COVID-19 insurance fraud response center

The Coalition Against Insurance Fraud is committed to providing leadership to the fraud-fighting community and helping throughout the evolving COVID-19 crisis. As this situation develops, we will continue to offer resources and support to our members and consumers alike. This webpage provides the latest information on a range of fraud topics regarding COVID-19.

We are mobilizing every resource at our disposal and collaborating with national, state and local partners to develop comprehensive and coordinated warnings about developing insurance scams. Fortunately, there are practical steps everyone can take to curb the spread of COVID-19-related fraud and support each other. We encourage you to share information on this page with your neighbors and colleagues and report fraud when you see it. 

COVID-19 is an unprecedented public health challenge. But with everyone working to battle its transmission, the anti-fraud community will prevail against fraud and come through this stronger than ever.

Report suspected COVID-19 fraud to us:

Desperate owner begs for lenience

How can a good man go so wrong?

The federal court wrestled with how long to jail Demitrios “Jimmy” Stavrakis after he torched his failing weapons firm in Baltimore. Yet he also had a long history of good deeds. Does Stavrakis deserve the 22 years that prosecutors wanted? You be the judge.

Stavrakis ran a prosperous military weapons firm. Life was good, until he lost a big contract. Money quickly dried up and Adcor Industries went into a tailspin. He defaulted on loans, struggled to pay suppliers and rang up millions in losses. Stavrakis pumped his own money into the firm, trying to prop it up. Adcor’s future seemed grim.

Then his building mysteriously erupted in flames the night of July 29 2015. A passerby saw smoke billowing from the building and alerted officials. Fire fighters saved Adcor, though flames wrecked an office on the shop floor and damaged the ceiling.

Stavrakis filed a whopping $21-million insurance claim, receiving about $15 million. He used some of the insurance money to buy new machinery and fix the fire damage.

Stole insurance money

But then Stavrakis fell off the moral rails, and started stealing. He diverted nearly $125,000 of insurance money to buy a Mercedes GL 550 and Harley-Davidson motorcycle. Another $53,000 bought his wife a BMW. More insurance money went for luxury watches and jewelry.

Investigators also pored through the wreckage for clues to an insurance arson. Stavrakis had set fire to Adcor to make a bogus insurance claim. Security footage showed that Stavrakis put tape over a security latch on the front door. That let someone creep in to start the fire. The arsonist — still unknown — punched in a code to disable the security system.

A jury convicted Stavrakis. Then came sentencing. Prosecutors wanted to put him away for 22 long, lonely years in a federal jail cell.

Tearful family and friends packed the courtroom, seeking lenience. Nobody denied Stavrakis committed a serious insurance scam. Rather, supporters begged for a lesser sentence. He embodied philotimo — a sacred Greek word for leading an exemplary life, they urged.

Supporters recount good deeds

One after the other, his supporters urged Judge Ellen Hollander to consider all the good deeds Stavrakis had done. Stavrakis got a bullied boy into private school. He wrote checks for improvements to his church, and paid funeral costs for community members who were financially strapped. He paid for an employee to attend substance-abuse treatment.

His four children walked to the courtroom lectern together, arms wrapped around each other. People cried so violently that a bench shook.

Aris Melissaratos is a businessman and Maryland’s former head economic development official. He knew Stavrakis’ family most of his life. “Let this man contribute to the world to the fullest,” he told Hollander. Judge Holland sought to balance Stavrakis’ many good deeds against his serious insurance crime.

Ok … how would you sentence Stavrakis if you were Hollander?

She handed him 15 years in jail instead of 22, and ordered Stavrakis to repay the $15 million of stolen insurance money.

“Desperate times lead people to desperate measures …” she said. “He’s done much that was good, without seeking acclaim. This feels extremely aberrational.”

About the author: Jim Quiggle is senior director of communications for the Coalition Against Insurance Fraud

Surgeon promised false beauty

Israel packed celebrity skin doctor David Morrow back to the U.S. to serve 20 years of federal jail time for slicing and dicing his way to a $50-million attempted defrauding of insurers for glam-boosting nose jobs and tummy tucks camouflaged as life-saving surgeries.

Insurance will pay everything, the prominent Rancho Mirage, Calif., cosmetic surgeon promised. Patients believed Morrow, and his scalpel swung like a samurai sword. Morrow ransacked health insurers, billing them for $50 million. At least $25 million cascaded into his bank accounts.

Yet insurance generally doesn’t pay to beautify bodies. It’s elective surgery. So Morrow disguised the plastic surgeries in a deep forest of false diagnoses.

Tummy tucks magically became insurable hernia repairs or abdominal reconstructions. Morrow billed nose jobs as fixing deviated septums. Breast lifts were surgeries for “tuberous breast deformities.”

Pressured patients into surgery

Morrow also trumped up test results, medical notes and surgical records to back up his fantasy world. He even covered up the text of records for a patient’s “abdominoplasty” (tummy tuck) — hand-writing “umbilical & ventral hernias” on top of the original wording.

