N.Y. No-Fault Insurance Fraud Ring Busted

December 30, 2004

New York Attorney General Eliot Spitzer and State Insurance Superintendent Gregory Serio on Wednesday announced the arrest of 31 members of a Bronx based no-fault insurance fraud ring that reportedly submitted phony no-fault claims to 13 different insurance carriers.

Between March 1999 and July 2003, the defendants staged automobile accidents in the Bronx and Manhattan and subsequently filed fraudulent insurance claims for non-existent injuries. The defendants used two different scenarios in staging the accidents.

In one scenario, the drivers of two vehicles would intentionally crash into one another. In the second scenario, the driver of a vehicle would cause an accident with an unsuspecting driver, frequently a taxicab or livery cab driver.

The vehicle occupants were then directed to no-fault clinics in the Bronx, where they falsely claimed they had been injured in the accidents. Collectively, the defendants submitted just under $500,000 in bills to insurance carriers. About half of those bills were paid.

"The investigation demonstrates that the effort to combat auto insurance fraud is having a significant impact," Spitzer said.

"New York State is making great progress in the fight against no-fault auto insurance fraud and these arrests are only the latest evidence," Serio commented. "In fact, a number of the state's insurance carriers reduced their premiums this year because fraud reduction is cutting their cost of doing business. The big winners here are New York's honest consumers."

The charges against the defendants are contained in multiple felony complaints filed Monday in Bronx County Criminal Court against 25 defendants. Six other defendants were charged earlier this month. The defendants are charged with numerous counts of grand larceny, insurance fraud, and falsifying business records. The charges are the result of a long-term investigation, which is ongoing.

Many of the accidents occurred in Manhattan and the defendants would then seek treatment at various medical facilities in the Bronx. According to the complaints, the leaders of the ring, or "steerers," promised to pay the vehicle passengers several hundred dollars in exchange for posing as accident victims.

Many defendants were also promised that lawsuits would be filed against the insurance carriers and that they could reap thousands of dollars in settlement monies. In some cases, the defendants received up front payments from the steerers and settlements from the insurance carriers for their alleged pain and suffering.