Wednesday, December 9, 2009

Insurance Fraud: The Dumb Criminal Chronicles

One of the greatest challenges insurance companies face is the ferreting out of insurance fraud. Wherever there is a chance that someone can get paid for submitting a fraudulent claim, there are also stupid people who are willing to give it a try.

Here are some recent examples:

1. Arson (I like this story because of the restaurant’s name.)

JACKSONVILLE BEACH, FL: Two men were arrested and charged with insurance fraud after a 2008 fire at Wakey, Wakey Eggs & Bakey.

The fire was set in the kitchen after the restaurant closed on May 5, 2008, and caused over $200,000 in damages.

One of the owners, Victor H. Jara, was arrested and charged with arson and filing false insurance claims. Matthew Thayer, a contractor, was also arrested on the same charge.

The building’s owners had just evicted the restaurant owners for defaulting on the rent.

2. Dumb Insurance Adjusters...there are a bunch of them.

BALTIMORE, MARYLAND: A Maryland woman pleaded guilty to writing company checks to herself and depositing the money into her own checking accounts while she was an insurance claims adjuster.

Shironda Jones pleaded guilty to one count of felony theft over $500. She was sentenced and ordered to pay back over $16,000 she had stolen from Nationwide Insurance Company between September 2006 and September 2007.

3. Hometown Insurance Fraud...I missed out on all the fun.

KENT COUNTY, MICHIGAN: Grand Rapids, Michigan is known as the Furniture City, and is getting a reputation as a hub for medical research. But now it’s become the Michigan Mecca for insurance fraud.

Three of the top Five insurance fraud cases in Michigan in 2009 were committed in Kent County.

The top case was Dr. Robert Stokes, a dermatologist who bilked Medicare and other health insurers for over $2 million. He is in prison serving a 10-year sentence for double billing and charge for work he did not perform.

Stokes’ Tudor mansion on Reeds Lake, which he tried to sell for $7.7 million, was recently auctioned off by the bank for $1.75 million.

Next case involved James Westra, age 80, who paid a former employee to torch his business so he could collect over $300,000.

Third is Isaac Chandler, of Alpine Township, who was sentenced in Augustto at least six years in prison for selling $40 counterfeit insurance policies to almost 500 people.

Insurance fraud is serious business, since claims paid on fraudulent claims cost ALL of us higher premiums. It’s no different than shoplifting at a retailer. Stores simply add the cost of their “shrinkage” to the cost of the goods you and I pay for.

Report any suspected insurance fraud to the police. And know that most of the time, criminals get caught.

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