Midwest District Launches Initiative to Crack Down on Vehicle Crash Fraud

The Miami-Dade Police Department has launched a pilot program designed to root out fraudsters who commit staged car crashes, a white-collar crime that siphons billions of dollars from the insurance industry and drives up premiums for honest motorists.

The program, operated out of the department’s Midwest District, began with training in December 2023. On its first day in effect, on March 1, 2024, detectives responded to two reported accidents that were determined to be staged car crashes upon further investigation. By mid-July, officers had arrested 52 individuals involved in orchestrating fraudulent crashes to scam insurance companies.

The insurance industry estimates that vehicle fraud exceeds $2 billion annually in the U.S. The National Insurance Crime Bureau, or NICB, reports over 600 “questionable claims” filed each year in Florida, with approximately one-third originating in Miami-Dade County. The number of such dubious claims would decrease if more law enforcement agencies developed specialized training to weed out fraud.

“As we all know from having to pay thousands in high insurance premiums, this is not a victimless crime,” said Midwest District Lt. Lazaro M. Torres, who developed the plan to create the Staged Crash Investigation Initiative, leading to the pilot program. Before joining the department in 2009, he worked as an insurance investigator, specializing in vehicle fraud.

“I decided that we could put my knowledge in that area to use,” he said. He recruited two members of the district’s hit-and-run unit: Detectives Douglas Melendez and Alfredo Gonzalez. The unit’s partners include NICB, the Department of Financial Services’ Bureau of Insurance Fraud, the Special Investigative Unit, and the Miami-Dade County State Attorney’s Office Insurance Fraud Unit.

Training focused on how to spot a scam. Staged crashes come in various forms, including rear-end, single-vehicle, rollovers, emergency braking, pre-existing damage, and hit-and-runs, according to investigators. The department’s public service aides (PSAs) play a major role because their workload is predominantly responding to traffic accidents. If a PSA or a road patrol officer suspects foul play, the next step is calling a detective to the scene. The signs of fraud that PSAs, patrol officers, and investigators have been trained to look for include favored locations such as isolated residential or commercial areas, crashes occurring after 9 p.m., multiple occupants per vehicle, a driver who is not the vehicle owner, crash logistics inconsistent with the incident, minor damages to both vehicles, demand for crash reports despite minor to no damage, and complaints of possible injury with a refusal for medical attention on scene.

Often, the participants of a staged crash will rehearse together. They will gather near the scene to go over the details and will conduct a dry run or two before actually carrying out the crash. Sometimes those rehearsals are captured on nearby home or commercial surveillance cameras. Detectives say the typical person who decides to participate in such deception is desperate for money and is told by organizers that it is an easy scam that goes undetected and pays thousands. But the math does not typically work out in favor of the person attempting to cheat their insurance company, as their premiums will increase over time, way beyond the one-time check they received for being part of the scam.

“I feel that we, as first responders, have the best opportunity to make a huge impact by responding to the scene and stopping the fraud before it takes off,” said Lt. Torres. “This is a highly orchestrated type of crime, with many levels and players involved. Doctors, physicians, body shops, tow companies, and even attorneys are soliciting people to participate in this type of crime.”

On Thursday, July 18, 2024, Lt. Torres and members of the unit met at the Midwest District with partner agencies to discuss the progress of the initiative and how to improve sharing of vital information across all involved agencies.

Mr. Miguel Sanchez, a special agent with NICB, attended the meeting and lauded the pilot program, saying that it has already helped prevent the filing of dozens of scam claims, which has likely saved insurers tens of thousands of dollars. “Once there’s a claim, the insurance companies have to put a certain amount of money per person in that car, sign and cover that claim, and they spend all kinds of money. These people who they arrest on scene never file a claim, so the companies are saving a lot of money,” he said.

Headquartered in Oak Brook, Ill., with regional offices throughout the country, the NICB is “the nation's leading not-for-profit organization exclusively dedicated to combating and preventing insurance crime,” according to NICB’s website.

The department is likely to expand the initiative, as the unit has received numerous calls from officers in other districts requesting their presence at accident scenes, but unfortunately, because there are only two detectives assigned to the unit, they cannot respond to the majority of those requests.

“We’re confined to our budget and our area, but this is something so widespread, involving so much money, that we’re just scratching the surface,” said Detective Gonzalez. “We know what we are up against; they are very organized. We’ve seen cases where the same people own a clinic, a body shop, and a tow truck business. They’re like one-stop shopping.”