2005 Top 10 Insurance Crimes: New members inducted to the insurance crime hall of shame

TORONTO, January 9, 2006 – Canada’s home, car and business insurers have released their annual Top 10 Insurance Crimes list, highlighting some of the strangest and most audacious insurance frauds and auto theft cases uncovered by insurance investigators in 2005. The latest list includes the usual line-up of con artists who try to make a fast buck by duping both innocent bystanders and insurance companies.

The list is intended to raise awareness of the most ridiculous crimes concocted by insurance criminals.

“It never fails to amaze me the extent to which people will go to defraud the system,” says Rick Dubin, Vice-President, Investigations, Insurance Bureau of Canada (IBC). “Insurance crime is serious and costly and makes victims of us all. A conservative estimate is that insurance crime costs Canadian insurers and their policyholders about $3 billion a year.

“We cannot fight these crimes alone. Many of the schemes on this list were brought to light thanks to tips from Good Samaritans. We applaud the efforts of individuals who refuse to sit back and watch others cheat the system.”

To make it easier for Canadians to report auto theft, insurance fraud, staged auto collisions, and other crimes related to insurance, Canada’s home, car, and business insurers have launched a national insurance crime TIPS line. Anyone with information about a possible insurance crime can call the toll-free TIPS line at 1-877-IBC-TIPS (422-8477) or submit a tip on-line at www.ibc.ca. All tips are kept confidential. Take the time and report insurance crime.

1. Too many encores

His acting was quite good, and he also doubled as his own stuntman, but eventually his performance would earn him a very bad review. The man’s act was simple and convincing. He would hang out in a parking lot until he spotted a woman or a senior backing out of a space. He would then step behind the car, bang the trunk with his fist and fall to the ground in apparent pain. At first, various insurers would settle his claim, so he gave a repeat performance every two weeks. He put on a total of 11 shows until a sharp-eyed adjuster gave him the thumbs down. After an investigation, his next appearance was in court, where he received a bad review and was ordered to repay his victims. His acting career is over.

2. Pirate shipping

Stolen cars are one of Canada’s fastest-growing exports. Every year, an estimated 20,000 of them are loaded into shipping containers and sent overseas. One crook thought he’d try to cash in on both ends of this illicit trade. First, he arranged to export his brand new high-end vehicle to his home country in Europe. Ninety days later, he filed an insurance claim in Canada saying his car had been stolen. Problem was, his car had already been seized at a port in Belgium along with two other stolen Canadian cars found in the same container. Investigators were naturally suspicious of a theft report concerning a vehicle that had already spent weeks impounded in Belgium. They wondered why it had taken him so long to realize it was missing. So did the insurer. Claim denied.

3. Fender bender fraud

The man thought the damage to his car looked relatively minor. He’d accidentally scraped the left front quarter panel as he was pulling out of a parking space. So he was shocked to see the enormous bill and list of replacement parts — including a new front grill and cooling system — that the body shop was sending to the insurance company. The insurer agreed something seemed amiss. During the investigation, a sharp-eyed appraiser recognized that the damaged parts that the body-shop employees claimed had been removed from the man’s car were actually from another vehicle. Fooling around with somebody else’s parts can backfire. The body shop is currently being investigated by police.

4. The chop shop king

He was a very wealthy man, and when insurance investigators and police looked into his car dealership and body shop operations, it was easy to see why. He ran two bustling chop shops — illegal garages where stolen cars are stripped for parts — and he had a significant side business that altered vehicle identification numbers. When police moved in, they seized 40 stolen vehicles with a cash value totalling $1 million. In fact, the case was so big that the trial took 119 days and involved 190 witnesses. When the gavel came down, the Chop Shop King was removed from his throne, sent to jail to serve a six-year sentence, and ordered to pay a $774,000 fine. As he pronounced the sentence, the judge referred to an IBC-commissioned study that highlighted the social costs of car theft and said, in effect, that it’s a crime that costs all Canadians.

5. Field of schemes

It began as a routine auto theft claim. The man reported that his high-end pickup truck had been stolen, and he collected $68,000 from his insurer. Months later, insurance investigators received a tip that led them to a farm owned by the man’s mother. There, in the middle of a field, they spotted the truck — what was left of it. The man was selling it off piece by piece. The wheels were already gone, along with a range of other parts. The investigators seized what remained, the insurer launched a lawsuit, and the man was charged with public mischief, fraud, and obstructing a police officer.

6. Phantom injuries

The “victims” weren’t even in the car when it crashed, but they filed injury claims totalling over $200,000. Turns out the fraudsters had received some expert coaching. A paralegal had recruited them and led them down a crooked trail. They were sent to a clinic — also a partner in the crime — for assessments and treatment of injuries that didn’t exist, and the claims were sent in. The whole scam was working fine until one of the “victims” revealed the truth. In the end, the only thing that really crashed was a conspiracy of greed.

7. Too good to be true

It looked like a bargain to the car owners wanting a deal on insurance. Salespeople at a few car dealerships and other businesses were offering an insurance special. They were charging $500 — a “finder’s” or “consulting” fee — to arrange insurance with a broker they claimed would save the car owners lots of money on premiums. The scam artists were intentionally putting bogus information on the applications so that customers would be put into a cheaper rate group. However, because the policies were purchased under false pretenses, they were invalid. IBC received a tip that led to the discovery and dismantling of this scam, which involved hundreds of policies and finder’s fees amounting to about $1 million. The insurance company has since offered new policies, based on the correct information, to the duped customers.

8. Persistence doesn’t pay

The ringleader didn’t have to go far from home to find recruits to join her gang of crooks. At first she persuaded friends and family to join her in staging car accidents and filing false claims. Business was good, so she decided to expand by signing up her neighbours. Some of them took her up on her offer to make a quick, crooked buck, but she got greedier and greedier and needed more and more recruits. Eventually, she got so desperate that she began repeatedly pestering neighbours who had already turned her down. Finally, someone became annoyed enough to secretly record her pitch. It wasn’t long before she was singing a different tune to police and Crown attorneys.

9. The invisible workers

Investigators noticed that the employees of one particular firm seemed to be very unlucky. A great many of them were getting involved in car accidents and filing injury claims. That was news to the company’s owner and, when he was shown the long list of his unfortunate workers, the scam began to unravel. The owner scanned the names and said none of the people had ever worked for him. In fact, he had never even heard of them. It turned out that a rogue paralegal was the driving force behind a staged accident ring and, to boost the compensation claims of his “victims,” he had forged their employment forms. The paralegal’s out of work now, too.

10. Very bad advice

A man injured in a collision decided to get some cheap legal advice and assistance from a paralegal. He certainly got what he paid for. The paralegal had the man sign a pile of legal forms without explaining what they meant and, all the while, assured him that he would look after him. The paralegal went on to negotiate on the man’s behalf with the insurance company without telling his client, then forged the man’s signature on the resulting cheque and cashed it. When confronted by his client, the paralegal shamelessly denied any wrongdoing. He continued to deny it during his trial and even after he was convicted.

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