11 Dumbest Insurance Fraud Cases

The special investigative units (SIUs) employed by property/casualty insurers seem busier than ever. According to recent estimates by the Insurance Information Institute (III), property/casualty fraud alone costs insurers $30 billion a year.

“[People are driven by] desperation, greed and a lack of common sense, it depends who you are, how bad the economy is, and how much your finances are affected,” James Quigle, spokesperson for the Coalition Against Insurance Fraud, told Life Quotes, an online insurance aggregator. Quigle, whose “Hall of Shame” offerings give consumers and insurers updates on some of the more egregious insurance fraud cases, reports a steady increase in fraud cases since the height of the recession.

This is when people began torching their cars or dumping them into lakes to collect auto insurance money, personal luxury goods such as jewelry and sound systems started going missing and claims were being made on their renters insurance and homeowners insurance, and fake health insurance plans started popping up around the country, notes Quigle.

“Among average consumers, mysterious disappearances and theft are the most popular schemes … it’s easy to say someone stole my camera, or I lost my watch at the beach,” he says. “These items can be expensive and disappear very easily. Fake health insurance plans are also very popular with the struggling economy because people are desperate to get health coverage, and organized criminals are doing a very effective job selling bogus health insurance plans … its a coast-to-coast scam with thousands of people bilked.”

Although usually an elusive target, some cases of insurance fraud are more transparent, easier to spot and, well, downright dumb, according to a new report.

Based on actual cases supplied by the Coalition Against Insurance Fraud, Life Quotes Inc., compiled the following list of top 11 dumbest insurance fraud cases, reproduced below in their entirety:

 

11. Garrett Dalton, a Naugatuck, Conn. correctional officer, was collecting thousands of dollars in workers compensation money after he was “hurt” on the job and no longer able to work.

Dalton, wearing a dress, a woman’s wig, and high heels, revealed the scheme himself on TV during a radio station’s promotional race that included balancing an egg in a spoon. The coveted prize Dalton was trying to win? Tickets to a Hannah Montana concert.

 

10. Nicholas Di Puma of Walton, N.Y. burned his home and convertible to reap fraudulent homeowners and car insurance benefits. But unfortunately, his story didn’t quite make sense to investigators … Di Puma was at home when the fire began, and claimed it started when pans on the stovetop caught fire as he was cooking steak. After trying to extinguish the blaze with a rag, he threw a pan out the door, which landed in the backseat of his convertible. On his way to throw the second pan outside, he claimed that he tripped and the pan landed on a couch. Delaware County officials were not amused or convinced.

Along with a torched home and car, Di Puma also was left with five years of probation.

 

9. In Akron, Ohio, Matthew Mueller made the decision to rent a backhoe and bury his 1997 BMW on his father’s rural property. The car had engine problems, and Mueller could make $20,000 by reporting the car stolen.

But after insurance officials were notified of the “stolen” vehicle, Mueller had second thoughts. As he started to dig the car out with the same backhoe used to bury it, the equipment got stuck in the mud. With the evidence out for all to see, Mueller’s scheme was discovered and landed him in jail for a year.

 

8. Justo Padron, owner of Tamiami Medical Supply Inc., was running a fraudulent business that scammed $7.4 million from Medicare. When police caught Padron burglarizing a vehicle, they chased him until he jumped into a lake bearing the sign “Danger Live Alligators.” Padron was found dead the following day with gator bites covering his torso.

 

7. Carla Patterson of Newport News, Va. claimed she found a dead mouse in a bowl of vegetable soup at an unsuspecting Cracker Barrel restaurant.

After Patterson requested $500,000 in business liability insurance money, Cracker Barrel stepped up and discovered the mouse did not have soup in its lungs and had not been cooked in the soup. Although Patterson ended up in prison for a year, the restaurant’s businesses suffered, with one employee losing her home after business slowed.

 

6. Tramesha Lashon Fox was a Houston high school chemistry teacher who was sick and tired of her monthly car payments. Instead of dealing with the responsibility, Fox gave two failing students passing grades to steal and torch her Chevy Malibu so she could receive car insurance money.

