Financial con artists reaped $35 million in state over last year

By Purva Patel
Business Writer
Sun Sentinel
Posted June 10 2003

Financial con artists committed $35 million worth of insurance and financial fraud schemes during the fiscal year that ends June 30. At least that's how much fraud the Department of Financial Services says it discovered among more than 1,700 investigations conducted during that period.

At the start of Fight Financial Fraud in Florida Week on Monday, state regulators warned consumers of the risk of fraud. Two days before insurance fraud investigators and prosecutors will gather in Orlando for a conference, the financial services department issued a list of the top 10 financial frauds for consumers to look out for.

On the list for the third consecutive year is the sale of unlicensed insurance, which the department said left thousands of Floridians uninsured or uninsurable. Consumers who buy from unlicensed companies often end up with debt for unpaid claims that the unlicensed insurer had no ability or intention of paying. The other schemes included the sale of unauthorized securities, the unlicensed sale of securities, and misappropriation of investor funds.

Regulators also warned of predatory lending, in which lenders charge excessive fees, offer unaffordable loans, or charge advance fees to borrowers.

Viatical scams also made the list. Viatical settlement providers buy life insurance policies from individuals who are terminally ill or aren't expected to live much longer and then resell them to investors. But the fraudulent providers often sell fake settlements, tout high returns and often fail to list all the risks and uncertainties.

Some of the frauds bilked insurance companies and banks by filing of false property and auto insurance claims, misclassifying employees to reduce workers compensation payments and submitting fake loan applications.

"Fraud costs us all -- through higher insurance premiums and through higher prices on goods and services," state Chief Financial Officer Tom Gallagher said in a statement.

Consumers can call the department's hotline at 800-342-2762 to report frauds or check if a company is authorized to do business in Florida.

Purva Patel can be reached at ppatel@sun-sentinel.com or 954-356-4667.