Foreclosure, Financial Woes Apparently Fueling Homeowner Arson

Dec. 2, 2009 — -- Earlier this year, "Good Morning America" told you about people who were burning their cars for insurance money.

Now we report on another trend: desperate homeowners accused of burning their own homes to collect insurance money or avoid foreclosure.

Earlier this year, Michael Marin of Arizona was arrested for allegedly torching his own multi-million dollar mansion.

"He had a large balloon payment that was due. According to his assets, he was not able to make that payment," said Phoenix Fire Captain Jeff Peabody.

Marin categorically denied the allegation.

"I had nothing to do with this fire starting," Marin said. "I have a conscience as clear as the driven snow."

Marin told "GMA" he believes poor electrical wiring started the fire. He's currently out on bond with a February trial date.

The headlines go on and on, in every corner of the country, broke homeowners have apparently been turning to arson, which has resulted in arrests, indictments and jail time.

Sheryl Christman of Michigan was sentenced to five years' probation and 1,000 hours of community service for igniting her home when it was four days away from foreclosure.

"It didn't look like a typical fire," one witness to the fire said. "It didn't look like something that something caught -- it almost looked ignited."

Police charged the owner of a Maryland home with setting his house on fire after he allegedly fell behind on his mortgage payments. The homeowner maintains his innocence and plans to enter a not-guilty plea.

Arson-related insurance fraud in Detroit soared 40 percent between 2005 and 2008. Just last month, a coalition of insurance companies pledged $1 million to attack the problem.

"It's way beyond just a financial problem," State Farm claim consultant Dennis Schulkins said. "You're putting firefighters at risk. You're putting innocent bystanders at risk."

Insurance Companies Turn to Arson Investigators

In Bloomington, Ill., State Farm and the Bloomington township fire protection district gave "GMA" exclusive access as they set two mobile homes on fire to train arson investigators.

The first fire was set to look like an accidental electrical fire. The second one was set to look like a combination of an accidental kitchen fire and an intentional fire in the living room.

"We take them through and they get a chance to see burn patterns that they would not see in the course of their daily work," said Loren Keim, a State Farm instructor with the special investigations unit.

State Farm also trains arson Labradors that can identify traces of an accelerant like gasoline or lighter fluid in the aftermath of a fire. Insurance officials say these dogs can find in minutes what might take investigators hours or days.

Schulkins said there are two types of people committing these crimes: Desperate people in desperate situations and people who burn homes for profit.

"They can buy a home that's been foreclosed for pennies on the dollar. They insure them for far greater than what they paid for them and then they'll start the fire to collect the insurance money," Schulkins said.

Insurance fraud is a $30 billion a year problem that's not going away any time soon. But investigators said even the most desperate homeowners shouldn't try it.

"You're probably not going to get away with it and you could get yourself in a lot more trouble than you're in already," Schulkins said.

Because where there's fire, there's smoke and investigators know how to read the signals.