Swoop and Squat, a Dangerous Form of Car Insurance Fraud

By Michael Collins

Insurance Fraud is a major problem in today's society. People will often hear stories about people burning down their houses or even killing spouses in order to collect insurance money. However, there is another form of insurance fraud that is not as common or as well-known: the Swoop and Squat, a form of auto insurance fraud.

AllState Insurance has publicized this type of fraud in commercials to help customers avoid becoming victims. Their website defines the swoop and squat as "Two vehicles work as a team to set up an accident. One vehicle pulls in front of an innocent driver and the other alongside, blocking the victim in. The lead car stops short, causing the victim to rear-end him. The car that pulled up alongside serves as a block and prevents the victim from avoiding a collision." So, the fraudsters essentially create a "controlled accident" that minimizes the risk to themselves, but will still get them a lot of money from the insurance companies, as well as causing the victim's insurance rates to go up.

Cities like Los Angeles and Miami have been known as hotbeds of swoop and squat rings. In addition, vehicles that are heavily insured, like tractor-trailers or expensive cars, are commonly targeted. If the fraudsters claim bodily harm (often faked), along with the damage to the car, they can make much more money with their scheme. Many rings have been known to involve corrupt doctors and lawyers, in order to verify injuries and get the cases through the court system.

This type of fraud is often difficult for drivers to avoid if confronted. However, insurance companies believe that the best ways to avoid becoming a victim are refrain from tailgating other cars, and to call the police as soon as an accident takes place.

References:
http://www.allstate.com/About/fraud.aspx
http://www.buy-and-sell-car-secrets.com/swoop-and-squat.html
https://www.nicb.org/cps/rde/xbcr/nicb.../13734_StagedFraud_Eng.pdf
http://www.justnews.com/news/18888799/detail.html

Car Insurance Fraud, Are You Next?

Posted by: Madeleine Brooks

An insurance fraud scheme that hasn't been repeated since the 1990's has come back in full force as of recently. Four creative men devised a scheme that put insurance companies out of $500,000 and having innocent people paying for the repercussions. 48-year-old Michael Bozzi, devised a scheme to obtain Pennsylvania auto insurance policies and sell them to people living in New York City.

The scam was going on from January 2005 to September 2006 getting hundreds of New York citizens involved. A man named Bien Aime was being paid to advertise in New York City for cheap automobiles and cheap car insurance. Bien Aime was in charge of selling cars to New Yorkers and dealing with Michael Bozzi for the fake auto insurance policies. Bien Aime had an assistant to help him create fake P.O. Box addresses in Bucks County, Pennsylvania. Auto insurance premiums in New York are estimated to be around $4,000 however through this amazing scam people were paying only $1,500 for a premium in New York. The biggest problem with this scam was that if a New York resident insured under this false auto insurance policy got into an accident who will pay for the damages? You would think that if you got into a car accident, your insurance would go up, however, the people who have to pay for the damages and premiums are residents of Bucks County, Pennsylvania.

Michael Bozzi was a licensed insurance broker who operated his very own insurance company. With the help of his very own employee, Josh Green, they were able to take the hundreds of applicants and submit the applications for out-of-state residents to insurance companies with false addresses and information. The men were able to print out fraudulent insurance cards and get around the system (but not for very long). All four men were charged with theft, corrupt organization, insurance fraud and many other crimes. Also Michael Bozzi who was once a licensed insurance broker with his own company is also being charged as well.

So how can you prevent this from happening to you? You, as an owner of an auto insurance policy, should do heavy duty research about the insurance company that you are receiving a policy from. Making sure that the company is real and the information they present you is not falsely represented. You should also educate yourself with knowing what is and what is not a fraudulent scam. People can stage accidents, add damage to an already damaged car to make it seem worse than it is, and having fake helpers. In the case of getting issued fake auto insurance policies, the best advice one can give is not to fall for an offer that looks and seems to be "too good to be true" and to research what you are doing before you get yourself stuck in a sticky situation.

References:

http://personalinsure.about.com/cs/vehicleratings/a/aa062203a.htm
http://www.philly.com/inquirer/local/pa/20090228_Insurance_fraud_involves_Bucks__N_Y_C_.html
http://abclocal.go.com/wpvi/story?section=news/consumer&id=6682629

AIG Executive Sentenced to Prison

By Shu Zheng

A former vice president at American International Group Inc. was sentenced to four years in prison for defrauding shareholders, avoiding a possible life term.

Christian Milton, 61, was convicted Feb. 25 with four former executives of General Reinsurance Corp. of using a sham transaction in 2000 to help AIG improve its balance sheet. The judge could have given Milton a life sentence after ruling that the fraud cost AIG shareholders as much as $597 million.

Milton asked U.S. District Judge Christopher Droney for a “minimal” term, citing his good work in the community. Droney said that while life in prison would be too severe, the sentence must deter other executives, and that Milton’s conduct showed a “stark lack of honesty and respect” for investors.

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by Jane Mills and David Voreacos (Bloomberg)