More Auto and Car Insurance Fraud Cases In Bad Economy

Photo: The faltering economy is to blame for a rise in auto insurance fraud cases nationwide, according to investigators who tell that never before have they seen car owners so desperate to get rid of their carsCourtesy Stanislaus County Sheriffs Office
Dennis Bicek is in prison for of insurance fraud, after setting his car on fire to collect on his policy.

Across the country, desperate Americans are lighting their own cars on fire when they can no longer afford the payments. Then they report the vehicles stolen and try to collect the insurance money.

So many cars are getting lit up in Las Vegas that the city's Police Auto Theft Unit patrols the roads for burned out cars.

"The driving factor right now is the economy. It really is," said Sgt. Will Hutchings of the LVPD Auto Theft Unit.

VIDEO: More Auto and Car Insurance Fraud Cases In Bad EconomyPlay

During this past year, on one stretch alone, police say they've found the charred hulks of at least 70 torched cars. Their police helicopter finds other abandoned vehicles hidden in crevices and on peaks in the middle of the desert. Police said since the drive to desolate sections of the desert is a one-way mission over harsh terrain, the bottoms of these vehicles are usually torn out before the burn even begins.

Some of these car arsons have been caught on tape. Police said the tapes demonstrate the immense danger of this crime.

"Take the hit on your credit or whatever, don't commit this crime. What you're risking in injury far outweighs anything you'll gain financially," said Lt. Robert Duvall, head of the LVPD Auto Theft Unit.

Police said a Nevada man, Raidel Vega, suffered secoond and third degree burns on his arm and hand when he burned his girlfriend's car when she wanted out of her car payments.

Vega was charged with seven felonies including arson and insurance fraud. He's currently in jail and back in court next month.

But it's not just Nevada that seeing the problem.

For Modesto, Calif., resident Dennis Bicek, car payments on his Infiniti G35 became such a burden that police allege he hired a man to steal and burn the vehicle to collect the insurance. Bicek claimed to police that his car had been stolen from a local golf course.

"The primary motive was for economic means," said Sgt. Brian Findlen, the public information officer at the Modesto Police Department. "This individual found that he could no longer afford the vehicle he had purchased and made the choice to commit a criminal act to ease the financial burden."

Bicek's car was eventually located nearby by firefighters who found the burned-out hulk. Bicek and the two men he allegedly hired to do the job face charges of arson and conspiracy to commit arson.

Messages left at Bicek's home by were not immediately returned.

According to James Quiggle, the spokesman for The Coalition Against Insurance Fraud, such cases have been on the rise since the economic recession began in December 2007.

"A growing number of stressed-out consumers around the U.S. are ditching unwanted vehicles to try and stop them from falling off a financial cliff in the recession," said Quiggle.

According to the Insurance Research Council, an organization that does research on behalf of the insurance industry, automobile insurance fraud added between $4.8 billion and $6.8 billion to auto claim payments in 2007, the most recent year data was compiled.

National statistics on the number of auto fraud cases that occur are not available, said Quiggle, who says that because each insurance company maintains their own statistics on fraudulent claims -- and because they each consider different acts to be fraudulent -- no "omnibus of data" exists.

But the uptick in the number of cases is undeniable: The National Insurance Crime Bureau released a study in 2008 reporting that owner give-ups -- the term used to describe cars that are abandoned by owners who are oftentimes looking to gain financially from the act -- skyrocketed in five major cities, including Houston, Las Vegas, Phoenix, Los Angeles and Chicago.

The same report indicated that these fraud cases were on the rise, according to reports from various states. New York State's Fraud Bureau reported a one-third increase in the number of fraud cases in 2008. Florida and Wisconsin reported similar trends.

In 2007, the latest year for which statistics on arsons nationwide are available, the U.S. Fire Administration estimated that approximately 20,500 cars were intentionally set on fire.