Some patients were pressured to get surgeries they didn’t want in exchange for “free” cosmetic upgrades.

Many trusting patients still believed Morrow played by the rules, giving them honest surgery and lodging honest insurance billings.

On top of concealing cosmetic operations, Morrow also billed insurers for phantom surgeries. He stole patient names, medical information and signatures — their medical identities — and invented records that claimed successful surgeries the patients medically needed.

Morrow billed up to $150,750 for a single surgery, and as much as $700,000 if he foisted several procedures on a patient. Sadly for some patients, he botched their procedures. They ended up disfigured or were forced to live with ongoing discomfort.

Insurance money and beautiful bodies made Morrow a wealthy celebrity surgeon. The now-shuttered Morrow Institute was his hub of, literally, operations. He called himself “One of the top cosmetic surgeons in the world for skin and facial rejuvenation.”

Flaunted his wealth

Morrow’s Pinterest postings are a self-backslaping ode to status and wealth. He created a line of beauty cosmetics, and claimed the world’s first laser face lift. He and his wife Linda founded a Jewish day school. They also donated heavily to the symphony and other cultural causes.

The couple spent comfortable off-hours in their $9.5-million mansion, and had a fleet of luxury cars.

Investigators and federal prosecutors unraveled the deception. Morrow pled guilty, then bolted to Israel in 2017 with Linda. They’d sold their mansion and cars, and wired millions of dollars into secret bank accounts. Morrow was handed 20 years in federal prison while they were in hiding.

Israel sent Morrow back to the U.S. in 2020 after two years on the run. Morrow is serving his hard time. Linda who was sent back earlier, faces federal trial for her suspected role.

Acting U.S. Attorney Sandra R. Brown clearly saw the future when Morrow was given those 20 years while on the run in 2017.

“When he is taken into custody — and he will definitely be captured — he will serve the lengthy sentence he deserves as a result of his greed and fraud,” she said at the time.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud

Fraud of the Month: Agents steal premiums

Auto giveup

The list of insurance agent Kevin Donnellan’s potential victim clients runs for 70 pages, with about 650 names. They think they have insurance for their homes and cars. They may not, and could be financially wiped out in a heartbeat.

Officials are trying to contact the St. Joseph, Miss. man’s clients to warn them. Donnellan stole client premiums without buying them coverage he promised. They’re dangerously uninsured in case of a life-altering catastrophe such as a crash or fire. 

The vast majority insurance agents and brokers are ethical and honest. Yet a disturbingly large number of dishonest agents ply their trade around the U.S. They exploit their position of trust to defraud clients who come to them for the safety and security of insurance. 

Perhaps most often, unethical agents steal client premiums, send them fake policies, then spend the premiums on luxuries such as vacations and cars. Consumers should watch for warning signs and make sure they receive the coverage they pay for. Here’s why:

Policy was cancelled
Donnellan’s scam came to light when a client was involved in a car collision. The other driver’s auto insurer and her own insurer sued her. When she looked into the allegations, she found that her own auto policy was canceled earlier. Donnellan hadn’t bought the policy after handing him her auto premiums. 

The woman called police, who investigated. Donnellan gave the insurers false addresses and phone numbers for clients when setting up policies. Thus the clients didn’t receive any notice from insurers that their premiums were unpaid and policies cancelled. 

They only learned they were duped after making claims that were denied after their policies were cancelled. Donnellan pled guilty and awaits sentencing. He also must repay all victims. Officials are still working to identify them, potentially hundreds just as vulnerable as the woman in the collision.

Then there’s Cody Damron. He owned Cowboy Capital Insurance in Stephenville, Tex. Storms brought hail and high winds to the area. Homes and businesses were damaged across Erath County. Damron’s clients started filing damage claims. Anxious for repairs, the clients discovered they were unprotected when their insurance companies stunned them with the news that they had no policies. One of Damron’s own employees blew the whistle, leading to his conviction.

Jeremy Lee Olson stole premiums from clients in the Clarkfield, Minn. area. A client suffered a house fire yet couldn’t collect the full amount for fire-damaged vehicles because the policy was cancelled. The client suffered A $5,864 uninsured loss.

Truckers without coverage
Truckers trusted John Paul Kill to buy insurance that protected their livelihoods — their cargo and trailers.

More than 800 trucking firms in nearly a dozen states paid the Atlanta-area broker $3.7 million of premiums for coverage. Except Kill never bought them insurance — they were driving the crowded highways totally unprotected. In other cases, Kill bought the truckers far smaller policies with less protection than he promise yet charted them higher premiums for larger policies.

Kill placed their premium money in his personal bank account and sent out fake policies. He paid some claims from his own pocket to hide the thefts. 

Many agents also act as financial advisors and handle client investments. These clients place their savings and financial security in their agent’s hands. 

