Catastrophe Fraud & Criminal Acts Fraud Video

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According to the Coalition Against Insurance Fraud, and general experience, natural disasters are always followed by fraud. The sheer size of the cleanup created by Katrina and the other hurricanes since 2005 has ignited the biggest glut of litigation and insurance fraud attempts in the history of US disasters.

Lt. Allen Carpenter, head of the Louisiana state police insurance fraud unit, which is the focal point for suspicious claims from the state, said:

    In a normal catastrophe, about 11 percent of claims are fraudulent. I think the percentage of fraudulent claims will be the same, but it’s just such a large catastrophe that the numbers will be greater. What’s going to be different is the wide extent of the flood and the overall number of fraudulent claims.

Criminal Acts Relating to Insurance Fraud

Where a yacht policy contained a provision excluding coverage for “any loss, damage or liability willfully, intentionally or criminally caused or incurred by an insured person,” the First Circuit Court of Appeals found no coverage where the operator of the boat was convicted of criminal negligence that resulted in the death of a passenger in his boat. [Littlefield v. Acadia Insurance Company, 392 F.3d 1 (1st Cir. 12/08/2004)]

The court based its decision on the fact that even in the absence of a statutory requirement of intent, under New Hampshire state law, “a person cannot be convicted of a crime,” including a misdemeanor, “without proof that the unlawful act was accompanied by a culpable mental state.” Negligent operation of a watercraft, in the absence of the requisite culpable mental state, could not be a crime and would not trigger the exclusion provision in Section B of the policy. Hence, criminal negligence differs from civil negligence under New Hampshire law in important ways, and the yacht policy provides meaningful coverage for loss or liability incurred through negligence other than the criminal act.

Rex K. DeGeorge, a lawyer, charged with fraud, unsuccessfully appealed his conviction and sentence following a month-long jury trial for conspiracy, mail fraud, wire fraud, and perjury. The government proved to the trier of fact that DeGeorge participated in a scheme to defraud an insurer by purchasing a yacht, inflating its value through a series of sham transactions, obtaining insurance on the yacht at the inflated value, scuttling it off the coast of Italy, and attempting to collect the insurance proceeds, in part by lying about the cause of the sinking during civil litigation with the yacht’s insurer.