16 Charged in New York Staged Accident Scheme

John Egan

Sixteen residents of Brooklyn, N.Y., have been accused of staging car accidents to reap more than $400,000 from bogus car insurance claims.

New York Attorney General Eric Schneiderman announced the arrests of the 16 defendants March 6.

“This staged accident scheme put innocent lives in danger in order to make the perpetrators a quick buck – now they will be brought to justice,” Schneiderman says in a news release. “Breaking up this criminal operation means safer streets, and a fairer market for consumers whose insurance premiums skyrocket as a result of fraud.”

The 16 defendants allegedly staged nine car crashes in Brooklyn, beginning in September 2009 and ending in May 2011, to file fraudulent claims with car insurance companies and collect illegal payouts.

The alleged scheme involved the intentional crashing of cars into those driven by unsuspecting motorists or by willing participants. Some of the defendants allegedly arranged and participated in the accidents, while others agreed to be passengers in the vehicles. Still others pretended they’d been in an accident when they actually weren’t in a crashed car, authorities say.

In several instances, defendants rented U-Haul trucks and intentionally smashed them into taxis, authorities say.

Participants in the alleged scheme capitalized on New York’s no-fault car insurance law. Under the law, insurers must pay for medical treatment of crash-related injuries, up to $50,000 per person and regardless of who caused the wreck. Furthermore, crash victims may be able to go to court to pursue insurance money for their injuries.

Benjamin Lawsky, superintendent of the New York State Department of Financial Services, says: “Arrests like these are just round one in the fight against no-fault fraud. We will use every tool at our disposal to fight this crime because it victimizes honest New Yorkers with higher insurance premiums and health care costs.”

No-fault fraud and abuse cost New Yorkers about $241 million in 2010 in the form of higher car insurance premiums, according to the Insurance Information Institute.

In late February, federal officials announced 36 people – 32 of them from New York – were charged in a separate no-fault car insurance scheme. Authorities say that scheme reaped more than $279 million in phony insurance claims. Among the defendants are 10 doctors and three lawyers.

David Schwartz, a spokesman for a group called New Yorkers Stand Against Insurance Fraud, applauds the two criminal cases but says “lucrative” no-fault fraud will continue in New York unless loopholes in the no-fault system are closed.

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