Clients considered amiable agent Joseph Ramiro Garcia their friend. He repaid their friendship by stealing nearly $587,000 from his clients’ IRAs and 401(k) accounts. Clients had placed their money in a bank account the Brea, Calif. man controlled. He promised their retirement funds would be rolled into better-paying plans. One victim was a 91-year-old woman.

Shawn Heffernan spent client $1.5 million of client investments on jewelry, a Maserati, wedding and other luxuries. The San Diego agent’s victims included seniors and a dependent adult. He was handed nine years in state prison. 

Agents are largely an ethical bunch, the bulwark of the insurance system. Yet there are enough swindlers that consumers should follow an old adage when buying insurance: Trust, but verify.

Jim Quiggle is director of communications for the Coalition Against Insurance Fraud

Lied Kia was stolen, video proves he did the deed for insurance money

Auto giveup

Rescuers rushed to the cliffs above the above murky, caramel-brown Black River. A golfer had spotted an overturned black Kia Sorrento in the water, near Elyra, Ohio. Concerned someone might be barely clinging to life inside, the golfer called police.

The rescue team mounted a dangerous operation. They rappelled down a sheer 100-foot cliff — their only hope of reaching anyone trapped inside the flooded SUV. Vegetation and slippery rocks hampered their urgent descent.

They finally reached the vehicle. Nobody was inside. Nor did they find a body after scouring the river banks and water. Police checked the license plate. The owner Randall White had reported his SUV stolen earlier that night from in front of his apartment, police records showed.

White launched what’s called a vehicle giveup — an insurance crime. Often the drivers can’t afford the monthly payments, or the car needs an expensive repair, or they just want to restock sagging bank accounts.

So they lie to their auto insurer that a thief stole the vehicle — maybe from a parking lot or from in front of their home. Instead, they often burn the vehicle, or just hide it in a remote area. They hope a false insurance claim will bring a quick cash infusion.

But vehicles are harder to steal in today’s era of high-tech vehicle security. So insurers often look closely at suspect theft claims. Investigators wield an arsenal of investigative tools — and honed instincts for asking the right questions.

Security cameras busted con
Fraud fighters can quickly break open clumsy theft claims by amateur fraudsters such as White. Investigators cleverly reviewed security cameras at a nearby restaurant. They were stunned. The video showed White driving along the river, pulling the Kia into an opening above the cliffs, then pushing it over the side. Next he walks back toward his nearby apartment with a flashlight. He called police and his auto insurer once home.

White dumped his SUV for an insurance payout. He endangered the rescuers trying to save his life — all for a few insurance dollars. He soon was convicted of insurance fraud. While avoiding jail, White must hand over more than $10,000 to repay the rescue teams and other expenses.

Giveups can turn deadly
Some giveups are botched. They can head south quickly, with deadly impact. Oscar Zavala-Gallegos asked his buddy Fabian Cedeno to steal and strip his Cadillac Escalade for parts. The Reno, Nev. man wanted to steal an insurance payment for the vehicle. Zavala-Gallegos couldn’t afford the $620 monthly payments. He also owed $22,000 on the old vehicle — far more than it was worth.

Zavala-Gallegos parked the Caddy at a mall with the keys inside, then told his insurer that somebody stole it. Meanwhile, Cedeno and Jorge Moreno took the car and shattered a window to make it look like a break-in.

They drank at a bar, then drove into a guardrail to damage the Escalade even more. They jumped out just before the collision. Cedeno fell and cracked his head. Moreno took him to a hospital. He said Cedeno was in a bar fight. Too late; Cedeno shortly died.

The airbags hadn’t deployed. That meant no one was in the front seat, investigators determined. Cell phone records also linked the Cedeno and Moreno, who knew each other in their work as carpenters. Zavala-Gallegos and Moreno both were convicted. Cedeno wasn’t so lucky.

Suspects burned in suspected grisly giveup
Then there’s the strange — and still-open — case of Diane Jones. The grisly evidence literally raises burning questions. She reported her car stolen. It was found in flames near Lexington, Ky.

Prosecutors allege: Two men were spotted leaving the scene in a white van. Police pulled over the van, and found Jones’ son and grandson inside. Her son had serious burns on both lower legs. Her grandson’s eyelashes, facial hair and arm hair were singed. A dashboard camera inside the van captured Jones at the burn scene. They’re all charged in the suspected giveup scam.

So, back to the convicted felon Randall White: His life is a mess. The shock of his life-altering mistake has put him back straight and narrow, he professes. “I mean, I’m sorry for what I’ve done, and like I’m trying to get my life back together 100 percent,” he told the judge.

About the author: Jim Quiggle is communications director for the Coalition Against Insurance Fraud.

Straps kids into child seats, sets up murders to look like accident

autistic kids

Onlookers heard the tires screech as Ali F. Elmezayen’s car sped down a commercial fishing wharf and shot into the harbor at Los Angeles.