But instead of doing away with her car payments, the school did away with Fox’s job. She also landed in jail for 90 days.

 

5. Robert and Teresa Hammond, and Margaret Dillavou and Paul Gaines, two couples from Union County, Ill., crashed the Hammonds’ car into a tree and videotaped the entire event. They needed money to pay Dillavou for rent, and decided to use scammed car insurance money.

However, Dillavou lost the tape. It was later found by her estranged husband during their divorce, who then gave it to the police.

 

4. Candice Lambert was a seemingly sweet and inspirational special-education teacher in Albany, N.Y. who was diagnosed with terminal cancer … or so everyone thought.

The teacher actually faked having the disease, garnering sympathy and even going as far as shaving her head and retiring to New Hampshire to live her “final months” on disability insurance from the school system.

Until former colleagues caught wind of a Nashua, N.H. newspaper article about Lambert’s brave fight against an inoperable kidney tumor. It turns out Lambert wasn’t on her deathbed at all; instead she collected disability insurance benefits while taking her act to another unsuspecting school.

Lambert received one to three years in prison for trying to steal more than $110,000 in health insurance and disability insurance benefits.

 

3. Massachusetts-based Ronald and Mary Evano had a strange tradition before going restaurants, bars and grocers: glass-eating.

For eight years, the duo filed more than $200,000 in fraudulent claims using fake ID and Social Security cards. Oftentimes, the insurers and businesses paid out to avoid a lawsuit.

But this was not without a physical price. The Evanos braved medical danger to pull off this scam, which included glass in their intestines and colon, vomiting blood and having to pass glass fragments.

When the couple’s scheme was discovered, the Evanos begged for mercy, stating that they are members of the gypsy community and needed money for dowries and marriage expenses for their sons. Ronald was arrested and charged in 2006, and Mary, who spent years on the run pretending to be a psychic, was finally captured in early 2010.

 

2. Michael Paul Schook was a Suffield, Conn.-based ex-con with a lot of debt and a big mouth. Not only was his house in foreclosure, but his car was repossessed and he owed thousands on credit cards.

Desperate for money, Schook decided to set his house on fire to get $250,000 … by leaving a fat-filled pan on the stove as he left the house with his family. The house indeed burned down, but it was no surprise to anyone: turns out Schook had told everyone who would listen about his future plans to burn his own house down. His children even told classmates, who reported it to school officials and notified police.

Schook received seven years in prison for his grease fire debacle.

The scheme they cooked up was drastic—and dumb—in every sense of the word.

 

#1: Clayton Daniels was in a heap of trouble: After sexually assaulting a 14-year-old girl and deferring his 10-year sentence, he never reported to his probation officer. Daniels would be heading back to jail if he and his wife Molly didn’t do something drastic.

Clayton and Molly dug up the grave of Charlotte Davis, an elderly woman who had been dead for almost a year, dressed her entirely in Clayton’s clothes, put her body in a car and pushed it off a cliff. They hoped the life insurance company would believe the burned body was Clayton, and pay $110,000 in benefits.

But the insurer wouldn’t pay out until a DNA test confirmed the body was indeed Clayton. And just weeks after the accident, Clayton came back with dyed hair and a moustache and was introduced as Molly’s new boyfriend, Jake Gregg.

But some things didn’t add up in the investigation: Molly was “eerily calm” in post-crash interviews; there were no signs of an accident at the crash location; investigators discovered the fire started in the driver’s seat of the car and not the fuel tank; and the DNA did not match up.

The complex plan was also discovered in great detail on her computer, including Internet history of how to burn a human body beyond recognition and how to create a fake identity.

The scheme landed Molly with 20 years for insurance fraud, and 10 years for hindering Clayton’s arrest. Clayton is awaiting trail on arson charges. Clayton will serve no less than 10 years for desecration of a cemetery and 15 years for arson.

 

“These people get caught for various reasons, maybe they get greedy and then sloppy, or they just didn’t plan very well to begin with,” said Quigle. “But some schemes are very well constructed and insurance companies need to do very detailed investigations to uncover a well-concealed crime.”

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