Swinging his car out to pass on a country road in South America, JavierMozo found himself in the path of a roaring, smoke-belching cross-countrybus. Swerving off the road, the car flipped and rolled. Somehow, Javiercrawled out of the wreckage alive. But his brother Ernesto was not so lucky.He died in Javier's arms.
Or at least that is what Ernesto's wife, Maria Magdalena Santos, andJavier Mozo told the Northwestern National Life Insurance Co., which hadinsured Ernesto Mozo's life for $500,000.
As confirmation of the death, Ms. Santos sent the small Minnesota insurer-- since renamed the Reliastar Life Insurance Co. -- a death certificateissued by the city morgue in the Colombian town of Santa Marta. And whenan investigator came calling, Javier Mozo provided a moving account of hisbrother's death and showed him a stone vault in the San Miguel Cemeterywith Ernesto Mozo's name inscribed on an ornate bronze plaque.
But in yet another instance of a fraud that has been increasingly plaguingthe American life insurance industry, everything about Ernesto's supposeddemise turned out to be false.
The death certificate had been forged. The stories that Javier Mozo andMs. Santos told suggested promising careers as screenwriters. The cemeteryvault had been rented. And eventually, Ernesto Mozo even turned up, verymuch alive.
People have been trying to collect on life insurance policies withoutactually dying almost since life insurance was invented. But in the lastfew years, a new twist has emerged. Never mind the heavily insured swimmerwho is supposedly carried out to sea by a riptide. Or the fisherman whoseempty boat turns up bobbing in the Atlantic. Or the climber lost on a snowymountainside. These days the deception is being carried out mostly on paper,from forged police and hospital reports to false death certificates.
Though the latest cases may number only in the hundreds or thousandsevery year, they are setting off alarms among life insurers. Why? More andmore residents of the United States have ties to developing countries, whereit is easier to fake deaths. And as American insurance companies extendtheir global reach, they are aggressively selling policies in countrieswith less rigorous standards for record-keeping and documentation. Moreover,there is growing concern that organized groups are getting into the game.
As a result, even though it is exceedingly difficult to prosecute peoplefor false death claims, insurance companies are trying to get tougher toset an example.
In most of these fraud cases, a central thread is a trip abroad, preferablyto some place trying to cope with an upheaval like an earthquake, a flood,or, perhaps, a civil war. But any place will do where official record-keepingis slipshod, civil servants earn survival wages and baksheesh i have a hearsay problem to overcome."
And that washes out most cases.
"To get a witness to come in from Nigeria or Cameroon or Ghana isvirtually impossible," said Ronald Sallow, who heads Maryland's insurancefraud unit. "It's prohibitively expensive. And they are extremely reluctantwitnesses because they fear retribution."
There have been exceptions. Two years ago, Daniel Skelly, the chief ofthe Insurance Fraud Bureau in Massachusetts, won the conviction of SamsonOmosefunmi, a Nigerian businessman who collected $134,000 after contendingthat his wife had died in an auto accident back home. Skelly did not havethe budget for the overseas work. But he persuaded the insurance companyto pay $5,000 to fly in a Nigerian government official who testified thatthe death certificate and its adorning seals were fakes. Omosefunmi, whohad previously been convicted of welfare fraud, went to prison.
In another case, Skelly succeeded in getting a guilty plea from FrancoisC. Maisonneuve, a Haitian who posed as his brother, Louis, and took outa $100,000 policy naming himself as beneficiary. Then, on paper, he killedhis brother, even sending the insurer a photograph of himself standing besidean open coffin with a body that was supposed to be his brother's. But Skelly'sinvestigators found the real brother, alive, in Massachusetts, and he testifiedthat the claim was false. Maisonneuve had never before been in trouble withU.S. authorities, though, and his punishment was two years of probationand $10,000 in restitution.
In Florida, Poindexter has yet to catch up with Maria Magdalena Santos,who filed the false claim for the death benefits of her husband, ErnestoMozo. But he has issued an arrest warrant that can become effective thenext time she tries to enter the United States. She was the only one ofthe three conspirators, including Ernesto's brother Javier, who committedcrimes -- such as submitting the paperwork for the $500,000 policy to herMiami agent -- within Florida's jurisdiction.
As a result of the work of a private investigator hired by Reliastar,Ernesto Mozo was jailed briefly in Colombia for forging the signature ofthe Santa Marta morgue director. But as far as the Americans know, no oneever went after Javier Mozo.
Because the cost of insurance fraud is ultimately passed on to the customerin the form of higher premiums, more and more states are creating specialinvestigative units and requiring insurance companies to investigate suspiciouscases and report them to the authorities. Michael Diegel, an official ofthe Coalition Against Insurance Fraud in Washington, says some companiesstill think it is more cost effective to pay some questionable claims, particularlysmall ones, than to start an investigation.
But others, including Prudential, the Metropolitan Life Insurance Co.and relatively small Reliastar, a unit of the Reliastar Financial Corp.,make a fetish of checking out claims. Lawrence Vranka, who oversees claimsfor Metropolitan, said his company spent $30,000 on a single Indonesiancase to win a conviction in which the con artist was jailed. Not long ago,Reliastar spent $3,500 to investigate what turned out to be a fraudulentclaim in the Philippines on a $5,000 policy.
"We believe that being aggressive is a deterrent to people foolingaround with our company," Gary Dunn, a Reliastar executive, said.