5 Craziest Stories of Insurance Fraud

Don't try these at home

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Susan Meyer

Senior Editorial Manager

Credentials
  • Licensed Insurance Agent — Property and Casualty

Susan is a licensed insurance agent and has worked as a writer and editor for over 10 years across a number of industries. She has worked at The Zebr…

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Ross Martin

Insurance Writer

Credentials
  • 5+ years in the Insurance Industry

Ross joined The Zebra as a writer and researcher in 2019. He specializes in writing insurance content to help shoppers make informed decisions.

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Insurance fraud takes more than $300 billion from American consumers each year.[1] Much of this amount comes from smaller and sometimes opportunistic scams. However, even small scams can add up to big amounts. For example, in the case of a big disaster such as the record-breaking Hurricane Katrina. Of the $80 billion in government funding that was provided to rebuild after the storm, an estimated $6 billion might have gone to fraudulent claims.[2]

Insurance fraud is a crime that occurs when someone intentionally provides false information or misrepresents facts to an insurance company for material gain. Some examples include:

  • Exaggerating claims
  • Staging accidents
  • Using someone else’s identity (such as for healthcare benefits)
  • Intentionally causing a property loss (such as arson)
  • Life insurance claims under suspicious circumstances

But for all the petty crimes and blurring of the truth, there are some pretty crazy cases of fraud that have rocked the insurance world and make you wonder how these criminals thought they could get away with it. Here’s our top picks for the five craziest insurance fraud stories. 

The two-armed fraudster

In 2009, Michael LeDuc obtained an accidental death and dismemberment insurance policy, and in 2010 he filed a claim saying his left arm had been ground off in a wood chipper accident. As such, he was due slightly more than a quarter million dollars in a benefit payment. The problem? LeDuc still had two arms. He tried to fool the insurance company by altering his official medical records…but not missing an arm was a pretty easy thing for the insurance company to disprove. The investigation also uncovered other frauds he had committed including faking a serious head injury and a number of bounced checks. In 2011, he pled guilty to wire fraud and was sentenced to 57 months in federal prison.[3]

The go big or go home fraudster

Perhaps one of the biggest insurance frauds committed in U.S. history, Sholam Weiss, along with a number of co-conspirators, managed to siphon over $400 million from the National Heritage Life Insurance Company. The scheme occurred from 1990 to 1995, when the company was liquidated. The majority of the 35,000 policy holders who were defrauded lived in Florida and many lost their life savings as a result. Weiss was convicted of 78 counts of racketeering, wire fraud, money laundering and more. To match the enormity of the theft, he received one of the longest federal prison terms ever imposed: a whopping 845 years.[4] He only ended up serving 18 years of that sentence before he was pardoned by then-President Trump in 2021.[5]

The fraudster with a suspiciously familiar new boyfriend

In 2004 in Texas, 20-year-old Molly Daniel’s husband Clayton Daniels was about to go to prison for sexual assault charges. However, he was suddenly found dead in a burned out Chevy Cavalier. The body was burned to the point it was unrecognizable, but it had Clayton’s shoes and baseball cap. Molly was set to receive the benefit from a $110,000 life insurance policy. She soon introduced family to her new boyfriend “Jake Gregg” who looked an awful lot like Clayton with dyed black hair. Meanwhile investigators testing the charred body’s DNA determined it was not Clayton, and was in fact a woman. It soon came out that Molly had done significant arson research before the crash. She then admitted to having dug up the body of an 81-year-old woman and placing it in the car. Molly received a 20-year sentence and was released early in 2016. The still-living Clayton received a 30-year sentence and remains in prison.[6]

Planes, claims and automobiles

Theodore Robert Wright III was a pilot who led an insurance fraud scheme that spanned from Hawaii to the Gulf of Mexico. Essentially, Wright, along with his co-conspirators, would purchase luxury goods, insure then for more than he paid for them and then torch, crash or flood them and collect the insurance money. Some of the assets he destroyed included a 1966 Beechcraft Baron plane, a 2008 Lamborghini, a 1971 Cessna 500 and a 1998 Hunter Passage yacht. In 2017, Wright pled guilty to arson and wire fraud and was sentenced to 65 months in prison and ordered to pay nearly $1 million in restitution.[7]

The slip and fall artist

Isabel Parker, a 73-year-old grandmother, had a 15-year career as a master of the slip and fall fraud. In retail stores throughout Pennsylvania and New Jersey she would lie on the ground and claim to have fallen over a lamp cord or sidewalk crack hoping for an easy insurance payout. She would avoid stores with cameras and generally drop the claim if investigators started asking too many questions. She reportedly had almost 50 aliases she used over the time period and managed to collect half a million dollars from her schemes. She was finally caught when a liquor store owner questioned her claims and the investigation revealed her previous fraud activity.[8]

Why you shouldn't lie about insurance claims

While few people would go through the lengths of the above criminals, it's important to remember that even small lies can cause big problems.

Never exaggerate a claim, change a date, omit pertinant facts or otherwise intentionally misrepresent information when dealing with an insurance company.

Even small amounts of misinformation, when knowingly intended to defraud, can get you in trouble. Your claim may be denied, your policy cancelled or, in the case of large fraud, charges may be brought against you. 

Sources
  1. Insurance fraud impact. [Coalition Against Insurance Fraud]

  2. Insurance fraud stats. [FBI]

  3. Man Who Faked Amputation to Get Insurance Payout Sentenced. [FBI]

  4. 845 Years in Prison, If the Authorities Can Catch Him; F.B.I. Says Fugitive Has a Flair For Fraud and Hiding Stolen Cash. [NY Times]

  5. Trump commutes prison sentence of Monsey man serving 835 years for 1999 fraud conviction. [Times-Herald Record]

  6. Woman pleads guilty to faking husband's death. [The Spokane Review]

  7. The Wildest Insurance Fraud Scheme Texas Has Ever Seen. [Texas Monthly]

  8. Slip And Fall Expert Heads Coalition Hall Of Shame. [Property Casualty 360]