- The 11 Goofiest Insurance Fraud Schemes of All Time
- March 1, 2017
Insurance fraud can be messy, dangerous and even hilarious. Here are 11 cases that offer ample evidence to that effect
Throughout history, insurance fraud schemes have involved a host of illicit activities, mountains of debt and even murder. Like all crimes, a fair number of them have been committed by idiots. Criminals have attempted truly startling acts of brutality and stupidity in search of a quick payout. More times than not, those schemes led to the perpetrators being faced with probation, hefty fines and in some cases, years spent in the Big House as guests of the state.
“[People are driven by] desperation, greed and a lack of common sense,” says Jim Quiggle, a spokesperson for the Coalition Against Insurance Fraud. “It depends who you are, how bad the economy is and how much your finances are affected.”
The Coalition Against Insurance Fraud is a group of insurance organizations, consumers, government agencies and legislative bodies who work to enact anti-fraud legislation. The group also tasks itself with educating the public and providing anti-fraud information to act as a resource where consumers can review scam warnings, report fraud and find tips on how to protect themselves. Founded in 1993 as a response to reports of a significant uptick in instances of insurance fraud, the CAIF has helped to enact a host of anti-fraud laws and regulations.
According to Quiggle, there’s been a steady increase in fraud cases since 2007 and 2008 as a result of the recession. He says those ranged from policyholders torching cars or dumping them into lakes to collect auto insurance money, insured jewelry and sound systems reported missing, and false claims against renters insurance, homeowners insurance and fake health insurance claims from around the country.
“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.’ These items can be expensive – and disappear very easily,” he says.
And Quiggle adds that organized crime is often at the center of some of the most sophisticated scams.
“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. It’s a coast-to-coast scam with thousands of people bilked,” Quiggle says.
While not every insurance scam is so easy to spot like the 11 Dumbest Insurance Fraud Schemes of All-Time we’ve compiled here – and thanks to the Coalition Against Insurance Fraud for providing us these examples – our list should provide some entertainment.
The Hannah Montana Scam
#11: Garrett Dalton, once a Naugatuck, Conn. corrections officer, collected thousands of dollars in workers compensation money after he was “injured” on the job and claimed he was unable to work. Dalton was a bit of a character. He inadvertently revealed the details of his scheme himself – on TV – during a radio station promotional race that included balancing an egg on a spoon. At the time he was wearing a dress, a woman’s wig and high heels. So what motivated him to blow his criminally sweet deal? First prize in the contest was a set of tickets to a Hannah Montana concert.
Overcooked Home Insurance
#10: Nicholas Di Puma of Walton, N.Y., was a bit of a fire bug. Di Puma torched his home and his convertible in hopes of collecting homeowners and car insurance benefits. Sadly for him, investigators were not amused by his explanation of the incident. Di Puma told them he was home preparing dinner when the fire broke out, and he claimed the horror truly began when pans on the stovetop caught fire as he was cooking a pair of delicious steaks. He added that while trying to extinguish the blaze he threw a pan out the kitchen door, it landed in the backseat of his convertible, and the mayhem was under way. To spice up his story, Di Puma said as he tried to toss the second pan outside, he tripped and deposited that pan on his couch.
Delaware County authorities, while likely amused, were not convinced.
In addition to his charred steaks, a torched home and a blackened car, Di Puma also received five years probation for his feats.
Digging Himself A Hole to Crawl Into
#9: Matthew Mueller of Akron, Ohio, decided to rent a backhoe and bury his 1997 BMW on his father’s rural property. Why? The car had engine problems and Mueller believed he could walk off with a cool $20,000 by reporting the car stolen. Problem solved.
Unfortunately, once insurance officials were notified of the “stolen” vehicle, Mueller lost his nerve and started to dig the car out with the same backhoe he used to bury it. He managed to get the backhoe stuck in the mud, and with the evidence in plain sight for all to see, Mueller’s scheme unraveled. He landed a year in jail for his troubles.
A Snack for Pancho the Gator
#8: Justo Padron, the owner of Tamiami Medical Supply, Inc., was operating a fraudulent business that ultimately scammed $7.4 million from Medicare. But it seems Padron was unsatisfied with his ill-gotten gains and decided to burglarize a vehicle in search of more cash. The police spotted him, gave chase and looked on as he jumped into a nearby lake. His major mistake? He failed to notice a sign on the shore which read “Danger Live Alligators.”
That was a grievous error. Padron was found dead the following day, a victim of multiple gator bites. The killer? You can’t make this stuff up. The killer gator was named Pancho…
Mouse Trap Soup
#7: Carla Patterson of Newport News, Va., said she was mortified to discover a dead mouse in her bowl of vegetable soup during a meal at a Cracker Barrel restaurant.
Patterson went after $500,000 she hoped would come her way from the restaurant’s business liability insurance policy, but Cracker Barrel performed an autopsy on the mouse. Their investigators discovered the mouse did not have soup in its lungs and had not been cooked.
Patterson ended up in prison for a year.
Not Making the Grade
#6: Tramesha Lashon Fox was a high school chemistry teacher in Houston. Tired of shelling out for her monthly car payments, Fox gave two of her failing students passing grades to convince them to “steal” and torch her Chevy Malibu to allow her to collect insurance.
Fox was ultimately nabbed when the scheme came to light, she lost her job and she landed in jail for 90 days.