The Honda Civic quickly sank in 20-30 feet of murky salt water. His two severely autistic kids were tightly strapped in child seats. They never had a chance and drowned, still in their seats. His live-in partner Rabab Diab couldn’t swim. She was rescued by fisherman after escaping through an open window.

Elmezayen made no effort to help the kids or Diab before slipping out of the driver-side window to the surface.

What seemed like a horrible accident was a stone-cold murder. Elmezayen had bought more than $7 million of life insurance on his family. The accelerator pedal was his moment to start cashing in.

Elhassan (age 13) and Abdelkrim (age 8) needed high levels of medical care, including state support. Elmezayen merely smelled a profit center. He spent two years plotting to rid himself of them. So he bought seven life and accidental-death policies on himself, the kids’ lives and Diab.

Often called insurers

The Egyptian native earned less than $30,000 a year in wages. Yet he somehow found the money to pay more than $6,000 of insurance premiums annually to keep the policies afloat.

Elmezayen frequently called the insurers, posing as Diab. He kept asking the insurers to confirm they wouldn’t investigate for fraud if he made the claims two years after buying the policies. That’s the time window that life insurers typically require for investigating deaths of insureds.

“Oh, ok. The difference two years or not two years is you investigate it. You try to find out how I die. Right?” he asked in broken English in a recorded phone call with an insurer.

So sure enough, Elmezayen drove his car off the pier two years and 12 days after the policy purchases. That was just in time, he hoped, to stifle investigations and walk away with his money. He soon collected more than $260,000 on his sons’ lives, and wired $171,000 back to his native Egypt. He used part of the money to buy real estate there, and a boat.  

Elmezayen garbled his stories when questioned after the kids died. He may have accidentally pressed the accelerator, he said. Or he may have passed out from medicines he took for a blood disorder. Or maybe he fell prey to an “evil inside of me that pushed me to go.”

At trial, prosecutors said Elmezayen beat Diab and phoned her parents in Egypt, “threatening to send her home in a coffin.” He was going to “bury her alive,” and wanted to take a second wife. He also tried to convince witnesses to lie to enforcement that he gave the insurance money to charity.

Sued carmaker, city

Even so, Elmezayen smelled yet more money. He and Diab sued the city of Los Angeles and other government entities. They alleged wrongful death and dangerous public properties. The pair also sued Honda and an auto-maintenance store, though the court ruled against them.

Elmezayen was convicted. He could receive up to 212 years in federal prison when sentenced. Diab isn’t charged at this point.

His intentions were clear during a call to an insurer. He didn’t realize it was being recorded. Elmezayen is heard in the background, speaking in Arabic with Diab. “May God compensate us for the kids. …” he said. “May God give us better than them.”

Federal prosecutors gave another perspective: “These two boys deserved a loving father,” said U.S. Attorney Nick Hanna. “Instead they got a man who put his greed and self-interest above their lives.”

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud

Telemed mogul bribes doctors


Medical exams with doctors by phone or video hookup are bringing decent, affordable care to millions of people. Seniors with limited mobility or living in isolated rural communities can instantly reach caring doctors for needed tests and exams paid for by Medicare or other health insurers.

Telemedicine is changing healthcare for the better. It’s changing insurance fraud for the worse.

Crime rings are chasing insurance money with increasingly aggressive telemed scams that are stealing billions of taxpayer dollars around the U.S. The ruses aim especially at seniors — peddling unneeded back braces, fake DNA tests and other useless health benefits falsely charged to their Medicare accounts. The stolen insurance money is reaching record levels, and rising.

Part of $1.2-billion looting

Which leads to telemed mogul Lester Stockett. The Medellin, Columbia man ran an international network of telemedicine firms and call centers that recruited seniors into one of the largest accused health-fraud crime rings ever — a $1.2-billion looting of Medicare. Stockett was responsible for $424 million of the charged ring’s taxpayer losses.

His crime is an urgent alert for seniors to be wary of high-pressure phone sales pitches and medical exams for free medical benefits that aren’t so free after all.

Recruiters, brace suppliers and others kissed Stockett’s imperial ring with bribes so corrupt doctors on his payroll could prescribe useless braces and loot the Medicare money that fattened everyone’s bank accounts.

Stockett’s telemed firms operated under the umbrella name Video Doctor Network. His spiderweb of call centers phoned Medicare seniors from boiler rooms in the Philippines and across Latin America. They reached hundreds of thousands of seniors, many who were disabled. Stockett sold them false hope for a better life.

Doctors gave bogus phone exams

His phone callers convinced the seniors to accept free arm, back and neck braces — whether or not the seniors needed the equipment.

The call centers next transferred the trusting seniors to Stockett’s telemedicine firms for for bogus phone exams by corrupt doctors he’d bribed.

