According to an article by Scott Lacourse on PropertyCasualty360, Frank Abagnale has earned the title of “the ultimate fraudster.” So much so, that Leonardo DiCaprio depicted Abagnale in the film (based on his memoir), “Catch Me if You Can,” by Steven Spielberg.
Really, though. How much did Abagnale get away with? Lacourse states that, “Between the ages of 15-21, Abagnale amassed $2.5 million by assuming no fewer than eight identities. He conned his way through life as an airline pilot, a lawyer, a U.S. Bureau of Prisons agent, and as a doctor. ‘Becoming’ a lawyer involved forging a Harvard University law degree transcript, ‘passing’ the Louisiana bar exam, and getting a job at the Louisiana State Attorney General’s office at the age of nineteen.
Abagnale eluded the authorities for years, twice escaping from police custody before the age of 21.”
Pretty impressive…and scary. If a 15 to 21-year-old kid can accomplish fraud of that magnitude, how many others can follow in his footsteps?
Abagnale was finally in police custody in 1970 and spent the next five years in prisons in France, Sweden, and the United States. However, Abagnale was released on the condition that he would join federal law enforcement agencies in identifying and fighting fraud. Who better to fight fraud than one who committed some of the biggest con jobs known to man?
Abagnale elected to pay back his debt and begin his career as a security consultant, for not only federal law enforcement, but public and private institutions, as well. According to Lacourse, 14,000 institutions have adopted his fraud prevention programs.
He’s had his hands in thousands of industries, including the insurance industry when he was elected by the NAIC to be the spokesperson for awareness campaigns geared toward helping educate consumers about fraudulent health insurance policies.
Today, however, Abagnale warns about the largest threat: cybercrime. Social media and new technology allow us to see into the lives of others, but also serve as breeding grounds for fraud, false identities, cybercrime, etc. Anyone can create a fraudulent Facebook page, Twitter account, Instagram account, etc.!
Abagnale says, “Technology breeds crime. It always has, and always will. What I did 50 years ago as a teenage boy is 4,000 times easier to do today because of technology.” But it is our job (and Abagnale’s) to raise awareness. Every single one of us is a target and education is the first step to combat these crimes!
Why is it that insurance fraud rates are skyrocketing at a much faster pace than violent crimes in the United States? Dalene Bartholomew, Vice President of investigative firm Probe Information Services Inc., stated at the Combined Claims Conference held in Orange County, California that the media’s portrayal of workers’ compensation fraud is often comical and victimless. Of course, we know that not to be true, as costs to businesses and consumers steadily rise.
And sure, technology has allowed us to get a deeper look into the personal lives and activities of our claimants, but the pendulum swings both ways. The more information we, as investigators, gain access to, the more information the claimant gains access to. You can find ANYTHING on the internet. For example, Denise Johnson of Insurance Journal quotes Bartholomew with, “In addition, viral videos on YouTube and other video hosting sites as well as news reports provide tools to teach people how to commit fraud. They also reveal the tools investigators use to catch suspected fraudsters, including social media sites and surveillance.”
When the punishment for committing a crime is severe, the punishment likely acts as a deterrent. However, when the public’s perception of the punishment for workers’ compensation fraud is a termination of benefits or restitution instead of jail time, it starts to become a free-for-all.
Judging by our first article, and the amount of money that fraud is costing consumers and businesses alike, it may be beneficial to start spreading the word and getting the media outlets in on it.
Working in the claims investigation industry, we have pretty much seen it all. The creativity of the modern day professional claimant is certainly a sight to see, but not much shocks us anymore, right? Except maybe how much fraud costs the American consumers ($80 billion per year). How does one even begin to break the number down into some sort of understandable itemized list? Christopher Tidball, executive claims consultant, the author of multiple books, and columnist for PropertyCasualty360, gives us a rather conservative (but certainly not complete) idea of where our money actually goes.
First, Tidball notes two fraud classifications: hard fraud and soft fraud. “Hard fraud involves the staging of an accident or other form of a claim. It is intentional and well planned, often with connections to organized crime. Soft fraud, also known as ‘build up,’ is more opportunistic, involving insureds or claimants who will pad an otherwise legitimate claim. This can be anything from burying a deductible to running up medical bills in hopes of inflating pain and suffering awards. In some cases, claimants will go so far as to obtain needless surgeries in order to maximize the value of their claim,” writes Tidball.
Next, a conservative list of insurance scams responsible for raising premium costs for the public (as well as creating dangerous situations for all involved):
Vehicle Air Bag Scams: Vehicle air bags save thousands of lives as approximately 1.5 million of them inflate yearly. After an air bag is deployed, it must be repaired. And according to Tidball, “a small percentage are replaced with counterfeit airbags or in the most severe cases, trash is used to fill the void where the bag would otherwise be, putting unsuspecting consumers at risk.”
