An Insurance Fraud Scheme Too Strange for Fiction

A Kemah pilot was recently sentenced to 65 months in prison for his involvement in a wild and extravagant insurance fraud scheme. Law enforcement officials report that insurance fraud has become more complex and grandiose in recent years.


Here’s the basic gist of the scheme. The pilot, along with partners from Houston and Hawaii, purchased a handful of luxury vehicles (including a Lamborghini Gallardo and some small planes), as well as insurance in excess of the cost of the vehicles. The group then began to sink, crash or set fire to the vehicles in order to insurance money.


The most dramatic crash was that of a 1966 Beechcraft Baron. As the plane flew over the Gulf of Mexico in 2012, the pilot and a partner made an emergency landing that led to the plane sinking into the gulf. Local news even reported on the crash, not knowing that it had been staged in order to defraud the owners’ insurance providers. The men were even interviewed on television.


Those same news sources reported on the pilot’s sentencing after pleading guilty to conspiracy to commit wire fraud and conspiracy to commit arson. Both are federal charges. In addition to 65 months behind bars, the pilot will have to pay close to $1 million in restitution.


What Exactly Is Insurance Fraud?


This story is one of few cases involving the deliberate crash of an airplane. It is not uncommon for individuals to destroy luxury goods or fake vehicle accidents to defraud insurance companies. Regardless of the value of the property, all insurance frauds are taken seriously.


If the act of insurance fraud crosses state lines or concerns the federal government, it will be prosecuted in the federal court system. While most states have specific charges for insurance fraud, federal law dealing with such fraud generally involve mail or wire fraud indictments. Which brings up the question…


What Is Mail and Wire Fraud? 


Fraud is defined as the act to deprive a person or business of money or property through untruthful methods. There are many different types of fraud crimes. If the conspiracy to commit fraud involves the use of mail or wire communications, the offenders may be charged with mail fraud or wire fraud. These communications include the use of a cell phone, computer, postal service, and so on.


Houston Federal Fraud Attorney

The pilot and his co-conspirators were not honest about their intentions to crash and destroy their luxury goods. Therefore, they committed acts of fraud. Because they used wire communications to plot their scheme, they committed wire fraud.


Penalties for Wire Fraud


The pilot received a sentence of roughly five and a half years prison in addition to roughly $1 million in fines. All things considered, these penalties are relatively light for what offenders could face after an insurance fraud conviction.


If you are convicted of federal wire fraud, you may face up to 20 years in prison. This sentence may be increased to 30 years if a financial institution or national emergency was involved in the scheme.


It’s also important to note that a conspiracy does not have to be completed for the act to be a crime, so even if no one lost any money or property, you may still be charged. If businesses or people did lose money or property, offenders may be sentenced to pay them restitution plus pay additional damages.


There are Ways to Fight Back against Fraud Charges


Going up against federal prosecutors is an intimidating process.


However, all defendants must remember that they are innocent until proven guilty, and that they have a right to legal counsel. A federal fraud lawyer can help you navigate the federal criminal justice system and find the right defense strategy for your case. Some common insurance fraud defense strategies include:


No Intention to Commit Fraud/Acting in Good Faith


In order for the federal government to convict you of conspiracy to commit wire or mail fraud, they will have to prove that:


  • Two or more persons agreed to the scheme
  • The persons committed with intention to commit the crime
  • One of the persons committed an act to further the scheme or put it into motion


If the prosecution cannot prove that you had the intent to commit fraud, you may be able to walk free. Negligent tax filing, for example, may result in dismissal of charges. In order to use this defense strategy, you will have to show evidence that you acted in good faith and within the laws of the state or federal government. Simply being ignorant to the definition of fraud may not be enough.


Texas Federal Criminal Defense Lawyer

Sales Tactics


The line between a lie and an exaggeration can be very small in the world of sales. A salesperson may be accused of mail or wire fraud if they sold products to customers using wild exaggerations. They may guarantee the quality of a product that doesn’t deliver in order to close the sale.


If outright lies are used during the sale, the salesperson may end up in prison or on probation. However, many salespeople have claimed that they were just practicing “puffery” or flattery rather than fraud. This may be a defense in your case.


These are just some of the ways that you can defend against insurance and mail fraud charges. Reach out to an expert for more information about your specific case.