The exams were brief, and the doctors barely asked about the seniors’ real medical conditions. The doctors then prescribed overpriced braces for patients they’d never met and didn’t know. It was irrelevant whether the seniors even needed the braces.

Medical equipment firms shipped the braces off to the seniors, billed their Medicare accounts, and paid bribes to the doctors for their patient exams. The braces often were low-priced Chinese-made equipment billed at inflated prices to Medicare.

In many cases, doctors on his payroll never even bothered to tele-examine seniors. Nor did patients often receive braces — yet their Medicare accounts were billed anyway, the feds say.

Dozens federally charged

The stolen taxpayer money was laundered overseas, and used to buy expensive cars, yachts and luxury real estate.

Dozens of suspects are federally charged. Stockett already took a fall. He pled guilty in New Jersey, and will sentenced in December.

“The extent of Mr. Stockett’s fraud and money laundering literally knew no bounds …” adds Gregory Ehrie, special agent in charge of the FBI’s Newark Field Office. “They stole precious federal funds earmarked to assist the elderly. His admission today should resonate with anyone who is committing fraud against the U.S. government — the FBI will find you and your criminal efforts will not pay off.”

About the author: Jim Quiggle is director of communications for the Coalition

Goes to gym 208 times, filmed lifting weighs and driving car normally

Painfully limping from a seeming job injury, Mandy Henderson left work and started hauling in payloads of disability money as a lieutenant for the Santa Clara (Calif.) County Sheriff’s department.

Henderson convinced doctors she couldn’t do the job a law-enforcement officer needed to keep the peace and sweep bad actors off the streets. Henderson insisted she couldn’t walk regularly, jog a mile in 12 minutes, climb stairs, bend or drive a patrol car.

Sadly, she said she spent most of her days lying on the couch and couldn’t even raise her child normally. Doctors believed her convincing story.

Henderson moved to Las Vegas and retired from the force, presumably nearly crippled by pain and broken-down body parts. The disability money kept coming, helping replace her lost salary and pay for medical bills.

Faked injury, built muscles

In fact, Henderson was a competitive body builder the whole time in Las Vegas. She’d faked her work injury and was plundering the sheriff department’s disability system.

The disability money paid for a fantasy vacation lifestyle that let Henderson sculpt a perfect body at a local gym — courtesy of honest taxpayers. Rippling with muscles, stamina and energy, Henderson competed for body-building trophies. She checked into a local gym 208 times.

The sheriff’s department office back in San Jose grew suspicious and hired an investigative firm to tail Henderson. The firm secretly filmed her living the good life in Las Vegas.

The camera lens caught Henderson working a treadmill and stair climber. She lifted weights such as shoulder and bench presses, and shoulder lifts.

As for child rearing, Henderson easily lifted her kid and drove the car she said she couldn’t drive.

The sheriff’s department asked Henderson to fly back to San Jose for an interview. She begged off, claiming “a lot of pain sitting down for long periods” — such as on a plane.

Pretended pain at meeting

So two officials flew to Las Vegas. They all met at a Starbucks coffee shop. Henderson walked gingerly, leaning on her husband Ken — himself a former Santa Clara police officer. She pretended to have a lot of pain while moving. Midway through the conversations, she stopped to lie down on a bench after complaining of discomfort.

The hammer of justice finally came down hard, and Henderson was arrested. And none too soon. The 41-year-old stood to receive more than $3.3 million of industrial disability retirement money over her full life expectancy.

Henderson had no defense. She pled no contest to making a false claim. She avoided jail with six months of home confinement.

But the price tag was far higher. Henderson’s law-enforcement career is over, she must repay the stolen disability money, and will carry a record of convicted insurance felon wherever she goes.

“She took advantage of a system that is in place to help injured first responders. She should be ashamed for discrediting the sacrifice of law enforcement professionals everywhere,” the sheriff’s department said in a statement. “The true victims in this case are the injured employees that are recovering and actually planning to return to work.”

About the author: Jim Quiggle is director of communications for the Coalition.

Faked photos harder to detect, challenge


Photos form the backbone of billions of dollars in claims. Yet photos can be so easily and convincingly altered that insurers are having difficulty uncovering the deceit hidden in the altered metadata embedded in images used for claims and underwriting. 

Forgeries are subjecting insurers to a growing risk of losses from well-doctored images, especially for auto claims. The potential to use readily available technology to slip altered images past insurers has grown exponentially in recent years. Fraudsters thus are increasingly targeting insurers with doctored images to support their crimes. 

The emergence of consulting firms that focus on uncovering photo fakery with insurance fraud and other crimes is the marketplace’s way of confirming the problem is real and growing.

Photos are becoming easier to alter. Even consumers with only basic technology skills can use any of the many photo-editing programs that can create professional-looking altered images to scam insurers during policy transactions. 

In an era of low- and no-touch policy transactions and claims speeding through the insurance pipeline, the fraud risk from altered photos is growing more acute. The exposure, so to speak, is especially true with more insurers accepting more photos as part of seamless low-touch claims, where scrutiny can be lower.

