Dallas ranks eighth as more owners are driven to dump cars, scam insurers

The economy is down. Gasoline prices are up.

And car owners are just plain giving in.

Faced with mounting financial pressures, more drivers are taking part in an insurance fraud scam known as "owner give-up," in which they abandon their cars – or just destroy them – then report them stolen to collect insurance money.

According to the National Insurance Crime Bureau, Texas was second in the nation for potential owner give-up cases with 353 from January 2004 through March 2008, the latest figures available.

For the same time frame, Dallas ranked eighth of the top 10 cities with the most owner give-ups, seven spots behind first-place Houston.

And for the first quarter of 2009, owner give-ups nationwide jumped by 24 percent over the first quarter 2008.

"Insurance fraud is a widespread problem," Dallas criminal defense attorney Barry Sorrels said.

"It's becoming more and more commonplace all the time, especially in this bad economy."

He also said that car insurance scams may be even more prevalent than they seem.

"You don't see nearly as many cases prosecuted as there probably should be," Sorrels said.

"There's difficulty prosecuting these cases because the person committing the scam controls the crime scene. You're only limited by the extent of someone's imagination and greed."

But law enforcement officials and prosecutors aren't about to give up the fight. On June 12, Dallas Fire-Rescue investigators charged Sonia and Erik Stice with insurance fraud and arson.

In December, firefighters found a flaming Dodge pickup registered to the couple in the 11000 block of Indian Trail. According to authorities, Erik Stice called the vehicle a "gas guzzler" and said that he couldn't sell it in the down economy. The couple said they gave the car to a co-worker of Erik Stice's – Aveline Rodriguez – to burn it. Investigators also have charged Rodriguez, 29, with arson.

Neither the Stices nor Rodriguez could be reached for comment.

In another pending case, former Dallas police officer Jose Gomez resigned last July over insurance fraud allegations after he was accused of falsely reporting his car stolen.

James Quiggle, a spokesman for the Coalition Against Insurance Fraud, a consumer advocacy group, said that "ditching your car for insurance money is not a new scheme."

"People have been ditching cars for as long as people have been on the road," he said. "What is new is the sheer volume of people willing to take this drastic step."

Quiggle blames the increase in fraud on the slumping economy and the financial problems that many face as a result.

"People are normally honest, but people are literally being driven to desperation by the recession," he said. "People's finances are being squeezed so badly that many are willing to try to risk a criminal record by committing insurance fraud as their personal stimulus bailout package." But some believe the link to the economy is premature.

"Can we link that activity with the economy in a blanket statement? No, we can't," said Frank Scafidi, director of public affairs for the National Insurance Crime Bureau. "We just don't have any hard data to say that it's driven by the economy."

Scafidi said gas prices carry a more definite link to the rise, noting that many of the top vehicles reported as possible owner give-ups are trucks and SUVs. For instance, the insurance crime bureau says the number of claims for potential owner give-ups was 96 when gas cost about $2.80 per gallon in October 2007 and 49 when gas cost about $1.50 per gallon in October 2004.

Regardless of what's driving the scam, the Insurance Information Institute reports that property and casualty fraud as a whole cost insurance companies $30 billion a year.

And everyone knows who eventually foots that bill.

"Whenever you steal insurance money, insurance companies are going to pass some of those costs on to consumers," he said. "Honest drivers will pay higher auto premiums because of these illegal car dumpings."