All forms of insurance fraud tend to cost upwards of $40 billion annually in the United States, which translates to an additional $400 to $700 in premiums across all forms of insurance for the average family. Federal insurance fraud charges do not fit the preconceived notion most members of the public have. Certainly, intentionally destroying property or faking one’s death for the purpose of an ill-gotten gain through insurance is a crime, but this is rarely, if ever prosecuted at the federal level. These are crimes that are generally considered handled at the state level, and are usually charged as grand theft.
The United States Attorney’s Office is more concerned with massive fraudulent schemes by those involved in the insurance business. Until 1994, the charges for these schemes generally involved wire fraud, mail fraud and conspiracy. However, Congress reacted to insurance commissioners’ lobbying for stronger laws regarding fraud in the insurance industry and criminalized many fraudulent actions by those inside the industry.
The FBI is relentless in their pursuit of white collar criminals that engage in some of the more common schemes like premium diversion, fee churning, or asset diversion. Premium diversion is the most frequent form of insurance fraud, and is generally when an insurance agent fails to send premiums to the underwriter and instead simply keeps them. Fee churning is when premiums are divided amongst many insurance agents and eventually no money is left for an eventual claim. Asset diversion occurs during the acquisition or merger of different companies.
18 U.S.C. § 1033 is entitled Crimes by or affecting persons engaged in the business of insurance whose activities affect interstate commerce. Its first four subsections make it a felony to: make false statements to insurance regulators; embezzle or misappropriate funds; make false statements about the solvency of an insurance business; or make threats regarding regulatory proceedings.
The sentences for these crimes, similar to bank fraud, are tied directly to the amount of money that was stolen. These cases can become massively complex because of the amount of paperwork and time involved. While the evidence in your case will ultimately determine the outcome, you want a specialized insurance fraud attorney like Tim Bower Rodriguez who is committed to analyzing this evidence and fighting for you to get the best possible result.