Staged Accidents: Organized and orchestrated, these scams involve participants split into two groups; the bullet car and the target car. The bullet car will collide with the target car, and in turn, the participants in the target car will claim injuries. There are several other dangerous, orchestrated accidents involving unsuspecting motorists, such as the “drive down,” “wave down,” and the “swoop and squat” (which we discussed in last month’s article).
Vehicle “Thefts”: According to Tidball, “In the ‘owner give up,’ policyholders will intentionally ditch and sometimes burn their vehicles to get out from loans where they are upside down. In other scenarios, vehicles are sold to a body shop. This is a cash transaction and there is no paperwork or record of the sale. The shop in turn will cut the car up and either use or sell the parts. Yet another form involves the owner selling the car to an overseas buyer, again a cash transaction with no paperwork. When the car is out of the country, it is reported as stolen.”
Life Insurance Scams: We’ve all heard of the infamous murder-for-life-insurance-policy scams. A much less dangerous form includes policyholders providing an address in an area with lower premium costs, instead of their actual physical address.
Even more, let’s not forget workers’ compensation scams that plague our country, along with slip and falls and arson, just to name a few.
Tidball notes that, “After narcotics trafficking, insurance fraud is the largest criminal enterprise in the United States. Not surprisingly, the two are often interrelated.”
According to the National Insurance Crime Bureau, from 2001 to 2008, insurers reported a 102% increase in suspected forms of staged accidents.
Nearly 700,000 vehicles were reported stolen in 2013 in the United States (imagine the percentage of claims that are fake).
According to the Insurance Information Institute, approximately 10% of property and casualty claims are fraud.
The FBI puts healthcare fraud at 3% to 10% of healthcare expenditures (or up to $259 million dollars per year).
The Insurance Research Council estimated in a multi-state study that anywhere from 21% to 36% of auto-insurance claims contained elements of suspected fraud or buildup.
In a report by Bloomberg, it is estimated that Americans pay $180 billion per year as the result of our tort system, of which only 20 cents on the dollar is returned to a victim. Tidball notes, “While some of this monetary transference is the result of legitimate injuries, a portion is the result of frivolous lawsuits. This figure is likely very conservative given many businesses and service providers take costly steps to avoid litigation, often making monetary payments to avoid the costs of trial, which some experts have equated to legalized extortion.”
According to the Chamber of Commerce, the American tort system’s embedded litigation tax costs every American an estimated $1,200 per year (in addition to the $400 to $700 that consumers are paying in higher insurance premiums due to insurance fraud).
According to Christopher Tidball of PropertyCasualty360, the phrase “swoop & squat” went viral with national recognition on June 17, 1992 after a deadly freeway accident in the San Fernando Valley (right on the outskirts of Los Angeles, California). Of course, deadly freeway accidents are not unheard of, as at high speeds, even the slightest bump or lane change at the wrong time can prove fatal. But this accident was different, because it was no accident.
A black Firebird with multiple passengers slammed on its brakes in front of a semi. The semi rear-ended the Firebird and jack-knifed, while the truck’s entire load of cars flooded the 5 freeway.
Tidball writes the tragic ending to this story (but the beginning to a complex fraud investigation), as Firebird passenger, “Rubidia Lopez had been partially ejected and was seriously hurt, requiring the Jaws of Life to save her. One of the other passengers, Jose Perez, was not quite so lucky, losing his life in this vain attempt to cash in on the truck’s lucrative insurance policy.”
The passengers in the Firebird were involved in a “Swoop and Squat,” a complex scheme in which the passengers in the “squat” car are paid by a “capper” to slam on their brakes and get rear-ended by vehicles with large insurance policies such as luxury cars or commercial vehicles. The “swoop” car’s role is to pull in front of the squat car and hit the brakes in an effort to make the squat car’s story believable. Furthermore, some schemes include other vehicles whose role is to get in position next to the target to ensure there is no room to switch lanes.
Lawyers and doctors are usually at the head of the schemes. They hire “Cappers” to recruit passengers, who are often in need of money and coached with scripts to speak with law enforcement and claims adjusters, for the swoop and squats. According to Tidball, “The capper then sells the rights to the claim to the lawyer at the top of the hierarchy. The lawyer refers the claimants, or people who were in the squat vehicle, to a medical provider. The medical provider will document, fraudulently, that a number of diagnostic and therapeutic procedures were performed on the claimants. In many instances the claimant never goes to the medical facility or meets the doctor.”
