced more claims and, again, some familiar names appeared on the report. Also, the same car was involved in the second and third accidents, and emerged from both with the exact same physical damage. For this fraud ring, it proved to be three strikes and you’re out. An investigation revealed that all three accidents had been staged.

The Phantom Passenger

Maybe Joe (not his real name) was jealous of the cheques his friend was receiving, or maybe he simply saw an opportunity. Either way, his scheme was inspired by his friend’s car accident and the prospect of a claims payout for himself as well. Joe declared that he too had been in the car, filed a claim and began receiving cheques. It all seemed to be going well until the driver of the other car involved in the collision pointed out to investigators that no one matching Joe’s description was in the friend’s car. The phantom passenger had been found out and police issued a warrant for his arrest.

Humming Hymns in Krakow

Shipping stolen vehicles overseas has become one of Canada’s fastest-growing export industries. Often, high-end vehicles are crated and loaded onto cargo ships even before their owners know they are missing. In this case, though, the owner of a brand new Hummer knew exactly where it went. He bought the Hummer, used bogus employment and financial information to arrange a loan to help cover the $100,000-plus sticker price and took out insurance. Then he turned around and shipped the vehicle off to Poland. The scam was discovered when the Polish police seized the car. They reported that it was being driven around Krakow by a man they described only as “a high-ranking Church official.” So far, the man hasn’t confessed to taking part in the scam, at least not to any earthly authority.

A Transparent Case of Fraud

Insurers discovered something unusual going on in one area. Local residents, it seemed, were being plagued by broken windshields and the claims were rolling in. Perhaps the area was being hit by powerful hailstorms or maybe there were a lot of low-hanging branches along Main Street. The answer could probably be found at two local auto glass companies that were doing a roaring trade. A visit to the area revealed that there had been no hailstorms or low-hanging branches. In fact, the glass repair shops didn’t exist either. Rather, they had been invented by criminals who stole people’s insurance information and vehicle ownership documents to make fake auto glass repair claims amounting to thousands of dollars.

Where Did I Park the Car?

It was a simple plan, and it wouldn’t be the first time someone would try to use it to rip off an insurance company. The would-be fraud artist drove his car to a gravel pit north of Toronto and abandoned it. Later, he reported to his insurance company that it had been stolen while he was visiting Niagara Falls. Why he chose Niagara Falls for the scene of the imaginary crime remains a mystery, but his story did have a huge hole in it that would put him over a barrel. It turned out that police had already found the car at the gravel pit and towed it to a storage yard — two months before the claimant said he had driven to Niagara Falls. Of course, he never received a claim cheque, but he did cost police and insurance investigators time and money.

The Seafaring Honda

The insurance adjuster had a hunch. The woman’s claim looked straightforward enough. Her Honda Accord had been stolen, she said, and she was demanding her insurer pay the claim. Indeed, the car was truly gone but something smelled fishy; so the adjuster called in the investigators. It didn’t take them long to discover that she had exported the car two months earlier and the paper trail led them all the way to Dubai, United Arab Emirates. The car was tracked down and shipped back to Canada. It’s doubtful that she was happy to see it again.

Note: Consumers who become aware of or suspect fraudulent activity in Canada can report it anonymously to CrimeStoppers at 1-800-222-TIPS.