22 Insurance-Fraud Ring Members Apprehended; Fla. Warns Others About Tough Penalties

A campaign to point out the consequences of staging an auto accident or participating in auto insurance fraud has been launched by the Florida Department of Financial Services Division of Insurance Fraud. The “educational campaign” comes in the wake of arrests of 22 of 39 individuals in Miami, believed to have been involved in an insurance fraud ring that staged at least a dozen auto crashes and fraudulently billed insurance companies for $1 million.

The campaign emphasizes that the penalties for insurance fraud include time in prison and driver’s license revocation. Tom Gallagher, CFO said 25 members of the fraud ring, if convicted, will face a minimum mandatory sentence of two years in prison for organizing the staged crashes, and up to 15 years in prison on all charges.

“These individuals staged car crashes and faked injuries,” Gallagher said. “But the costs are very real – hundreds of dollars in additional costs each year on the backs of Florida families.”

In the last five years, the Department of Financial Services, Division of Insurance Fraud, has arrested more than 800 people in connection with at least $23 million in Personal Injury Protection insurance fraud. Florida drivers are required to carry a minimum of $10,000 in PIP coverage and $10,000 property damage coverage. By staging accidents, the planners and participants, usually in connection with unscrupulous clinic owners, target the PIP insurance of drivers, and fraudulently bill auto insurance companies for injuries and treatments that never happened.

Gallagher is promoting legislation to address the latest spin on PIP fraud – accidents that never happen. The legislation would establish a two-year mandatory sentence for accidents that happen only on paper or single-car accidents reported as hit-and-runs.

Today’s arrests are the culmination of a six-month investigation by the department, the special investigative units of the insurance companies and the National Insurance Crime Bureau. Florida’s PIP prosecutor Nina Vivenzio, of the Dade County State Attorney’s Office, is prosecuting the charges.

The 53-year-old suspected ringleader Wilfred Cyriaque, also known as “Lopez” or “Blanc,” is charged with 51 counts each of insurance fraud and grand theft, four counts of staging an accident, and organized scheme to defraud. Investigators believe Cyriaque may have staged as many as 90 crashes during several years.

Cyriaque and 24 participants have been charged under a new law designed to combat staged accidents, which took effect Oct. 1, 2003. State fraud investigators have arrested more than 40 individuals under the new law and, in Miami alone, are actively investigating more than 50 other fake crashes believed to have occurred since October 2003.

Omar Lantigua-Gonzalez, the first person convicted under the new mandatory sentencing law, was sentenced last September to two years in state prison. In what is known as the Hialeah Hummer case, he used a Humvee to damage several vehicles that he and other participants later said had been struck in a hit-and-run incident. And last Tuesday, six of seven alleged members of another staged accident ring in Miami were arrested.

“The pace of these crimes is staggering,” Gallagher said. “We are very grateful for the two-year minimum sentencing law and our dedicated prosecutor. Together, they are having a significant impact.”

Vivenzio, the state’s first dedicated PIP fraud prosecutor, began in March 2004. PIP fraud-related arrests – based on charges filed by Vivenzio – increased 25 percent in 2004 over 2003, from 155 to 201, and convictions and jail time also were up.

“The tools to fight this crime should be as strong as possible, and I appreciate the work the Legislature has done to enact minimum mandatory sentences,” Vivenzio said. “The more aware the public is of these minimum mandatory sentences, the more likely would-be perpetrators will take notice.”

Vivenzio’s position is funded by the Florida Automobile Joint Underwriting Association, who is also sponsoring the department’s public education campaign along with the Florida Insurance Education Foundation, a Tallahassee-based organization.

The information cards and posters, also available in Spanish, will be distributed to police stations in Miami, Miami-Dade and Hialeah, insurance agent offices, auto tag agencies, community colleges, traffic schools, retail outlets, community centers, churches and numerous state and county offices. The message will be bolstered by public presentations at traffic schools, community centers, churches and government organizations.

The Division of Insurance Fraud was assisted in making the arrests by Miami-Dade Police RID, Hialeah Police Department, North Miami Police Department and the Department of Corrections. The following insurance companies also assisted: include Allstate, Bristol West, Budget, Direct General, Federated National, First Liberty (Liberty Mutual), FAJUA (Illinois National – AIG), Ocean Harbor, Progressive, Republic Western, Southern Group, State Farm and US Security.

Topics Florida Auto Fraud Legislation A.J. Gallagher