The International Association of Special Investigation Units (IASIU) awarded its Investigator of the Year Award to Progressive Insurance's Beth Shroat during its annual conference, which is being held this week in Atlanta, Ga.

Shroat won the award by identifying and investigating a multi-million dollar “straw buyer” auto-theft scheme that ultimately led to the dismantling of a violent criminal enterprise.

According to a release from IASIU, the investigation began simply enough. By conducting an organized medical investigation in 2003, Shroat observed an interesting trend associated with several vehicles. Not only were there questions regarding vehicle ownership, but funds were also being drawn from one bank account to secure multiple policies for different people. She determined that there was no connection between the different policyholders. Additionally, the vehicles were all newly purchased, high-end vehicles with lien holders. Based on these initial findings, her investigation took a whole new direction.

Shroat began her roadwork with interviews of the agents who wrote the policies and field canvasses for the addresses on each policy. It was revealed that neighbors had never seen the vehicles in question. The interviews of the insureds revealed that they could not identify the vehicle for which a claim was being filed nor explain where it was located.

Shroat began developing and piecing together significant information in regards to participants, vehicles, and general intelligence. What she had discovered was an elaborate scheme that used “straw buyers” to purchase high-end vehicles, insure them for lower rates, and hide the true identities of the owners. In many cases, these straw buyers were individuals who either had excellent credit or who had used stolen identities. The vehicles were then leased or sold to parties with poor credit, no credit, and in many instances, no legal or identifiable source of income. In many instances, the individuals who ended up with the vehicles had horrible driving records and no drivers' licenses. Some of these vehicles were used in illegal and questionable activities. This was evidenced by the fact that several claims involved the repair of bullet holes.

A significant break in the investigation occurred during an examination under oath of an individual who was identified as a straw buyer. This individual, whom Shroat had determined purchased 14 vehicles under one name, testified that a fictitious company rented out the vehicles for an exorbitant fee, which covered the payment to the straw buyer. Shroat was able to get this person to cooperate and provide information on the inner workings of this scheme. Basically, the ringleaders were using multiple aliases to attract and set up straw buyers.

Based on the information and scheme profile developed through the investigation, Shroat began to proactively data mine in order to identify new policies linked to the straw buyers and the fictitious corporation. Through this technique, she was able to actively investigate the policy information. Where the investigation revealed another straw buyer and determined misrepresentations, the policy was voided ab initio.

Shroat referred her case to the local FBI office and met with them to explain her findings. It was soon learned that law enforcement was very aware of the group linked to this scheme; however, they were unaware of this aspect of their criminal enterprise. She learned that this group was part of a dangerous organized crime ring linked to drug dealing, extreme violence, and gangland executions. She continued identifying policies on a weekly basis and utilized link charts to track and organize this growing enterprise. This newly developed information was shared with law enforcement on a weekly basis.

Ultimately, after Shroat's five years of continuous casework, the final 11 defendants who led this nationwide scheme were sentenced in March 2008. It was determined that this fraud ring obtained 224 high-end vehicles worth more than $11 million through the use of 50 straw buyers. The straw buyers, at the direction of the organizers, used falsified employment and income information to obtain the vehicles and secure insurance. The straw buyers were instructed to purchase as many vehicles as possible in 30 days to prevent prospective lenders from learning of the scheme via recent loan information on their credit reports from previous purchases.

As part of an “underground economy,” the vehicles were then turned over to the organizers, who then provided these vehicles to others with a need to conceal their identities. When payments to lenders stopped and repossession efforts began, the vehicles could not be located through the original straw buyer. Lenders ultimately lost more than $2.4 million due to this scheme. The 100 insurance policies linked to Progressive represented a potential exposure of more than $1 million.

Special Reports /

Shroat Named IASIU Investigator of the Year

Related Stories

Recommended For You