Coalition Against Insurance Fraud: Unwise Wise Guys purloin insurance money?

Mafia busts another sign that big crime rings have big ideas for fraud

Reputed mobsters from the Luchese, Bonnano and Genovese crime families were busted up and down the East Coast last week.

The epic lasso roped nearly 50 suspected hoods, including high-ranking capos who called the shots.

Extortion, gambling, loansharking, muggings and other standard Mafia schemes were alleged in the federal indictments.

Unwise wiseguys?

What stood out was health-insurance fraud. The gangsters allegedly convinced docs to write “unnecessary and excessive” prescriptions for expensive compound creams. Allied docs overbilled insurers and received kickbacks, the feds say.

Street hoods turning to respectable white-collar crime?

“Many of the Italian mafia families across the nation have sought to diversify their interests into more high-tech, white-collar crimes for a while now, dating back, really, to the 1980s,” mob expert Scott Burnstein tells Vice. “Smart mobsters in this day and age no longer just line their pockets with traditional rackets (gambling, loansharking, extortion) — and some try to stay away all together. When you compare prison sentences, it makes the most sense.”

Organized crime sinking its grubby paws into insurance fraud is a known phenomenon. The Coalition has tracked the trend for years. Complex rings, and ethnic gangs such as Russians and Armenians, have gotten rich from staged crashes, inflated health-insurance claims, medical ID theft and other insurance rackets.

The latest busts add new insights into how the Mafia itself may be larding family ledgers with insurance crime.

Drug dealers and other street types are branching into insurance crime. It’s safer, more-profitable and less likely to earn you a bullet to the head in a dark alley, they reason. Same often holds true for larger crime rings.

All this is hardly surprising. Corporations inevitably follow a good money-making idea. They add efficiencies and scale, thus magnifying profits. This is as true of insurance fraud as honest entrepreneurial ventures such as coffee, copier and hamburger franchises.

There always will be a generous niche for mom-and-pop fraudsters — average consumers who inflate claims for “lost” engagement rings or “stolen” sound systems.

It’s the corporate fraud players who may be the most dangerous. In addition to size and organization, many complex rings could have resources to bring in tech-savvy players who can hack and breach insurers.

Sensor-driven devices such as telematics also may be hackable, thus allowing hi-tech crash rings to alter data and seemingly legitimize setup car wrecks. Shifting alliances among fraud rings with differing skill sets likely will surface. Align medical providers with breach techies and the theft potential is great.

The Mafia may not be the unstoppable octopus of yore. Yet the upcoming Mafia trials still will give fraud fighters useful field intel on the threat they’re up against. They’d be smart to watch closely and mine for actionable insights. Whether the Mafia is a bit fraud player or serious actor, they’re another reminder that size does matter with insurance fraud.

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