FBI sting catches nearly 100 insurance scam artists
Friday, June 27, 2003
CHICAGO -- An FBI agent posing as a personal injury lawyer set up a bogus law office and caught scores of scam artists who staged auto accidents to cheat insurance companies out of more than $1 million, prosecutors said Thursday.
So far, 82 people have been charged with mail fraud and other crimes in a sting described by authorities as a significant advance in the fight against insurance fraud. Experts estimate that insurance fraud costs $7 billion to $15 billion annually, translating into possibly $200 to $300 for every policyholder.
"People who think they can make a living off fraudulent claims will discover -- after they have been convicted of a felony -- that they must find another line of work," U.S. Attorney Patrick J. Fitzgerald said.
As part of the operation, the FBI created a fake law office on Chicago's Michigan Avenue in the name of James L. Kent. Agents tipped off the Illinois Supreme Court to the investigation so that Kent could be added to the list of lawyers in Illinois in case anyone decided to check his background.
Kent was quickly introduced to a group of con artists known as chasers who orchestrate phony auto accidents to file false insurance claims. The agent known as Kent turned down any legitimate business.
Officials said the FBI used a hidden camera to record sessions in which Kent brought chasers to his office along with the people who were willing to be at fault for the supposed auto accidents. Kent had to make sure they had valid auto insurance before giving the green light.
Only then would the fake accident be staged, officials said. They said the phony victims were known as "sleepers" because they were willing to sleep overnight in the hospital. No one was really injured.
"Most of the sleepers were sitting somewhere drinking coffee while cars were being crashed under the L tracks," Assistant U.S. Attorney William Hogan said. He said the crashes were staged in alleys and isolated places under Chicago's elevated train tracks.
Stings have long been employed by the FBI as a crime-fighting tactic. Agents posed as Arab sheiks in their Operation Abscam investigation of Capitol Hill corruption in the early 1980s and more recently set up a bogus mutual fund company in Miami as part of another investigation.
Chicago has seen a number of high profile stings, including Operation Greylord in the mid-1980s when a visiting judge hid a microphone in his black robe and a tape recorder in one of his cowboy boots to uncover courthouse corruption.
Hogan said FBI agents posed as lawyers in the Greylord investigation but the current one may be the first in which the FBI opened a law office.
The undercover insurance investigation was dubbed Operation Soft Tissue, after the injuries often cited by the bogus accident victims. Injuries to "soft tissue," such as muscles, are difficult to prove and thus easier to fake.
The operation, first reported by The Chicago Tribune, involved an unusually close cooperation between the federal government and the insurance industry.
Officials said the National Insurance Crime Bureau, a suburban Chicago group financed by the industry, paid the startup costs of the operation, estimated at $300,000.
Fitzgerald said he could think of only one case in which an industry had subsidized a federal investigation before, a case years ago in New York. But he said he had no qualms about a possible conflict of interest.
Federal prosecutors made their decisions in the case independently of any outside influence as in all other cases, Fitzgerald said.
At the news conference Thursday, Fitzgerald announced five indictments charging 45 individuals in various schemes arising from the case. They were added to those who were charged in smaller indictments in recent months, bringing the total number of people charged to 82.
One defendant has pleaded guilty thus far, officials said.
While none of the doctors involved in claims arising from the fake accidents has been charged in the case, officials left open the possibility that some might be as the investigation continues.