Many insurers ill-prepared

Photos submitted by claimants can provide pivotal evidence allowing insurers to verify underwriting and claims for millions of Americans. Yet many insurers today are ill-prepared to penetrate well-doctored images that can be easily submitted.

Using free or inexpensive photo-editing phone apps, fraudsters can easily create or inflate car damage by altering the date or time of a claim incidents such as a vehicle crash.

“The days are disappearing when investigators can know a digital image accurately depicts a claimed scene, person or event.”

Instagram, FaceTune, iPhone apps and other widely available photo-altering programs make it easy for most people to alter photos. Thus it’s a small step for people to skillfully manipulate images for insurance cons.

The days are disappearing when investigators can know a digital image accurately depicts a claimed scene, person or event. Defeating burgeoning photo fakes thus takes on added financial urgency in today’s dawning era of low-touch or no-touch claim transactions up and down the insurance chain. 

Even modestly tech-driven consumers can easily defeat insurers with well-doctored photos that support false claims, or doctor bogus policy applications during underwriting.

A revolution in manipulating photos taken by cellphones already is underway at the consumer levels. Basic photo-editing tools are standard software on most smartphones. Hundreds of more-sophisticated apps are easily downloadable for free. 

Phone software has “beauty modes,” for example, that can alter someone’s appearance. Different eye color, hair color, facial structure and other elements can easily disguise someone.

Mounting losses from fakes happening?

This tech surge comes at an especially challenging time. Insurance fraud is growing, a majority of insurers say in a recent study by the Coalition Against Insurance Fraud. This crime is an $80-billion annual drain of insurers across all lines, the Coalition conservatively estimates.

Without the right tech tools and human skills to detect altered photos, many insurers can expect large and mounting losses as emboldened fraudsters increasingly submit bogus images that stand a high probability of being accepted as valid. Imagine sophisticated criminal rings manipulating photos for large claim dollars, paying well to hire associates with advanced imaging skills.

Photo frauds are relatively easy for average consumers to use with insurance scams. Several photo apps integrate AI algorithms that allow people to add or remove objects in an image, wipe out the background and enhance the appearance of subjects. Here are just two examples of hundreds of easily available techniques: change or mask my location on Android … adjust time and date after capture.

The commercial design app Photoshop is widely used to alter photos for brochures, personal photo portraits, annual reports and the like. Many people have Photoshop skills. It requires training, though is commonly available. A Photoshop user can cleverly change photos to support false claims such as car or home damage, or add injured crash “victims” to a collision scene. I recently talked to an SIU investigator who said he discovered two Photoshoppedphotos in a claim file.

Automobile scams are a persistent, multi-billion-dollar drain on insurers year in and year out. Auto insurance heavily relies on photos, and thus is vulnerable to fakery. Accurately documenting preexisting damage on applications or crash damage during claims, for example, are part and parcel for auto insurance. 

“This fraud potential is magnified by the rapid spread of remote insurer photo inspections …”

Altered photos can support almost any false vehicle damage claim. A free or low-cost phone app lets drivers add or enlarge a scratch or dent with little trouble. This fraud potential is magnified by the rapid spread of remote insurer photo inspections replacing on-site manual reviews.

An uninsured driver who rams a utility pole can make it appear the collision happened after she bought a new policy. Simply change the incident’s date and time on her iPhone or Android, then snap a photo. The metadata now reflects the date she selected. She then changes the time and date back to the correct coordinates afterward. When the insurer asks for photographic evidence, the claimant submits the altered image and the false damage claim stands a good chance of being paid.

Imagine a staged-crash ring makes injury claims for seven passengers in a purported two-car collision. Only the drivers were onsite. Yet the ring gives the insurer photos that show five other people at the scene — all doctored into the image, and making expensive injury claims. As with auto damage and repair claims, photo inspections continue to replace in-person site inspections. Larger insurers,  especially, are adopting such claims efficiencies.

The core problem is that photography went digital in a less-complicated time. A digital photo is a collection of binary 1s and 0s that are mutually interchangeable: Alter those 1s and 0s, and you can transform the entire photo. 

This applies equally to pixilating the image — what it actually displays — and to altering the metadata inside the image file. Nearly all digital cameras embed additional information within the image file. Most smartphones record the time, date and geolocation of the image capture. Data as mundane as the camera model, aperture and exposure times also are recorded.

This metadata should signify accurate, useful information about the context in which the image was captured. Yet current image file formats have no built-in mechanisms to preserve the metadata accurately. Countless tools are readily available online for anyone to manipulate this information and try to defraud insurers. Worse still, tools to manipulate image metadata are built into photo-storage services such as Google Photos

Insurers and other businesses rely on employees to make underwriting and claim decisions based on what they see. That’s why manual inspections exist in the insurance world.

“Want the image to appear taken last week instead of today? A few clicks start the scam.”

