Two-County Sweep in N.C. Yields 10 Arrests for Insurance Fraud

December 5, 2006

In what officials describe as the largest auto insurance fraud ring in North Carolina history, 10 residents of Cleveland and Rutherford Counties are accused of defrauding insurance companies of an estimated $1 million.

Arrested by Department of Insurance investigators, the suspects – if convicted – could face prison time for the felony charges. Outstanding arrests remain to be made in the case. All suspects were taken to the Cleveland County jail. The alleged scheme was uncovered by Southern General Insurance Co. earlier this year, when company representatives noticed unusual claim activity associated with the same vehicles and the same addresses.

The company reported their suspicions to the National Insurance Crime Bureau which in turn contacted the Department of Insurance Investigations Division in August. In the investigation that ensued, law enforcement officials found evidence of a classic staged auto accident ring, and allege that the individuals arrested yesterday caused accidents deliberately, filed fake insurance claims, claimed fake or exaggerated injuries, and/or misrepresented information on insurance applications.

As of September, 487 insurance claims from reported accidents had been connected to this alleged organized fraud ring. At least eight insurance companies, including Southern General, have allegedly been defrauded: North Carolina Farm Bureau, Nationwide, State Farm, Allstate, GMAC, Atlantic Casualty and Universal.

“Some people believe insurance fraud is a victimless crime – who cares if you steal some money from a big insurance company? They charge too much anyway, right?” said Insurance Commissioner Jim Long. “The reality is that insurance companies in North Carolina charge a reasonable amount to provide you with a valuable service – protecting your investments and your belongings. Any time a company has to pay for a fraudulent claim, it costs us all in the long run through higher rates. This isn’t fair to all of us who work hard to pay for the essential insurance coverage we need to protect ourselves.”

Assisting in the arrests and investigation were the NICB, the Shelby Police Department, the Cleveland County Sheriff’s Office and the Cleveland County Detention Center. The Department of Insurance employs 20 sworn law enforcement officers dedicated to investigating claims of insurance fraud. In 2005, these investigators saw 90 cases successfully closed with more than $25.8 million recovered in restitution and 52 guilty convictions.


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