Massachusetts Automobile Insurance Fraud Probe Yields White Collar Record Breakers

Have you ever wondered how seriously insurance companies take the possibility of fraudulent claims?

In Lawrence, Massachusetts, the city’s auto insurance fraud task force brought charges against nine people last week…all involving the very same two-car accident.

One method the task force uses for their investigations is to be on the look-out for what they call “frequent flier” cases. “Frequent flier” is the nickname the auto insurance industry labels those with five or more claims in 10 years. Such high claim totals generally raise “red flags” about the credibility of claimants and suspicions about possible fraud. Four of the nine people charged in their latest probe had filed seven or more claims.

The accident took place in January, 2003. As the story goes, a 1996 Honda Accord was driving on Bailey Street when it slid in the snow and through a stop sign at the intersection with Phillips Street, hitting a 1993 Lincoln Mark VIII. Two passengers in the Honda, however, now tell the police that the accident was a fraud. Accident reconstructionists are also of the opinion that the damage could not have been caused as described.

The “red flag” in this case? Well, let’s take the driver of the driver of the Honda, Jose C., 58 (Defendant 1). He has filed 26 auto insurance claims over a 51/2-year period ending in early 2003, including eight for accidents involving injury.

Coincidence, you say? Perhaps he is simply the unluckiest driver in the world. Maybe. But, let’s look at the owner and passenger in the Lincoln, Rita L., 52 (Defendant 2). She has had 22 auto insurance claims over a 12-year period dating back to 1996. Nine of the claims involved car accidents with reported injuries. Defendant 2 claimed to have been hurt in six of those cases.

“In the five years I’ve been investigating these cases, I think 18 is the most auto insurance claims of anyone we’ve charged,” said Lawrence Detective Sgt. Michael Simard, the department’s lead investigator on the task force, which also includes investigators from the Insurance Fraud Bureau of Massachusetts. “And here we have two people with 48 claims between them involved in this one accident. This certainly was a red flag that alerted investigators.”

“There are many red flags that tip us off to fraud: claims history, location of accident, chiropractic clinic and attorney. But this one hit them all,” he said.

One Beacon Insurance, which insured both cars, referred the case to the fraud bureau after an accident reconstruction specialist concluded the Lincoln was stationary when it was struck and that it could not have caused the damage done to the Honda.

The alleged fraud’s case of characters included the following participants according to law enforcement:

Joel V., 30, (Defendant 3). He is accused of setting up the crash and many others for local law offices and chiropractic or physical therapy clinics. He is being held by federal authorities on immigration-related charges and faces deportation.

Ana J. (Defendant 4). She was one of two passengers in the 1996 Honda. She told investigators the accident was staged and that she was recruited to participate in the fraud.

Lissette A., 33, (Defendant 5). She was a passenger in the Honda who said the crash was set up by Defendant 3 as an insurance scam and claimed she was never in the car. She has, however, filed nine insurance claims over a 10-year period ending in October 2007.

Pedro S., 33, (Defendant 6). Investigators identified him as the driver of the 1993 Lincoln Mark VIII owned by Defendant 2. He is being held in a federal correctional facility on unrelated charges.

Amparo L., 76, of (Defendant 7). He was a passenger in the Lincoln who was arrested last week after denying the crash was staged.

Maria L. 47, (Defendant 8). She was a passenger in the Lincoln and is still being sought through an arrest warrant.

Melissa N., 26, (Defendant 9). She was a passenger in the Lincoln and is still being sought on an arrest warrant. She has filed seven auto insurance claims over a seven-year period ending in June 2003.

Insurance fraud, it would seem, is a game that can be played by people of almost any age. However, it is a game that can cost players their liberty.

The latest case brings to 333 the number of people charged with auto insurance fraud in the city’s five-year crackdown. The task force consists of a handful of police detectives working with investigators from the Insurance Fraud Bureau, District Attorney Jonathan Blodgett’s office, the state attorney general’s office and fraud investigators from several insurance companies that operate in Lawrence.

Lawrence police Chief John Romero assembled the special unit after a 65-year-old great-grandmother died in a staged car crash in September 2003 that police said she helped plan to scam insurance companies.

Yes, they take it seriously.

Samuel’s take:

Insurance Fraud is one of those illegal acts that is known as a “white collar crime“. It is fraud to lie in any way on an insurance claim. Doing so in order to “ensure” that you get the insurance proceeds can result in a denial of the claim at best. It can also result in criminal prosecution.

As one might expect, few cases are as extreme as this. Often, the “red flag” is not the history of claims being in the double digits, it is something else. Often, any irregularity will do.

I don’t know that insurance companies have ever been known as being warm-hearted and trusting souls, but they certainly aren’t these days. Why, I have even heard rumors that many of them even look for reasons not to pay claims! With the economy going the way it is, they are likely to become even more wary to simply pay out funds. Why? Because, when times get tough, people get desperate. Sometimes the ol’ hot rod in the driveway is too big an economic burden to keep. Most people find legal ways of dealing with that.

Some don’t.

And some are guilty of merely having financial difficulties and, although not dishonest at all, become suspects in an investigation based purely on an assumption.

As I have often pointed out in this daily blog, it is easy to be suspected of wrong-doing. For example, I have handled matters where such investigations have started based simply on a presumed motivation on the part of the insured to have his vehicle stolen. The basis of the suspected motivation? The fact that he was behind on various bills and so was financially needy. Investigators for the insurance company built their suspicions into a denial by mandating he provide tax returns, bank statements and other personal documents to find out any financial irregularities. Under the law, they may make these demands and, if they are not timely met, the insured is deemed “uncooperative”.

Especially in economic times such as these, there are not many people who are in the position where financial irregularities and shortfalls never happen. Moreover, the worse the economic conditions, the more theft crimes are likely. If you are insured, that means more claims. You guessed it…that means more “red flags”.

“Red flags” can mean criminal prosecution, not simply denial of a claim.

If you have been notified, or even suspect, that you are being investigated in relation to alleged insurance fraud, take it seriously. At the earliest possible time, protect yourself. Consult an experienced defense attorney who knows how these things work to represent you and enforce your rights.

If nothing else, consider it insurance of another kind…liberty insurance.

The full article of this story can be found at

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