Ex Husband, Ex Car, Ex Freedom
#5: Robert and Teresa Hammond, and Margaret Dillavou and Paul Gaines, couples from Union County, Ill., decided to ram the Hammonds’ car into a tree with an eye towards collecting insurance. The plan involved videotaping the event as they needed money to pay Dillavou for back rent.
Things went south when Dillavou misplaced the tape, which was later discovered by her estranged husband as the couple sought a divorce. Her soon-to-be ex-husband handed the incriminating tape over to the police.
A Close Shave With Death, Twice
#4: Candice Lambert was known as an effective and inspirational special-education teacher in Albany, N.Y.
Many were saddened when they heard she was diagnosed with terminal cancer. But the story turned ugly when it was discovered that she faked her diagnosis.
Lambert played for sympathy and went as far as shaving her head to seal the story. She retired to New Hampshire, ostensibly to live out her “final months” on disability insurance from the school system.
But former colleagues spotted an article in a Nashua, N.H., newspaper which detailed her brave fight against an inoperable kidney tumor. After some sleuthing, it was found Lambert was hardly on her deathbed. She was using the same scam to once again collect disability insurance from yet another unsuspecting school.
As her scam collapsed, Lambert ended up being sentenced to one to three years in prison for attempting to steal more than $110,000 in health and disability insurance benefits.
Sorry, I Have to Pass Glass
#3: A Massachusetts couple, Ronald and Mary Evano, liked to snack on some crushed glass before they left on trips to local restaurants, bars and grocery stores.
Over the course of eight years, the pair filed more than $200,000 in fraudulent claims using fake ID and Social Security cards. As insurers and businesses paid up to avoid lawsuits, the couple were consuming glass at a startling rate.
It turns out that there was a physical price to pay for their gastronomic bravado as the couple began to build up glass in their intestines and colons, regularly vomited blood and often had to “pass glass.”
Once the couple’s scheme was revealed, the Evanos sought mercy by telling authorities they were members of the gypsy community who needed the money for dowries and marriage expenses.
Ronald was arrested and charged in the glass caper in 2006, and Mary, who went on to fleece victims by claiming to be a psychic, was ultimately brought to justice early in 2010.
A Class Act
#2: Michael Paul Schook was an ex-con with a big mouth facing an enormous pile of debt. His house was in foreclosure, his car had been repossessed and he owed thousands on credit cards.
In a last-ditch effort to solve his financial problems, Schook decided to set his house on fire in hopes of collecting $250,000 on an insurance policy. To that end, Schook left a pan filled with fat on the stove and left the house with his family. As expected, the house burnt to the ground. But not content to leave well enough alone, Schook had bragged to anyone who would listen about his plans to burn his own house down.
Emboldened by their dad’s bragging about the scam, Schook’s children felt comfortable enough with the tale to pass it on to their classmates. Some of those classmates reported it to school officials, who then notified police.
As a result of his scam and his loose tongue, Schook received seven years in prison for his grease fire gambit.
Body of Evidence
#1: Clayton Daniels was a bad, bad man, and he was in a whole heap of trouble.
After sexually assaulting a 14-year-old girl, he received a deferred ten-year sentence, and after failing to report to his probation officer, he faced a 30-day jail sentence. Daniels knew he’d be heading back to jail if he and his wife Molly couldn’t come up with a satisfactory scheme.
The pair settled on a plan to dig up the body of one Charlotte Davis, a woman who had been dead for nearly a year. The couple proceeded to dress the body of Ms. Davis entirely in Clayton’s clothes, placed her body in a car, set the car afire and then shoved it off a cliff.
Their idea? The couple’s life insurance company would believe the charred body was Clayton, and that would be sufficient to reap $110,000 in benefits.
The insurer decided it might be a fine idea to run a DNA test to confirm that the body was indeed Clayton Daniels.
Thinking they were in the clear and eager to cash in just weeks after the accident, Clayton returned to town, now sporting dyed hair and a mustache, and was introduced around town as Molly’s new boyfriend, Jake Gregg.
Investigators were tipped off to something “hinky” when Molly appeared “eerily calm” during a series of post-crash interviews. In addition, the investigators found no signs of an accident at the crash site, discovered the fire had started on the driver’s seat of the car, and most telling of all, the DNA did not match up.
If that wasn’t enough to blow the scheme, details of the planning for the crime were discovered in great detail on Molly’s computer which included a history of Internet searches on how to burn a human body beyond recognition and creating fake identities.
“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 Quiggle. “But some schemes are very well-constructed and insurance companies need to do very detailed investigations to uncover a well-concealed crime.”
Insurance companies and investigators don’t just sit back and let criminals operate. According to Quiggle and the Coalition Against Insurance Fraud, these insurance fraud scams are fast becoming tougher to accomplish as investigators have built more effective tools to catch suspects. Investigators now monitor social networking sites as part of their routine.
The courts are not always consistent when it comes to the punishment of insurance swindlers. Sometimes people are allowed to plead guilty in exchange for no jail time, and in other instances when the claimant seems to be an upstanding citizen who did something drastic in a moment of weakness, the punishment will not be as severe.
“The courts have tried to balance the need for justice against the fact that someone did wrong,” says Quiggle. “The more violent the crime, the more risk to public safety, and the more money stolen, the more likely the person will receive a harsher sentence.”
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