Want to make an image appear it was taken in Europe instead of the U.S.? It’s easy with a little training. Want the image to appear taken last week instead of today? A few clicks start the scam. Imagine inventing a photo alibi for your home arson or other insurance scam. Advancing technology, along with imagination by fraudsters, make such bogus-claim scenarios an increasing threat. 

Why not make a false claim for a $10,000 diamond engagement ring that you say you lost at the beach? Or just go to a jewelry store, try on a ring, and photograph it on your finger (with a generic background). Buy coverage, wait the recommended number of days (easily found in an online forum), then claim the “lost” ring. A photo at policy inception with validated metadata (time, date, location and more) can be crucial and convincing evidence of a valid purchase.  

GPS data also can easily be manipulated on mobile devices, especially Androids. It’s undetectable unless more-sophisticated checks and algorithms are run at the point of photo capture in a controlled experience. 
Example: Take a photo from a jewelry shop and spoof the address as your home. Same with furniture.

Digital photos speed claims

Compounding insurer loss exposures is the rapid emergence of low- and no-touch transaction processing along the insurance chain. The customer-centric business model relies on heightened speed, efficiency and auto-processing of transactions. 

Faster, easier transactions mean happier customers. This is especially true for rising generations of younger, tech-savvy insurance buyers who expect this efficiency. Lightning speed and ease of use are key to attracting and keeping younger consumers whose incomes and buying power are increasing as they move upward through life. 

“… altered photos also can face less scrutiny to keep transactions moving fast.”

Relying on digital photos provided by customers can greatly speed up underwriting and claim-processing times. Yet altered photos also can face less scrutiny to keep transactions moving fast.

Insurers catch many thieves by analyzing a suspect’s photo metadata.  Fraudsters also can easily foil investigators with a minimum of knowledge about image manipulation. For example, a scam artist wants the time and date in metadata to reflect a vehicle crash at 3 p.m. yesterday instead of a week prior. Fraudsters can easily change their phone settings and snap a photo. The data forgery is undetectable to an insurer. 

Claims and SIU teams are highly professional. Yet they cannot work fast enough to manually detect altered images. Investigators and claims staff don’t have time to manually inspect the large volumes of photos racing in for policy applications and claims.

Deepfakes, altered videos next?

Technology for altering videos is fast-emerging as well. They are less of a current threat to insurers today; manipulating photos remains the primary threat. Still, they point to how rapidly and thoroughly technology is being deployed to manipulate reality.

Until recently, only professionals at major photo studios or design firms could alter videos to such impact. Now AI can help nearly anyone manipulate even a video with considerable skill. 

Deepfakes are another looming tripwire. They take image altering to a higher level. Deepfakes are totally fabricated videos or images of people or scenes, yet they seem clear and convincing.Deepfakes are widely circulating on social media, and appearing in mainstream media. They are causing confusion and allowing false information to circulate. 

“Will the day arrive when average consumers can manipulate videos and deepfakes in fraud schemes?”

To grasp the full power of deep fake photo manipulation, view these images of imaginary rooms and this invented person. We may not be seeing deepfakes in claims — yet. However, the technology’s rapid spread greatly increases the chances that fraudsters will literally invent photos to support false clams.

Will the day arrive when average consumers can manipulate videos and deepfakes in fraud schemes? Imagine a home or business arsonist editing himself out of his security video, or editing in someone who’s taller, heavier and from a different ethnic group.

Seamlessly check photos

Better prevention, not just detection, is the core of catching photo fakes. Being proactive at the point of underwriting, plus receiving trusted, verified and forensically checked images can prevent more scams.

Insurers are checking more photos for deception. The right systems can seamlessly review photos while maintaining convenient policy transactions for customers. Key is to define the “right system.” 

Insisting on in-person inspections for every policy or claim — including photos — costs time and money. This also creates creates high-friction points for customers. Delays and repeated requests for information can make customers feel their truthfulness is being questioned. 

Virtual photo inspections are gaining a foothold in response. Customers can upload images from their phones at policy initiation, or provide documentation to back up a claim. Virtual inspections are a step forward in fraud detection, yet the images still are not necessarily trustworthy. 

An auto policyholder, for example, says she was rear-ended. The insurer asks her to use its virtual-inspection tool to capture damage photos for the claim. Yet she wants to inflate the damage. So she simply searches the internet for photos of the same make, model, year and color of her real SUV — with the same damage she described. Then, she uses the insurer’s software to capture those images on her high resolution computer screen. 

There is no easy way the insurer can tell the photos are fake. So her $14,000 damage claim is paid after the virtual inspection, or maybe her expensive SUV is declared totaled.

Controlled capture can auto-detect

Such scams can be auto-detected, even in a low-touch claim environment. Next-generation solutions — for images, at least — employ a technology called controlled capture, working with image forensics. These solutions reduce the fraud risks of virtual and manual inspections, while maintaining a satisfying consumer experience. Controlled capture can be embedded seamlessly into automated claim and detection workflow. It inspects photos behind the scenes as they flow into insurers.

