N.Y. Cops Charged In $1.5M Auto Fraud Ring

By Daniel Hays

NU Online News Service, Oct. 23, 2:38 p.m.EST?Authorities in New York City said yesterday they hadbroken a $1.5 million auto fraud ring involving three veteranpolice officers and 27 civilians.

The arrests were announced by Kings County District AttorneyCharles J. Hynes in Brooklyn, and marked the second time in twoyears that law enforcement officials said they uncovered a fraudring involving city police.

In the latest scheme, cops were said to have been paid off withcash, pills, and in one case fancy auto parts.

Mr. Hynes' office said the latest scheme cost insurers more than$1.5 million in billings and claims.

The arrests, it was announced, were the result of a two-yearinvestigation conducted by the District Attorney's Office, the NYPDInternal Affairs Bureau, and the National Insurance CrimeBureau.

The investigation was initiated, Mr. Hynes' office said, afterthe NYPD received information that several people in the SouthBrooklyn area were involved in an auto insurance fraud scheme. Theoperation was said to have faked 24 fictitious accidents, with morethan 50 additional accidents involving the same ring currentlyunder investigation.

None of the scams would have been possible, prosecutors said,without the help of the three police officers who were charged inthe case.

The trio all worked out of Brooklyn's 61st Precinct in theborough's Sheepshead Bay section, where all the phony accidentswere said to have taken place. Police Officers Jeanine O'Malley,Susan F. Lavin, and Robert L. Herold allegedly generated theaccident reports required to file the insurance claims. Ms.O'Malley has 11 years on the force, Ms. Lavin has 15 years, and Mr.Herold has 16 years.

Prosecutors said the officers allegedly obtained the phonyaccident information from members of the ring, who served as"runners." The group was said to have conspired at the precinct orat nearby locations.

At these meetings, the officers would allegedly receive a slipof paper containing the names and vehicle descriptions to be put onan accident report. The officers would allegedly file theinformation with the police department as an official accidentreport. The runners would either pick up the report at the precinctor the officers would deliver it to them.

The "runners" would solicit individuals called "jump-ins" toprovide personal information, which would be included on the phonyaccident reports. Bogus injuries would also be claimed and jump-inswould be sent for treatment at certain medical offices, prosecutorssaid.

Runners would also refer the jump-ins to attorneys who wouldfile insurance claims under no-fault provisions, according to theD.A.'s office.

The claims, it was explained, would cover the cost of medicalexpenses, transportation to and from the medical facilities,medical supplies, MRI exams, and psychiatric treatments for stressthat resulted from the alleged accidents.

Another tactic used by the ring, prosecutors said, involvedsoliciting jump-ins to allow their vehicles to be used in afictitious accident. In this scenario, the vehicles--which wereoften already damaged--would be brought to an auto body repairshop. On many occasions, these vehicles would be further damaged tomake the alleged accident more convincing.

The insurance companies would then be notified of the allegedaccident, and their adjusters would inspect the vehicles, theprosecutors said.

According to officials, the jump-ins were promised severalhundred dollars for their participation in the scheme, whichtypically settled their insurance claims for payments ranging from$1,500 to more than $15,000. Those jump-ins who allowed their carsto be used in the scheme were paid from $500 to $1,500. If theircar had damage to it, the car would be repaired at the expense ofthe insurance company, it was alleged.

"These kinds of insurance fraud schemes result in millions ofdollars in higher rates passed on to honest car owners," Mr. Hynessaid. "It is especially distressing to learn that police officersin whom we put our trust were involved in this particular racket. Iknow they are not representative of the finest police force in thecountry and I congratulate the team of NYPD, insurance industryinvestigators and my office for their work on this case."

According to the D.A.'s announcement, officers were paid between$20 to $100 for each accident report they prepared. Sometimes, thepayment was said to have taken the form of auto repairs for theofficers' personal vehicles. In one case, it is charged, OfficerLavin had new stylish wheels put on her personal car as payment forpreparing the reports.

Payments were also said to have been made by providing theofficers with the prescription painkiller, "Vicodin," which wasdelivered at the precinct or while police officers were sitting intheir patrol cars.

The police officers face charges of conspiracy, officialmisconduct, insurance fraud and grand larceny. The runners andjump-ins face charges of insurance fraud, grand larceny, andfalsifying business records. All face up totwo-and-a-third-to-seven years in prison if convicted, the D.A.'soffice said.

Last year, when charges were brought against a 67-member autofraud ring in the city, two police officers were charged.

An attorney for Officer Lavin was quoted by The New YorkTimes as saying she denied guilt and anything she did was atthe direction of her supervisor, Officer Herold.