Quiggle said he's seen cases of car owners getting rid of their vehicles in a variety of ways, from sinking them in lakes and ponds where evidence can "lie submerged for decades," to the most popular disposal method: arson.

"It's most common to torch vehicles because the hope is that they can destroy the evidence or make it appear [to their insurance companies] that the car was stolen by a fire-minded vandal," said Quiggle.

Detectives Nationwide Report Increased Auto Fraud Cases

Det. Tom Reilly of the Dallas County Sheriff's Department is all too familiar with car owners who are willing to break the law to get out of paying for their cars.

"This is a problem that has gotten way worse because of the economy," said Reilly, who heads the North Texas Auto Theft Task Force. "We're seeing people destroying their vehicles, getting rid of them in Mexico and later reporting them stolen and constantly giving false statements to the insurance companies."

Reilly and his department often take videotaped statements from individuals who have been found to have illegally unloaded their vehicles, in an attempt to better understand what drives otherwise law-abiding citizens to partake in criminal acts.

"We see people who are just mad at the insurance companies and feel like they owe them because of previous claims that they've filed and were never paid for or they're simply just frustrated [with the economy]," said Reilly.

A former chiropractor said, "I made the wrong decision. You know, I shouldn't have done it," during one of the videotaped interviews. "Trying to save $1,100 … it's just not worth it. It's not. There [are] other means of taking care of your payments, or hell, let them repo the car. Let them take the car back. But don't go to great details of calling the police department or calling the insurance company because that's what got me here today."

"Some people in leased vehicles are afraid of the penalties they'll have to pay for high mileage or damage, and see no other choice [but to get rid of their vehicle]," said Reilly. "A lot of these people think the insurance company is just a money pit and a faceless entity that will send them a check."

Det. Gary Smith of the San Bernardino County District Attorney's Office said all too often vehicles "mysteriously go up in flames" as their owners struggle to make ends meet.

"People have admitted it's because they have no money," said Smith. "It varies from not being able to make their mortgage payment to losing their jobs and just trying to downsize their budgets."

Auto Fraud Culprits Garner Sympathy, Even From Cops

Smith says that even he feels badly for the people he catches illegally disposing of their cars because he realized just how desperate they've become.

"A lot of the time these people are normal, run of the mill folks who are just panicking because they're trying to take care of their families and they've put themselves between a rock and a hard place with their home and vehicles.

"For a lot of these people the choice becomes feeding their family or making their car payments," he added. "A lot of them are first-time criminals -- those are the ones you really feel for."

Quiggle says he has mixed feelings toward people who try to game the insurance companies.

"These are normally honest people who wouldn't steal a candy bar from a grocery store," he said. "They're trying to make it in a terrible economy and too often their finances are ruined and they're driven to the edge. They're resorting to a stupid and ill-thought out crime as a last resort."

Sometimes the owners are injured in the process. Quiggle said a Las Vegas man recently poured gasoline into his car and lit it with a match. But the gasoline exploded in his face and he suffered second and third degree burns that landed him in the hospital.

"People are just destroying their lives in an attempt to illegally bail themselves out."

Tips on Getting Out of Loans, Leases

So what can you do if you find yourself in a position where you can no longer afford your car payments?

Avoid repossession at all costs.
When your car is repossessed you still have to pay the loan off, plus your credit is ruined for up to seven years.

Contact Lender
Instead, immediately contact your lender and try to work out a deal with lower monthly payments.

Trade car in
You could also try to trade your car in for a much cheaper one. This is tough if you owe more on your car than it is worth, but it will work if you choose a much more modest vehicle.

Short sale
Another option is a short sale in which you sell the car yourself and give the money to the lender and they agree to write off the difference without dinging your credit.

Transfer lease
And finally, if you lease your car, you may be able to transfer your lease to somebody else, as long as your lender allows this.

Check out the links below for information on how to get out of a car loan or lease.

How to Get Out of a Lease
Getting Out of Car Loans and Leases
Legal Advice on Getting Out of Car Loans and Leases
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