Wherever there's a potential payout, there's someone who will go the distance to collect. Enter the world of auto insurance fraud. Let's take a look at 3 famous cases, some of which you might remember seeing on the news.
1. Swoop & Squats
In 1992 on a Los Angeles freeway, an eighteen-wheeler carrying automobiles plowed into a Pontiac Firebird that had been swerving in and out of its lane. The trucker lived. So did the driver of the Firebird. But one of the car's three other passengers was killed.
After an investigation, authorities labeled this incident as insurance fraud, and here's why.
According to Mother Jones, an investigative news organization, this incident "has brought to public attention the existence of organized crime rings that stage 'swoop-and-squat' accidents, in which poor immigrants (or others in need of quick cash) are paid to place their bodies in the paths of cars and trucks, playing a kind of Russian roulette with their lives and those of unsuspecting motorists around them."
Within this crime ring are three tiers: 1) The top, consisting of doctors, lawyers, and other professionals who come up with the schemes; 2) The middlemen who find the cars to crash and the people who will be driving them; 3) The desperate participants.
Back then in California, these accidents could bring in around $20,000 each. The higher-ups would get most of that, while only around $3,000 went to the lower tiers.
So how does this work, exactly? Mother Jones elaborates:
"Participants in the swoop-and-squat settle on a story to tell the cops, then get on the freeway in search of a target, usually either a commercial vehicle or a late-model, expensive car–anything that looks to be well insured. Usually a ring will employ from two to four cars to stage a single accident. The “squat” car, loaded with passengers and maybe some blankets or tires in the trunk to cushion the impact, pulls in front of a target. The “swoop” car cuts in front of the squat car, giving its driver a plausible excuse for slamming on the brakes and being rear-ended. If there are additional cars, they get on either side of the target to keep it from changing lanes. (Whether or not cars other than the Firebird were involved in the June 1992 collision is uncertain, because both witnesses and participants tell conflicting stories.)
"After a collision is engineered, the 'victims' from the rear-ended car file an accident report with the appropriate authorities, get treatment for soft-tissue injuries–lower-back sprains and whiplash– and file insurance claims with the attorneys."
After an investigation, authorities labeled this incident as insurance fraud, and here's why.
According to Mother Jones, an investigative news organization, this incident "has brought to public attention the existence of organized crime rings that stage 'swoop-and-squat' accidents, in which poor immigrants (or others in need of quick cash) are paid to place their bodies in the paths of cars and trucks, playing a kind of Russian roulette with their lives and those of unsuspecting motorists around them."
Within this crime ring are three tiers: 1) The top, consisting of doctors, lawyers, and other professionals who come up with the schemes; 2) The middlemen who find the cars to crash and the people who will be driving them; 3) The desperate participants.
Back then in California, these accidents could bring in around $20,000 each. The higher-ups would get most of that, while only around $3,000 went to the lower tiers.
So how does this work, exactly? Mother Jones elaborates:
"Participants in the swoop-and-squat settle on a story to tell the cops, then get on the freeway in search of a target, usually either a commercial vehicle or a late-model, expensive car–anything that looks to be well insured. Usually a ring will employ from two to four cars to stage a single accident. The “squat” car, loaded with passengers and maybe some blankets or tires in the trunk to cushion the impact, pulls in front of a target. The “swoop” car cuts in front of the squat car, giving its driver a plausible excuse for slamming on the brakes and being rear-ended. If there are additional cars, they get on either side of the target to keep it from changing lanes. (Whether or not cars other than the Firebird were involved in the June 1992 collision is uncertain, because both witnesses and participants tell conflicting stories.)
"After a collision is engineered, the 'victims' from the rear-ended car file an accident report with the appropriate authorities, get treatment for soft-tissue injuries–lower-back sprains and whiplash– and file insurance claims with the attorneys."
2. Teacher Gives Students 'A' for Setting Her Car on Fire
Aldine Senior High School in Houston, Texas. 2005. We have Tramesha Fox, a 32-year old chemistry teacher behind on her car payments. She decided to do what any one of us would do, of course. Light it up!
She approached a few students that were failing her class and offered to give them passing grades if they torched her car. For an 18 year-old pyro, this is a win-win, right?
According to a CBS News interview with the local senior fire investigator, Dustin Deutsh:
"The teens initially thought her scheme was a joke, but Fox continued to pursue them, Deutsch said. On May 27, the last day of school, the students took the unlocked 2003 Chevrolet Malibu from a shopping mall, drove it to a wooded area and set it on fire, he said.
"Fox reported the theft that day, after already having bought a 2005 Toyota Corolla, investigators said. She owed about $20,000 on the Chevrolet and had been facing repossession, Deutsch said."
Both students were granted deferred adjudication and placed on four years' probation. They were also required to pay $4,500 in restitution.
Fox lost her job and served a 90-day prison sentence.
She approached a few students that were failing her class and offered to give them passing grades if they torched her car. For an 18 year-old pyro, this is a win-win, right?
According to a CBS News interview with the local senior fire investigator, Dustin Deutsh:
"The teens initially thought her scheme was a joke, but Fox continued to pursue them, Deutsch said. On May 27, the last day of school, the students took the unlocked 2003 Chevrolet Malibu from a shopping mall, drove it to a wooded area and set it on fire, he said.
"Fox reported the theft that day, after already having bought a 2005 Toyota Corolla, investigators said. She owed about $20,000 on the Chevrolet and had been facing repossession, Deutsch said."
Both students were granted deferred adjudication and placed on four years' probation. They were also required to pay $4,500 in restitution.
Fox lost her job and served a 90-day prison sentence.
3. NYC Scam Artists Try to Cheat Auto Insurance Companies
Back in 2012, New York City law enforcement uncovered the "largest-ever fraud involving New York's no-fault law," according to Fox News.
"The fraud relied on ambulance chasers — called 'runners' — to convince real victims of car accidents to seek unnecessary care at the corrupt clinics in exchange for kickbacks of up to $3,000 per patient, authorities said.
"Doctors would prescribe physical therapy, acupuncture and other treatments to every patient no matter what their condition, sometimes five times a week. Authorities allege the clinics also referred people to lawyers who filed baseless personal injury lawsuits."
By law, a car accident victim could receive up to $50,000 in benefits, whether they were at fault or not. So the false claims added up: $279 million by the end of the investigation. Private insurers lost $113 million.
With ties to Russian organized crime organizations, the defendants faced prison sentences ranging from 30 to 70 years.
"The fraud relied on ambulance chasers — called 'runners' — to convince real victims of car accidents to seek unnecessary care at the corrupt clinics in exchange for kickbacks of up to $3,000 per patient, authorities said.
"Doctors would prescribe physical therapy, acupuncture and other treatments to every patient no matter what their condition, sometimes five times a week. Authorities allege the clinics also referred people to lawyers who filed baseless personal injury lawsuits."
By law, a car accident victim could receive up to $50,000 in benefits, whether they were at fault or not. So the false claims added up: $279 million by the end of the investigation. Private insurers lost $113 million.
With ties to Russian organized crime organizations, the defendants faced prison sentences ranging from 30 to 70 years.