Earlier in the year we reported on the link between car insurance and the global financial crisis, with the likelihod that car insurance fraud would increase as people struggled to pay the bills.
One such car insurance fraud scheme taking advantage of people struggling to pay thier cars has been uncovered in Miami.
Full text of the news article outlining the car insurance fraud scheme is included below.
Hialeah (Miami) police crack car insurance fraud scheme
Parked on the side of the road -- a For Sale sign scrawled on the window -- the seller asked $7,000 cash for the black 2006 Mercedes-Benz.
The buyers thought they were getting a bargain on the car -- valued at $43,000.
But Hialeah (Miami) police say there was nothing legal about the deal, calling the sale part of a ``major car insurance fraud case'' that has netted five arrests and led to the recovery of 27 cars.
Detectives are searching for 33 more vehicles.
Here's how the alleged scheme worked, according to Hialeah Detective Carl Zogby:
The ringleader found desperate car owners who could not make monthly car payments. For a fee, he would promise to dispose of the car.
The owner would then be told to report the car as stolen and file a car insurance claim.
But instead of getting rid of the car, they would doctor the Vehicle Identification Number, or VIN, and then put the car up for sale.
They would leave the cars on the roadside with a for sale sign with unusually low prices.
Buyers would get the car, along with a tag, registration and car insurance card.The registration and car insurance were phony, and there was no title to the car.
The tags for the cars were allegedly obtained by Teresa Penaranda, 51, who worked as a clerk at a tag agency.
In May, police arrested her on several counts of title fraud and official misconduct.
Police identified Carlos Malpica, 39, a person of interest in the case, saying he was likely involved with getting and reselling the cars. It's believed he has been deported.
Four people, who bought cars, have been arrested, but police declined to release their identities saying it was ``sensitive to the investigation.''
Police warned anyone who obtained a car under similar circumstances that if they are caught in one of the cars they could be arrested.
JENNIFER LEBOVICH, Miami Herald
Full article available online