Kingpin runners. Even standing alone the term commandsattention. But the full breadth of what kingpin runners mean tofraud operations isn't always clear to outsiders.

As an attorney whose firm concentrates on investigating,litigating and preventing fraud whenever possible, for more than 20years the practice has focused on Personal Injury Protection (PIP)and Bodily Injury (BI) fraud primarily as it relates to stagedautomobile accidents.

There were stories about kingpin runners. Others involved intheir scams shared some details, so there was a general idea of howthese fraudulent operations worked. But a kingpin runner has neverprovided me with a detailed, blow-by-blow account of how theseschemes actually came together and operated – primarily because thekingpins either simply refused to speak during their incarcerationor because they asserted their Fifth Amendment rights againstself-incrimination.

That is, not until this year when our team was deposing dozensof individuals who had been arrested, convicted and incarcerated.Learning how extensive and detailed these criminal operatives arewas surprising.

What are kingpin runners?

Kingpin runners are not the average run-of-the-mill criminals.They're smart and proactive; the type of masterminds who are ableto put the “organized” in organized crime.

Many times, clinics will recruit kingpin runners who are able tobring in hundreds of new “patients,” a majority of whom claim fakeinjuries from staged “accidents.” In other cases, it is the kingpinrunners who seek out clinics that are willing to accept stagedaccident patients in exchange for a healthy cut of insurancepayments.

In either scenario, the kingpin runners are the ones in chargeof overseeing the entire staged accident operation from start tofinish. They become researchers, teachers and coaches, recruitingsubordinate “runners,” setting agendas, laying out plans, anddirecting day-to-day operations.

Once they have identified fraudulent clinics and establishedworking relationships with their owners, the kingpin runners ortheir subordinates typically reach out to family, friends, andfriends of family to recruit people in need of cash to serve asstaged accident “victims.” The kingpins then vet each participant,negotiate how much the clinic and each “victim” will be paid, andoutline how, when and where the “accident” will be staged.

In scenes not dissimilar to business meetings, kingpins may hosteducational sessions, sometimes at a local hotel meeting room, bar,restaurant…even a hair salon. During what could be the run-throughfor a theatrical performance, accident scenarios are laid out andparticipants learn and practice what they are to do and say before,during and after their “accident.”

Often during these rehearsals, kingpin runners will askparticipants about their insurance carriers. They're looking for“victims” who have policies with insurance companies most willingto settle and quickly pay out claims. Those participants typicallywill be “at fault,” while the others are coached on how to feignsoft tissue, neck and back injuries.

Once the accident has been staged, the kingpin runners ensure no“victims” receive treatment at the scene or are taken to hospitals.Instead, they discover their “injuries” after the fact and arebrought to participating clinics where kingpins can oversee everyaspect of the paper trail, from the initial police report to theinsurance payout. Once a claim is paid, the kingpin takes charge ofthe money and distributes it to all participants.

In layman's terms, these kingpin runners are the ultimateproject directors.

Photo: JosephSohm/Shutterstock

Investigating fraud operations

Some attorneys, on behalf of their clients, have made an effortto find better ways to combat and prevent automobile insurancefraud. My team recently visited federal prisons, where we had anopportunity to depose and take the sworn statements of severalsophisticated criminals with the contacts and knowledge to pull offmajor staged accident schemes.

Some refused to speak, some asserted their Fifth Amendmentrights, and others have fled to Cuba where they are untouchable byU.S. authorities, at least for now. But a few of these kingpinrunners surprisingly spoke about fraud rings in a very relaxedmanner, revealing their secrets.

They provided a complete roadmap of their schemes – fromrecruiting crash “victims” and staging accidents, to targeting andcollecting from passive insurance companies.

While each fraud scheme might include 40-50 people, only one ortwo were sophisticated criminals. The others were bit players inthe fraud or scripted “accident” victims. But the ring leaders –the kingpins – would draft an effective business plan tailored toeach staged accident.

Then they would diagram their accidents and have a playbook ofsorts for every “victim.” It was almost like these kingpins sawthemselves as the coaches of sports teams.

Some even kept “little black books,” their ledgers whichcontained everything from insurance company analyses; names,addresses and money paid to their scam participants; and differentscenarios for the perfect “fraud;” to maps of the best places andthe best times for staging their accidents.

Everything they needed to successfully bilk carriers throughfraudulent claims. The process actually is a relatively simple one,but many of the “black books” kept by these kingpin runnerscontained all the elements of a good mystery novel.

Photo: Photographee.eu/Shutterstock

A look inside one fraud ring

Among the fraud specialists who agreed to speak freely about theoperations was a clinic owner we will call “Javier.” He was bustedduring a recent large-scale fraud operation that involved a majormulti-year, multi-million dollar probe by law enforcement intostaged auto accident fraud. Javier pled guilty, and is now servingtime in a federal penitentiary.

