Casualty insurers are facing a more difficult claims settlement environment as the number of claims with questionable factors is increasing. The National Insurance Crime Bureau is reporting that 2012 saw an increase of 26% in questionable claims. “Suspicious theft/loss (not vehicle)” had the highest increase in volume to 10,680 in 2012 from 7,152 reached in 2011. In 2012, the top five states generating the most questionable claims were: California (21,935), Florida (10,693), Texas (10,368), New York (9,059) and Maryland (4,296).
Our property title search report analysis has seen an increase in the percentage of subject properties with liens, judgments, or other distress factors. This may be leading to insureds creating claims or inflating legitimate claims. We are also discovering that properties with claims submitted are turning out to be not the parcel actually insured on the policy, once the legal description is identified.
In more favorable news, a court in New Jersey ruled that an insured is not entitled to reimbursement for fees paid to a public adjuster to negotiate a more favorable claims outcome. The insured moved to recover attorneys fees and the public adjuster fees, but the court denied the request. “Perley-Halladay’s motion for summary judgment is denied, and its motion for attorney’s fees and costs is denied.”
In the video which follows there are some suggestions on defending settlements from frivolous claims from private adjusters.
Recovery losses in a fraudulent investment case is not a hopeless endeavor. If you are a victim of any type of fraud, or have a valid judgement against a debtor, do not give up on getting back the funds which belong to you. The key to successful recovery is exploiting all available resources.
Do not take the position that your scenario is a “collection” matter. Collection implies that the money belongs to the fraudster and that the efforts are to beg it back or get a debt paid. The mantra of asset recovery is to begin with the belief that the money belongs to the victim/creditor. It is a matter of taking it back aggressively, but legally.
Money does not evaporate. It is spent, invested, hidden or squandered. But it is not erased. Following the flow of funds to wherever they went is the open door to unlimited resources for recovery. Think it can’t happen? In one of the largest ponzi schemes in the past decade, victims in the $1.2 billion Scott Rothstein fraud may see a return of 100% of their assets due to the extraordinary efforts of the receiver in that case.
This and other successful asset recovery missions is achieved with the following 4 point approach:
- Flow of funds – clawback
- Third party liability
- Aggressive negotiations
In the Global Bullion Exchange fraud case, the victims asset recovery team is going after the firms former bank, Wachovia, for not overseeing the fraud accounts properly. “Either they knew what was going on or they weren’t monitoring the accounts the way they should have been,” said the victims attorney.
These are both excellent examples of high level asset recovery methods using all available resources.
Watch the video below and hear more details of how this is approached.
Employee embezzlement can happen at the intersection between trust and reasonable security. People who are valuable parts of an enterprise need to have sufficient latitude to take action and get things done. The CEO or owner cannot do everything personally, so key people are entrusted with important roles including managing money and critical information within the firm.
Reasonable internal controls help protect the company from exposure to loss due to errors or fraud, but the need for personnel to be able to freely perform their duties allows the possibility for problems to occur. One common loss control method is to limit the amount an individual employee can authorize for payment. This can be circumvented as in the recent case at UPS, where an employee authorized multiple payments each for less than his $5000 limit. The employee and his vendor accomplice was able to steal $1.2 million until the fraud was discovered. In this case it appears the fraud was only caught when an outsider from a bank noticed unusual activity. This is a reminder to companies to use more than one method for preventing fraud or loss. For example, in addition to having a transaction limit, payments and invoices can be randomly reviewed. Fraud cases almost always reveal that internal policies are used by the criminal to mask the scheme.
Coincidentally, there was another fraud scheme in Atlanta for about the same amount. An employee at the prestigious Woodruff Arts Center set up a dummy company and billed the non-profit for $1.4 million in fraudulent services. According to the center, they only have 13 vendors in total. Why are these types for frauds able to be committed?
It is a combination of trust and circumstances. Good corporate integrity should not change over time. If controls are in place, they should not change based on an employees tenure. Of course certain executives may be given more latitude as they prove their trust over time. However every transaction and payment should still be subject to audit. Especially those done under a trusted and less scrutinized initial process.
The video below will list 5 reasons why an employee crosses the line of integrity, and 5 ways to prevent fraud.
Corporate fraud is a hot area of investigations in 2013. From embezzlement to corporate due diligence, the activity level is high. The Economist magazine presents an article talking about some of those areas. “One big source of work is the growing complexity of business regulation. Multinationals can never be sure that some employee, somewhere has not violated America’s Foreign Corrupt Practices Act, or some other anti-bribery law.” One investigator described how the job sometimes goes: “Part of the job will continue to be “tracking down the disgruntled former secretary or book-keeper who knows where the bodies are buried, and knowing how to coax information from them.”
Here are a couple of videos on areas of corporate investigations: