Dumb (and Deadly) Insurance Fraud Schemes

Life Quotes, Inc., a life insurance resource center, compiled a list of the 10 dumbest insurance fraud schemes of all time.  

Life Quotes compiled the list with the help of the Coalition Against Insurance Fraud. The Coalition reported that there has been a steady increase in fraud cases since 2008, as people struggled with unemployment and the market toyed with life savings.

Jim Quiggle, spokesperson for the Coalition Against Insurance Fraud, told Life Quotes that “[People are driven by] desperation, greed and a lack of common sense, it depends who you are, how bad the economy is, and how much your finances are affected.” He added: “Among average consumers, mysterious disappearances and theft are the most popular schemes… it’s easy to say someone stole my camera, or I lost my watch at the beach. Fake health insurance plans are also very popular with the struggling economy because people are desperate to get health coverage, and organized criminals are doing a very effective job selling bogus health insurance plans.”

Without further ado – the dumbest insurance fraud schemes of all time:

#10: Nicholas Di Puma of Walton, New York, burned his home and convertible to collect homeowners and car insurance benefits. Di Puma said he was at home when the fire began, and claimed it started when pans on the stovetop caught fire. After trying to extinguish the blaze with a rag, he threw a pan out the door, which landed in the backseat of his convertible. On his way to throw the second pan outside, he claimed that he tripped and the pan landed on a couch.  Delaware County officials were not amused or convinced. Di Puma was given five years of probation.

#9: In Akron, Ohio, Matthew Mueller decided to rent a backhoe and bury his 1997 BMW on his father’s rural property. Mueller could make $20,000 by reporting the car stolen. But after insurance officials were notified of the “stolen” vehicle, Mueller had second thoughts. As he started to dig the car out with the same backhoe used to bury it, the equipment got stuck in the mud. With the evidence out for all to see, Mueller’s scheme was discovered and landed him in jail for a year.

#8: Justo Padron, owner of Tamiami Medical Supply, Inc., was running a fraudulent business that scammed $7.4 million from Medicare. When police caught Padron burglarizing a vehicle, they chased him until he jumped in a lake. It is unknown if he saw the sign that read: “Danger Live Alligators.” Padron was found dead the following day with gator bites covering his body.

#7: Carla Patterson of Newport News, Virginia, claimed she found a dead mouse in a bowl of vegetable soup at a Cracker Barrel restaurant. After Patterson requested $500,000 in business liability insurance money, Cracker Barrel discovered the mouse did not have soup in its lungs and had not been cooked in the soup. Although Patterson ended up in prison for a year, the restaurant chain suffered a damaged reputation as well.

#6: Tramesha Lashon Fox was a Houston high school chemistry teacher who was tired of her monthly car payments. Fox gave two failing students passing grades to steal and torch her Chevy Malibu so she could receive car insurance money. When the scheme was uncovered, Fox was fired and spent 90 days in jail.

#5: Robert and Teresa Hammond, and Margaret Dillavou and Paul Gaines, two couples from Union County, Illinois, crashed the Hammonds’ car into a tree and videotaped the entire event. They needed money to pay Dillavou for rent, and decided to use scammed car insurance money. However, Dillavou lost the tape. It was later found by her estranged husband during their divorce, who then gave it to the police.

#4: Candice Lambert was a special-education teacher in Albany, NewYork who was diagnosed with terminal cancer… or so everyone thought. The teacher faked having the disease, garnering sympathy and even going as far as shaving her head and retiring to New Hampshire to live her “final months” on disability insurance from the school system. Until former colleagues caught wind of a Nashua, New Hampshire. newspaper article about Lambert’s brave fight against an inoperable kidney tumor. It turns out Lambert wasn’t on her deathbed at all; instead she collected disability insurance benefits while taking her act to another unsuspecting school. Lambert was sentenced to one to three years in prison for stealing more than $110,000 in health insurance and disability insurance benefits.

#3: Massachusetts-based Ronald and Mary Evano had a strange tradition before going restaurants, bars and grocers: glass-eating. For eight years, the duo filed more than $200,000 in fraudulent claims using fake IDs and Social Security cards. Oftentimes, the insurers and businesses paid out to avoid a lawsuit. But this was not without a physical price. The Evanos braved medical danger to pull of this scam, which included glass in their intestines and colon, vomiting blood, and having to pass glass fragments. Ronald was arrested and charged in 2006, and Mary, who spent years on the run pretending to be a psychic, was finally captured in early 2010.

#2: Michael Paul Schook was a Suffield, Connecticut-based ex-con with a lot of debt and a big mouth. Not only was his house in foreclosure, but his car was repossessed and he owed thousands on credit cards. Desperate for money, Schook decided to set his house on fire to get $250,000… by leaving a fat-filled pan on the stove as he left the house with his family. The house indeed burned down, but it was no surprise to anyone: turns out Schook had told everyone who would listen about his future plans to burn his own house down. His children told their classmates, who reported it to school officials and notified police. Schook received seven years in prison for his grease fire debacle. 

And the dumbest insurance insurance fraud scheme of all time, according to  Life Quotes, Inc. is...

#1: Clayton Daniels was very familiar with breaking the law: after sexually assaulting a 14-year-old girl and deferring his 10-year sentence, he never reported to his probation officer. To avoid going back to jail, Clayton and his wife, Molly, dug up the grave of Charlotte Davis, an elderly woman who had been dead for almost a year. They dressed her in Clayton’s clothes, put her body in a car, lit it on fire, and pushed it off a cliff. They hoped the life insurance company would believe the burned body was Clayton, and pay $110,000 in benefits.

But the insurer wouldn’t pay out until a DNA test confirmed the body was indeed Clayton. And just weeks after the accident, Clayton came back with dyed hair and a moustache and was introduced as Molly’s new boyfriend, Jake Gregg. But some things didn’t add up in the investigation: Molly was “eerily calm” in post-crash interviews; there were no signs of an accident at crash location; investigators discovered the fire started in the driver’s seat of the car and not the fuel tank; and DNA did not match up.

The complex plan was also discovered in great detail on her computer, including Internet history of how to burn a human body beyond recognition and how to create a fake identity. The scheme landed Molly with 20 years for insurance fraud, and 10 years for hindering Clayton’s arrest. Clayton is awaiting trail on arson charges. Clayton will serve no less than 10 years for desecration of a cemetery and 15 years for arson.

“These people get caught for various reasons, maybe they get greedy and then sloppy, or they just didn’t plan very well to begin with,” said Quiggle. “But some schemes are very well constructed and insurance companies need to do very detailed investigations to uncover a well-concealed crime.”