For Scammers in NY, Crime Can Pay

We’ve all heard the saying “crime doesn’t pay;” but when you commit insurance fraud in NY, it would seem the opposite is true.

According to the Daily News, less than 10% of the city’s convicted insurance fraudsters spend any time in jail.

Criminal records note that out of the 545 people who were arrested, tried and sentenced for insurance scams in the city over the past five years, just 50 served time in the big house.

Most of those offenders were allowed to plead down to misdemeanors or noncriminal offenses, while nearly 100 of them were able to walk away with only a fine.

Law enforcement officials and prosecutors say judges are reluctant to put insurance fraudsters behind bars, particularly first-time offenders, because theirs is a white-collar crime.

“These are not crimes of violence,” said one law enforcement source. “People are not injured.”

Insiders state that most prosecutors will prefer to plead out the cases so they can focus on the violent crimes.

Of the ones who do go to jail, they are usually linked to larger fraud rings or already have a history of committing crimes.

Prosecutors complain that the penalty for insurance fraud is relatively small – carrying up to only four years in prison.

Many believe that a slap on the wrist doesn’t do enough to discourage the fraud and that those who are caught and forced to pay restitution just see it as a cost of doing business.

Joseph Morelli, the Assembly Insurance Committee Chairman, stated that the lack of prison stays “raises some questions.”

“You try to make sure people don’t see it as, ‘I’ll take the risk of doing something inappropriate because if I get caught, the likelihood of serious repercussions is low,’” Morelli said.

From the industry’s perspective, insurance fraud is definitely a crime that takes victims –in the forms of New Yorkers, because they end up paying much higher premiums. President of the industry-backed Insurance Information Institute, Robert Hartwig says fraud that involves no-fault auto insurance by itself costs New York drivers around $200 million a year.

“Is it unfortunate that so many individuals wind up seemingly getting off scot-free? The answer is yes,” Hartwig said.