NYC Auto Fraud Bust Nets 51

September 30, 2003

Authorities announced the arrest of 51 individuals as part of the takedown of a no-fault insurance fraud ring in New York City last weekend. All are accused of taking part in a scheme that netted millions of dollars.

The joint bulletin, issued by Superintendent of Insurance Gregory V. Serio, New York City Police Commissioner Raymond W. Kelly and Brooklyn District Attorney Charles J. Hynes, described the arrests as “the first phase of ‘Operation Gateway,’ an investigation into a criminal organization that is taking advantage of New York’s no-fault laws by falsifying auto accidents.” The ring is suspected of being part of a larger nationwide organization, which is responsible for false claims running into hundreds of millions of dollars.

“The elaborate scheme and sophistication of the criminals involved in the case dismantled today proves that criminals are aware of how to circumvent the current no-fault law and make a great deal of money by doing so,” Serio stated. “The Governor, the Insurance Department and law enforcement agencies, like the New York Police Department and Brooklyn District Attorney’s office, are doing everything within the power of the current law to take these criminals off the street, but until there is legislative action we will continue to see criminals like these who steal tens of millions of dollars from the auto insurance system and cause auto insurance rates to increase for honest New York drivers.”

The bulletin described a “typical no-fault auto insurance scam,” indicating that it “begins with ‘runners,’ or recruiters who arrange to send individuals supposedly injured in an accident to clinics for treatment. The runners obtain phony accident reports and recruit ‘victims’ to send to medical clinics, which are paid off to provide medical tests. Lawyers are also involved who file insurance claims, up to $50,00 per victim, which is the maximum amount allowed under New York’s no-fault laws. The organization’s top leaders keep most of the money and paid off those involved. In this case, runners were paid up to $2,500 for every victim they could link to a fictitious accident.”

The NYSID participated in the arrests, which involved NYPD detectives posing as insurance company representatives. They called persons suspected of participating in the fraud scheme at home to inform them they had been awarded an insurance claim of up to $11,000 and to pick it up in person in Queens. When they arrived to pick up their claim money, they were arrested and charged with fraud.

The Department said it had been “initially contacted by New York City Police Department to assist in the investigation in December 2002 after the NYPD received a tip of a suspected fraud ring in New York City.”

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