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State reports reduced level of insurance fraud

Efforts by regulators and other investigators to combat auto insurance fraud -- including a major bust in Buffalo -- have paid off, as the New York State Insurance Department last year recorded its lowest level of "no-fault" fraud reports since 2000.

State insurance regulators last year received 17,124 reports of auto insurance fraud, mostly resulting from New York's "no-fault" system, according to the state's new 2005 Frauds Bureau Annual Report. That's down from a peak of 22,708 in 2003, and is the lowest since 16,287 five years earlier.

Overall, last year, the state took in 25,945 reports of suspected fraud across all forms of insurance, the lowest since 2002, but still well above 22,247 in 2000. That included 1,118 for workers' compensation, 2,279 for medical insurance, 651 for homeowners, 499 for arson, and 251 for life insurance.

The Frauds Bureau racked up 753 arrests last year, as cooperative investigations with federal, state and local law enforcement have become commonplace. That's down from 815 and 811, respectively, in the previous two years, but up sharply from 2000 and 2001.

Courts imposed fines totaling more than $5.8 million against 109 individuals, while others voluntarily paid $260,835 in 12 cases. Insurers saved $410,125 in connection with state investigations. And 1,179 new cases were opened during the year, about the same as in 2004.

The biggest coup for the state last year was the investigation and arrest of 42 suspects in a sweep in both Buffalo and New York City. The suspects, all of whom have pled to charges, were accused of staging a series of accidents in Western New York in which drivers and passengers falsely claimed injuries and sought medical treatment. Some of them were as far away as Brooklyn at the time of the alleged accidents.

Other cases locally included:

* A Buffalo coffee shop owner was charged with arson after the Buffalo Fire Department found that a fire that destroyed his business was intentional. He had just purchased three insurance policies worth $290,000, but wasn't charged with fraud because he hadn't yet submitted claims to them.

* 10 suspects were arrested and accused of giving up their cars to a Lackawanna man to destroy and collect insurance settlements between April 2000 and June 2003. Eight insurers paid out more than $105,000. Nine cars were recovered.

* The owner of a used-car parking lot in Niagara County arranged for someone else to intentionally cause an accident that damaged a Chevrolet Lumina with a bad transmission and a Plymouth Voyager. The defendants enhanced the damage and submitted a $6,070 claim, with the intention of repairing the cars for far less.

* A woman reported the theft of $30,000 of jewelry to the North Tonawanda police and filed an insurance claim. But an investigation found she had pawned the jewelry for $2,500 in cash, and gambled at a casino.

* A man reported the theft of $2,145 of computer equipment and tools from his car to the Town of Niagara police, and filed a claim the next day. But the state and three police agencies found that he had actually given the items to his girlfriend who sold them to buy cocaine.

* And a Buffalo man was convicted of insurance fraud, attempted grand larceny and falsely reporting an incident after a three-day trial in Niagara County Court. Just days after buying an auto insurance policy, he reported to police and the insurer that his car was damaged and a CD changer was stolen. In fact, he was paid $4,210 by a different insurer for a similar claim in 2003, and is on parole for a robbery conviction.

e-mail: jepstein@buffnews.com

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