Recently reported cases demonstrate that the judiciary are more prepared than ever to impose tough sanctions on fraudsters, and those who grossly exaggerate their claims.
On 29 May a judge sitting in Birmingham County Court referred a 26 year old, serial claimant (Mr Saeed) and his accomplices to the Director of Public Prosecutions to be investigated for possible perjury offences.
The trigger for this referral was that Mr Saeed lied during the trial when he claimed that he and his passengers suffered whiplash injuries when a National Express bus collided with his stationary vehicle. It was found that there was no collision and both the accident and the injuries were fabricated to support his fraudulent claim.
In addition, expert engineering evidence commissioned by the defendant confirmed that the damage to Mr Saeed’s vehicle could not have been caused by a collision with the bus. The claim was subsequently thrown out.
It emerged that Mr Saeed had made as many as twenty-three previous claims following alleged road accidents and, to the incredulity of the presiding judge he had sought to bring a further claim after the alleged bus crash claim. The judge ordered that a transcript of the trial be sent to the DPP and directed that all of Saeed’s witnesses, his solicitors and the medical expert that examined him should be investigated.
In the earlier case of Fari v Homes for Haringey, the plight of Mr and Mrs Fari, of course still remains to be decided by the High Court later this year. The committal of the couple for contempt of court following the strike out of Mrs Fari’s grossly exaggerated personal injury claim against Homes For Haringey may well result in custodial sentences. Fari was the first case since Summers v Fairclough Homes Limited in which a grossly exaggerated claim was struck out in its entirety. It follows the contempt of court proceedings against Mr Roberts who brought a grossly exaggerated workplace injury claim against his employers, Airbus. It is understood that Mr Roberts received a prison sentence.
It is worth remembering that in order for the criminal offence of contempt of court proceedings to succeed, the higher evidential test of “beyond reasonable doubt” must be satisfied. In underlying civil actions, the evidential test is decided on the “balance of probabilities”.
Sue Pawar-Price, a Consultant Barrister, who leads Mills and Reeve’s Counter-Fraud Team comments
When I am considering evidence on my clients’ behalf I always seek to assure myself insofar as possible, that the evidence obtained will meet the higher evidential threshold. This means being mindful of possible criminal proceedings either on a “single tracking” or “multi tracking” approach – that is to say whether by seeking a committal for contempt of court, referring the claim to DCI Dave Wood and his team at IFED (the Insurance Fraud Enforcement Department) or by recommending to clients the merits of a private prosecution.
Industry statistics have long reported the apparent nonchalance with which otherwise law-abiding individuals admit to committing insurance fraud, for example, by “fronting” motor policies, generally for offspring to enable them to obtain cheaper motor insurance than would be the case if they were named as the policyholder, or by exaggerating claims under household policies.
Fari, Roberts and Fairclough were individuals presumably motivated by greed to exaggerate their injury claims. It appears from the media reports that Mr Saeed may well have been operating as part of a fraud ring inventing bogus collisions, but is unclear to what extent Mr Saeed and his accomplices had financially benefitted from the twenty three previous claims submitted. There is, however, evidence enough of how lucrative insurance fraud scams have become for those engaged in the highly organised world of ghost broking or by engaging in more elaborate frauds.
In April this year, Elina Jaksone and Gagik Manucharyan were jailed for a total of ten years having been found guilty of setting up a fraudulent ghost broking business which netted them approximately £1 million. The couple offered motorists cheap insurance and provided false, misleading and limited information to insurers. The operation was uncovered by HMRC as the fraudsters had failed to declare earnings of £920,000 and were assessed as owing £340,000 in taxes. They were ordered to be deported upon release.
The aptly named Kevin Heartbreak was jailed at the Old Bailey in May for inventing a dozen road accidents in two years using various aliases and scrapped cars. He had benefitted to the tune of £65,000 by using scrapped cars which he alleged had been involved in collisions. He also made false injury and damage claims as well as claims for recovery and storage charges. Heartbreak pleaded guilty to eleven counts of fraud by false representation.
It is heartening that the police and judiciary are clamping down now, more than ever before, on those committing insurance fraud but, of course, the examples cited are the tip of the iceberg and it is understood that two thirds of insurance fraud remains undetected, with the fraudsters behind these scams going unpunished.
We encourage all our clients to adopt a five stage approach to dealing with fraudulent behaviours. This starts with identification, verification, investigation, resolution, underpinned by prevention which sits at the heart of our counter-fraud strategy. We believe this creates the optimum likelihood of defeating such claims. We encourage insurers to effectively cancel or void motor policies to minimise their exposure to meet consequential fraudulent claims and to always consider a resolution strategy at the outset of an investigation, and throughout. In the event of local police or IFED being unable to mount a criminal prosecution, we will consider and advise as to the merits of commencing a private prosecution.
It is only when more and more fraudsters are being publicly named and shamed, as the above individuals have been, that a change in society’s attitude to fraud will occur. That will lead to a more realistic assessment by society as a whole as to how those committing it should be dealt with.