Controlled capture is the ability to permanently gather all data recorded the moment someone presses the camera shutter button. Image forensics then auto-analyze the device and other metrics to verify the data’s authenticity. 

Controlled capture makes it impossible to manipulate a photo’s time, date, location or contents. It can detect fraud beforethe claim is paid. Controlled capture can apply to photos at underwriting, point of sale, claims and SIU. Insurers receive trusted, verified images that discover fraudsters and make everyone happier — customer, insurer and its employees.

Using controlled capture and comparing the phone settings to a secure server at the point of image capture is required to understand these manipulations. 

Lack of trust in photos is a mounting problem. All businesses that rely on photos are at increasing risk of fraud. It starts with insurance but extends to home sales, shortterm rentals, online marketplaces and more. Photos thus should never be trusted unless they go through controlled capture and forensic checks.

Many insurance consumers withdraw their claim or policy application when an insurer requests a virtual photo inspection. Or they delete suspicious images from several photos before they (or their agent/broker) send them to the insurer. This might include a manipulated image that shows mold in a house that’s in good condition, or jewelry with the store in the background. Controlled capture will discover these photo schemes.  

We’ve entered an era when photos are irreversibly fair game for potentially billions of dollars of bogus claims. Photo-altering apps and claimants’ need for speed have let the genie out of the bottle. As more consumers learn that they can use photo-altering apps to convincingly change images to inflate claims, insurer loss exposures will continue to grow significantly now. 

In an era when speed is pivotal in resolving claims, insurers must use that same urgency to detect and deter bogus photos. 

About the author: Dan Gumpright is Vice President and Head of Insurance at Truepic. He has worked on high-tech insurance software for 10 years, is a regular blogger, and is a speaker at insurance conferences worldwide.

Pretends heart attack in Moldova, wife inters stranger’s ashes to fool insurers in U.S.

Shame about Igor Vorotinov’s fatal heart attack, so sad. The putrid body found in the bushes near a rural village in his native Moldova supposedly was poor Igor.

His wife Irina quickly flew in from the U.S., cremated him and interred his ashes in a mausoleum in the Twin Cities, Minn. area, where they lived. She even held a touching memorial service. It was widely attended by members of the local Russian community, who knew Igor well.

Except that Igor used an unknown person’s body to fake his death and steal $2 million of life insurance. Igor spread around bribe money like marmalade to make sure Moldovan officials kept the couple’s ruse moving happily ahead.

Vorotinov bought the policy on his own life in 2010, listing Irina as the beneficiary. An auto mechanic and dealer, Vorotinov then left Minnesota for his native Moldova to set up the insurance theft. It’s a former Soviet republic in Eastern Europe.

Police found his passport, hotel cards and phone numbers on the body.

The responding police officer claimed he had no camera, so no photo of the body was taken. Igor had sadly died of a heart attack, the medical examiner cooperatively said.

Irina hurried to Moldova, identified her dearly departed Igor’s remains, had him cremated, then lugged the ashes back to Minnesota for interment. Irina also had a Moldovan death certificate as proof positive. She gave it to Mutual of Omaha, which sent her a tidy check for more than $2 million.

Irina then opened two bank accounts, one under the name of their son, Alkon. She deposited the money into the accounts, eventually transferring the insurance loot to accounts in Switzerland and Moldova.

Son stumbles on Igor at party

Meanwhile, Igor moved to Transnistria, a small strip of land next to Moldova. He changed his name to Nikoly Patoka and lived there for six years. Alkon then visited Moldova with his fiancee, and just happened on Igor at a party. The stunned kid kept returning to see Igor.

A mystery tipster in Moldova notified U.S. officials that something was up. Officers were waiting for Alkon at the airport when he returned from a trip.

Photos on his laptop showed Igor quite alive more than 2½ years after his claimed death. There was Igor, posing with the young daughter of Alkon’s fiancee in a park. Then again, playing with the girl at a swimming pool. Metadata showed the photos were taken in 2013. And the camera was a Canon IOS Rebel T4i. It wasn’t even available for purchase until June 2012 — more than nine months after Igor supposedly died.

Igor’s supposed ashes were tested, and they were someone else’s. Turns out that Igor also had planted his ID documents on the body, whose identity authorities have yet to reveal. Igor was handed 41 months in federal prison. Irina earlier received three-plus years in federal prison, and Alkon three years of probation.

Someone has to repay the $2 million to Mutual of Omaha. Irina has breast cancer and can’t work. Igor is stuck in jail. That leaves the luckless Alkon, just shy of 30 years old. “He will likely be paying off Mutual of Omaha his entire life,” his attorney Matthew Mankey lamented.

About the author: Jim Quiggle is director of communications for the Coalition.