“Javier” came to the United States from Cuba in 1997 with noformal education. In fact, he never even graduated from highschool. He spent years working in construction, as a laborer, truckdriver and metalworker. Then suddenly, Javier was the de facto(i.e., actual) owner of a money-making healthcare clinic.

How was that transition possible? It started when a kingpin,actually his former teacher in Cuba, asked him if he'd like toleave all that behind and get into the medical business.

Naturally, Javier said, “Yes. Absolutely!”

Javier visited a community some 60 miles north of where he livedand was told he now was the owner of a clinic, although the kingpinwould be his “boss.” The kingpin runner literally taught Javiereverything he needed to know to operate the clinic.

In fact, Javier knew the business so well he could pass forhaving been in the profession for years. That's how most members offraud rings gain their knowledge; it's handed down from thekingpins.

To prosper financially, rings need lots of “victims.”Consequently, most kingpins don't need to keep their recruits“close” in order to avoid snitching. The lure of fast money doesthat along with the knowledge that participants understand they tooare breaking the law and likely will be imprisoned if they speakup.

The one consistent element in every operation is the recruitmentof participants who are financially strapped; people for whom moneymeans the difference between barely surviving and being able tolive the American dream. Javier knew many of those people.

Once Javier's clinic received a check for treating accidentvictims – whether legitimate or not – it was deposited in the bankand a new check written for cash. The cash was given to the kingpinwho would take out his and the clinic's cuts, and give the rest tohis underling runners to pay off all of the victims.

To get around Florida law that every clinic must be owned by alicensed physician, the paperwork for Javier's clinic was filedunder the name of a medical doctor. However, Javier proudly toldthose who asked that Dr. “X” never was involved with clinicoperations and that he and his wife were the actual owners.

According to Javier, every patient who came into his clinicreceived illegal payments, even the one in every 100 claimants whohad legitimately been injured in a real accident. When pointedlyasked, “Did anyone not get paid?” Hisanswer was always a resounding, “No.”

From his answer, it was evident the fraud extends beyond justthe fake “victims.”

Photo: View Apart/Shutterstock

What fraud operators fear

Fraud tends to wither in the light of day. Ring operators don'tlike anything that exposes their operation as criminal. Swornstatements can unnerve participants and may keep clinics incheck.

Ongoing surveillance provides license plate numbers and a listof who is going in and out of a clinic on certain days. Thatenables insurance companies to cross-check victims' claims ofvisiting a clinic for treatment when they actually did not.

Something that simple can start eroding a fraud ring. Criminalsdon't want even a tiny piece of the puzzle to be cracked. They knowthat one false move can cause the entire scheme to crumble.

Fighting back

The game plan the insurance industry should follow is to becomea little more proactive and be visible about it.

Kingpin runners are closely watching what is going on in theinsurance sector. According to the players themselves who arespeaking out, simply closing their eyes and paying claims, as somecarriers do, and thinking the problem eventually will go awaydoesn't work.

Insurance companies don't have to go after fraud operations24/7; they just need to do something. Initiate random surveillance.Take a few sworn statements from “victims.” Set a couple of keydepositions. Study the medical records and accidents forindications of irregularities or fraud. Find and speak to formeremployees. Those activities can be immense deterrents tofraudsters.

Some of the fraudulent operations that were ultimately shut downhad been active for as long as 10 years. It wasn't until insurancecompanies started doing surveillance and deposing “victims” thatcracks started to appear in the operations and law enforcement wasable to indict kingpins and bring the schemes down.

Inaction is not an option

From the firm's representation of insurance companies in fraudcases, we know staged auto accidents cost the industry and itscustomers hundreds of millions of dollars each year. These recentkingpin runner depositions reinforced the belief that this is anissue that not only won't soon go away, but will likely continue togrow.

While these deposed kingpin runners are behind bars, others arealready taking their places and they may have their sights set onspecific insurance carriers. There is no time to sit back andrelax. The fraudsters won't and insurance companies can'teither.

When kingpin runners discover a weakness, they are quick toexploit it. If there is little or no resistance, they will exploitit over and over again. The best way to slow the onslaught is tomake things more difficult and disrupt their plans by taking allthe “easy money” off the table. A strong, unified front helps toreinforce this effort.

During the outset of the American Revolution, Benjamin Franklinproclaimed:“We must all hang together, or assuredly we shall allhang separately.” It was true then and it is true now as theinsurance industry faces ever-evolving threats from sophisticatedfraud rings.

To even stand a chance, companies must be vigilant andproactive. Take the fight to kingpin runners whenever possible.Maybe, they will think twice before scamming that insurance carrieragain.

Frank S. Goldstein, Esq., is the founder and managingpartner of Goldstein Law Group, a premier AV-rated law firmconcentrating on the investigation, detection and litigation offraudulent insurance claims. The firm's practice areas includeauto, property and healthcare insurance fraud. Goldsteinconcentrates on the civil prosecution of insurance fraud claims anddefense of insurance matters, including personal-injury protection,bodily injury and uninsured/underinsured motorist claims.