The officer assigned to investigating the “accident” that occurred on June 17, 1992 fully believed that it was staged and that attorney, Gary Miller, was responsible for coordinating it.
Tidball reports, “During the course of his probe into Miller, the investigating officer enlisted the help of an insurance investigator who wore a wire and captured damning information directly from the attorney. Miller was arrested and charged with conspiracy and second-degree murder, along with several other people involved in this particular staged accident ring.”
The investigation discovered that Miller’s Swoop & Squat endeavors were lucrative. “Miller typically cleared up to $20,000 dollars for each crash, netting over $1.6 million in the year prior to his arrest,” said Tidball.
The case ended when Miller pleaded no contest to involuntary manslaughter (after a deadlocked jury on the second-degree murder charge) and was also convicted of insurance fraud, conspiracy, among other felony charges. Miller received a concurrent prison term of 6 years for all charges.
Here’s how to fight Swoop & Squat Schemes:
The investigation needs to be highly detailed and well-documented
- Inspect the damaged vehicles
- Look for patterns of known associates
- Demand to speak to the claimants. Tidball notes, “Attorneys will often fight this request, but the reality is that everyone can be deposed should the matter be litigated. The claimants will be forced to sit down and recount the tale of what happened, and truth be told, many of these claimants will disappear.”
- Have investigators conduct statements IN PERSON. If not, claimants may use a script
- If there is no script, Tidball notes that investigators who ask “basic questions can yield a similar result. What did the doctor look like? Describe the medical facility? How did you get from your home to the doctor’s office?”
- Clinic inspections
- Have investigators canvass the claimants’ neighborhoods/speak to ex-spouses
- Order criminal checks to find prior illegal activity and destroy credibility
Suspicious? Get Answers TODAY with ICU Investigations.
“Disabled” Camden Firefighter Collects $82,488 in Disability Payments while Competing in MMA Tourneys
According to NBC 10 Philadelphia, 40-year-old Camden firefighter, Shane Streater of Camden, NJ, fraudulently received over $82,000 in state accidental disability pension (untaxed) after claiming to have sustained back and neck injuries in two fire truck accidents. While receiving his state disability pension, Streater was teaching mixed martial arts, as well as competing in mixed martial arts tournaments.
Streater originally applied for the accidental disability pension in February 2009, after seeking medical attention for his “inability to engage in physical activity.” The doctor did in fact rule that Streater was totally and permanently disabled; however, the disability was not sustained on the job but deemed preexisting.
In January of 2010, Streater received an ordinary disability pension (taxed and 40% of salary) from the New Jersey Police and Firemen’s Retirement System Board. Streater appealed the ruling, adamant that his injuries were sustained on the job.
Streater won, but state officials finally discovered that he was a jiu jitsu instructor at least twice a week and, thanks to the internet, they found a video of Streater competing in Grapplers Quest Mixed Martial Arts Tournament that had taken place in June 2010.
The board revoked Streater’s pension after learning of his activities in April 2012 (after he had already collected $82,488), and as of last month, he has been charged with theft by deception and is facing up to 10 years in prison.
Acting Attorney General Hoffman said, “It’s outrageous that this former firefighter was showing off his prowess in mixed martial arts, all the while that he was lying about a disability and collecting benefits from the firemen’s pension system. His conduct was a slap in the face of his colleagues in the fire department, who continued to risk their lives to protect the public and honestly earn their pay.”
Hospital and radiology canvasses develop a claimant’s undisclosed prior medical treatment. In the past, ICU Investigations has routinely included in-patient and out-patient admissions, emergency room visits, as well as radiology facility visits to include x-rays, MRIs, and CT-scans with much success.
Now with URGENT CARE CENTERS making a large impact on the healthcare industry and in our daily lives (our data has shown that in certain populated areas, there are now 2-4 urgent care locations within 5 miles of the home), the staff at ICU Investigations has proactively decided to include urgent care facilities in our routine hospital and radiology canvasses to better serve our clients and add value at no additional charge!
Urgent care facilities serve patients unable to wait for an appointment at their primary care physician, but are not necessarily ill and/or injured enough to make an emergency room visit.
Here’s a list of conditions that standard urgent care facilities have the capability to treat:
- Injuries (breaks, sprains, strains, cuts, minor burns)
- General wellness visits
In addition to diagnosing and treating the above listed conditions, standard urgent cares also provide basic imaging with X-Rays.
We are certainly not replacing hospitals and radiology facilities in our canvasses; we are using urgent care facilities to supplement them!
If the injury was not severe enough to warrant a trip to the emergency room, the next step for fast relief is an urgent care facility, which has now become a staple in one of ICU Investigations most result-driven services.
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