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Organised Fraud

Weightmans were recently instructed to investigate 29 connected accidents mostly occurring in 2011 in the Wolverhampton area.

Weightmans were recently instructed to investigate 29 connected accidents mostly occurring in 2011 in the Wolverhampton area.

Modus Operandi

As a result of our investigations, we found the following most common features in the suspected Fraud Ring:

  • Locus
    The accidents occurred or the parties resided in the West Midlands area;
  • Fault
    The Insurance client's policyholder was always the at fault driver;
  • Absent insured
    The policyholder did not report the alleged incident; was always of Eastern European descent, took no active part in the litigation; the addresses and dates of birth were false; and the very existence of the policyholder was often in question;
  • Policy inception
    All policies were incepted shortly before the alleged incident;
  • Policy cancellation
    All policies were cancelled shortly after the alleged incident, usually due to non payment of policy premiums;
  • Policy funding
    In the majority of cases, the initial deposit was funded by an individual who seemingly had no connection with the policy;
  • Insured vehicle
    The insured vehicle was old and of low value; no claim for vehicle damage was presented by the policyholder in any of the cases notwithstanding the commensurate damage to the third party vehicle;
  • Claims presented
    Various claims were presented from multiple occupants in the third party vehicle;
  • Claimant solicitors
    Remarkably prompt instruction of solicitors, occasionally on the same day as the accident;
  • Medical treatment
    Claimants prioritised instructing solicitors ahead of involving medical professionals.
  • Circumstances
    There was a remarkable similarity in the alleged accident circumstances involving either the insured policyholder/ driver colliding with the rear of the stationary third party vehicle or emerging from a side road into collision with the correctly proceeding third party vehicle.
  • Party links
    There were various connections identified between the parties alleged to have been involved in the various collisions identified.

Policy inception - A Key tool in investigating Fraud ring activity

The key tool in tracing the spread of the network was the data derived from the policy inception information used to incept the risk policies. While several brokers were exposed, one in particular, was the predominant target. Most fraudsters like to keep their economic outlay small in order to maximize the yield of the fraud. Low cost, internet based policies are an easy target, both accessible and affordable with little in the way of paperwork required.

Approximately 75% of the policies investigated were incepted between January 2011 and May 2011.

Unsurprisingly, most of the addresses provided were entirely bogus and seemingly chosen at random. When investigators went out to interview the at fault driver, they were often met at the door by a genuine tenant who had no knowledge of the insured, save for recognising the name from other post that had been sent to that address in that name. The same addresses were used on more than one occasion which did allow us to link individuals behind the fraud.

The insured vehicles were registered to other individuals and addresses, with no apparent connection to the policies. Certain bank accounts and email addresses were used on multiple occasions to incept separate policies for different individuals.

All the above suggested this was an organic enterprise, with knowledge of the “trade” being communicated by “word of mouth” throughout the Eastern European community in the area. We strongly suspected that a claims farmer was working in the area at the time.

We believe that there were two separate communities involved in this particular large fraud ring – Slovakian and Romani - who overlapped through shared addresses and car sharing.

Links to Social networking sites

The majority of the email addresses used to incept the policies on the Slovakian side of the ring were registered to a Slovakian networking site Pokec.azet.sk. (similar to Facebook). This site allows users to create social profiles, picture albums and chat. The only requirement is a recognisable email address to which the profile can be registered.

An email address, like an IP address, is often the only link between a cyberspace entity like a social profile and the real world user. This reality was pivotal to our investigations as we were able to use the profile pictures of the social profiles on Pokec.azet.sk to find the actual individuals on Facebook. We could directly link the Facebook profiles of individuals back to the policy inception data.

Facebook was key in providing further links between the individuals incepting the policies on all the related matters. We could now show that not only were all the individuals in these 29 seemingly unconnected cases known to one another but also that they each unequivocally happened to incept a policy (often funded by someone else entirely), go on to be involved in an accident days/ weeks later and then cancel the policy immediately.

Orchestrator

While no sole orchestrator has ever been identified, one particular Accident Management Company (AMC) featured in the majority of matters being investigated (12 out of the 29), as did a well known firm of vehicle assessors. There was evidence of a referral relationship between the AMC and a firm of solicitors acting on 9 of the AMC linked files.

Repudiation and savings

Of the 29 cases referred to, 14 were successfully repudiated pre-action. 15 litigated and we pleaded a robust defence in each highlighting the links between individuals involved in this incident and the other incidents being dealt with by Weightmans. We had, from the outset, requested that all connected litigated claims be transferred to the same Court and be heard before the same Circuit Judge.

All cases were transferred to the same Court. We also successfully argued to keep the cases involving the AMC heard as a smaller ring. Seven claims were listed to be heard together at Coventry County Court. Of the 15 in litigation, 3 were struck out due to the claimant's solicitors coming off record and the claimants failing to comply with Court directions.

Of the 29 matters, only 5 remain ongoing and continued to be robustly defended.

Total net savings recorded to date amount to £1,126,433.90

For further information about any of the issues in this update, please contact Kelly Ann Mills on 0151 233 7410 or via Kelly.Mills@Weightmans.com