Staged Car Crashes: Dallas Grand Jury Indicts Duncanville Man for Multi-Million Dollar Insurance Fraud Scheme

The Florida legislature has passed special legislation to deal with staged car crashes but faking auto accidents to collect on insurance claims hasn’t been as common a basis for arrests here in Texas — but things may be changing.

Investigators Targeting Arrests for Staged Car Crashes to Collect Insurance Money

More and more often, all over the United States, law enforcement officers are charging people with insurance fraud felonies as defined by their particular state laws for allegedly staging car accidents in order to file claims with insurance companies for damages to property as well as personal injury damages.

States like Florida where Personal Injury Protection (PIP) coverage is offered are enticing places to stage the staged car crash since PIP insurance protection pays for medical costs in an automobile accident without fault being an issue.  It pays the doctor bills, etc., regardless of who is responsible for the crash.  PIP insurance exists to protect people who are hurt in an accident where the other driver doesn’t have insurance and all that is needed is to file a claim with carrier.

Texas may provide even more incentive for staged car crashes.

For Texas, “financial responsibility law” under Texas Insurance Code Section 601.072 mandates that drivers buy a minimum amount of liability insurance, currently set at $30,000 for each person injured in the accident up to a total coverage of $60,000 along with coverage for property damage up to $25,000.  Knowing that cars on Texas roads drive along with mandatory insurance policies covering any accidents they may have may form a solid basis for staged car crashes here in the Lone Star State.

What is a Staged Car Crash?

The staged car crash has evolved into a grift worthy of the classic 1970s movie The Sting or the TV show Leverage:  in fact, the variations in how the actual crash is staged have nicknames like “the T-Bone,” “the Wave,” and “the Swoop and Stoop.”

Essentially, all staged car crashes are phony accidents which are minor in nature, but serious enough to warrant filing an insurance claim.  Any number of people can be involved in the con, depending upon the version being played that day.

Sometimes one driver crashes into a car as it crosses through an intersection, ramming into its side, and when the police arrive there are compatriots ready to give witness statements that the car which has been hit broadside ran the light or the stop sign.  (This is the version nicknamed the T-Bone).  There are many other versions of the staged crash, of course, as creative new ways to create an accident for insurance claim purposes are evolving all the time.

Duncanville Man Indicted for Felony Fraud Charges in Multi-Million Dollar Texas Stage Car Crash Scheme

This week, Leroy Nelson was indicted by a Texas federal grand jury after being arrested by FBI agents on felony charges of insurance fraud including 6 counts of mail fraud and 6 counts of engaging in illegal money transactions.  (Read the Grand Jury Indictment filed by the U.S. Attorney’s Office for the Northern District of Texas here.)

According to the April 29, 2013 news release by the Dallas Division of the FBI, Mr. Nelson began working with his colleagues back in 2005 to build an operation that over the past 8 years has brought in millions of dollars in revenue to Mr. Nelson and his team.

Texas Version of the Staged Car Crash: Claims for Property Damage to Geeky Equipment

How? According to the Grand Jury Indictment, Mr. Nelson filed false claims based upon fake automobile accidents where he paid cash to folk who would make false claims to their car insurance companies, telling their carriers that “they damaged a piece of equipment that was on the road or that was being hauled by a trailer.”

Clever Mr. Nelson also allegedly helped these people sound good to the insurance adjusters, going so far as to give them written scripts to help them in making their claims.

The claims would be based upon interesting and geeky kinds of things: the indictment provides examples like a “Remote Aircraft Landing Marker” and a “Seismographic Probe.”  There would be photos of these things, too, and the claims never appeared to go over $19,000.

The Indictment reports that the carriers paid claims by sending their insurance company checks to warehouses owned by Mr. Nelson in Duncanville, Texas, or to one of those private mail addresses he had set up in several different states (Minnesota, Missouri, Mississippi, Washington, Arizona, Connecticut, and Louisiana), where the private mailbox place would then periodically forward his mail back to Mr. Nelson in Duncanville.

Today, Leroy Nelson faces felony time behind bars as well as the federal government seeking restitution for all that money that he’s collect from insurance companies since 2005.  And undoubtedly, the U.S. Attorney’s Office and the Texas Division Offices of the Federal Bureau of Investigation have been encouraged to seek out more indictments and take on more investigations into possible insurance fraud based upon cunning and creative staged car accident operations here in Texas.