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The Fraud Report

TX Man ordered to Pay $5M for Insurance Fraud

by FraudReport 16. January 2015 06:25

On January 5th, a 61-year-old Texas man was sentenced to nine years in federal prison, and ordered to pay $4,973,046 in restitution, for his role in a staged accident fraud scheme. He was convicted of persuading others to falsely report damage to technical equipment during “accidents” that never happened, according to the U.S. Attorney's Office for the Northern District of Texas.

According to ABC News and Attorney's Office spokeswoman Kathy Colvin, Leroy Nelson pled guilty to mail fraud and engaging in illegal monetary transactions in March of last year. As part of his plea agreement, he forfeited several vehicles, a motor home, a boat and trailer, and real estate in Duncanville and Cooper, Texas.

From 2005 through 2012, Nelson defrauded auto insurance companies by submitting false and fraudulent claims for damage to various technical equipment in accidents that never happened, according to documents filed in the case.

As the scheme unfolded, Nelson would promise cash to individuals that he recruited for reporting fake accidents. The stories would normally involve something about a driver rear-ending a trailer or swerving to avoid something in the road, therefore causing damage to items such as a "remote aircraft landing marker," a "chemical pipeline examiner," or a "seismographic probe." In a release, U.S. Attorney's office said the claimed repair expenses would usually be between $16,000 and $19,000.

Taking on yet another role in the scam, Nelson would also instruct the recruits on how to make the phone call to the insurance company and then prepare and submit the claims for the property damage under a false business name. He also went so far as to include a photo of the equipment and a repair estimate.

The U.S. Attorney's Office said Nelson had private mailboxes in 6 states: Minnesota, Missouri, Washington, Arizona, Connecticut, and Louisiana, all listed under those false businesses and made to receive the insurance checks. He would then have that mail forwarded to two warehouses in Dallas.

From 2005 to 2012, the total of all the insurance claims submitted by Nelson was approximately $5 million, Colvin said.

This investigation was conducted by the FBI, IRS, and U.S. Postal Service, after it was brought to their attention by Farmers Insurance and the National Insurance Crime Bureau.

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Categories: Staged Accidents