Court proceedings have been this morning against 22 persons for allegations of their involvement in a massive case of insurance fraud.
Exchange of vehicles, repeated claims with different insurance companies and carefully staged traffic accidents were among the complex methods employed by the people involved.
One particular person even pocketed €27,000 for a totalled BMW, others superficially patched their vehicles up in order to reuse them.
The racket was uncovered by a group of insurance companies after realising that claims were being filed by the same people.
8 companies in total were allegedly victims of fraud, namely: Untours, Atlas, Elmo, Gasan & Mamo, Allcare, Citadel, Argus and MSI.
It is understood that the insurance firms found that some individuals had filed accident claims on several vehicles they owned. People were also agreeing to be involved in “traffic accidents” and would then file separate claims with their own insurance agencies. The evidence was handed over to the police.
The case was heard before Magistrate Aaron Bugeja. The majority of hearings have been put off until early March for the purposes of allowing out-of-court settlements to be completed.
4 persons pleaded not guilty, 1 could not be tracked down and another was slapped with a fine for being notified about the court summons but failed to appear. 12 cases have been deferred due to the possibility of out-of-court settlements.
Appearing for 5 of the accused, Lawyers Lucio and Michael Sciriha put forward a request to postpone the case to allow them to “regularise” their clients’ positions. This refers to the aforementioned out-of-court settlements. Dr Sciriha made the case that section 337 of the Criminal Crode stipulates that in the offence of insurance fraud, if payment is effected before judgment this attracts a mitigation of the punishment to be imposed upon.
They also requested that the prosecution quantify exactly how much money the insurers allegedly lost, for the purposes of carrying out negotiations with insurance companies, with the aim of reaching a potential out-of-court settlement. The court gave the lawyers till the next sitting to come up with their conclusions.
One of the accused, 38-year-old Joseph Sultana from Qormi, pleaded guilty to 4 fraud related charges. Mr Sultana defrauded Untours Insurance Brokers a total of€1,100, a representative said.
The other individual who pleaded guilty, a 35-year-old man from Tarxien, may not be named due to a separate case involving a third party. This person pleaded guilty to a total of 6 fraud related charges. A representative from Atlas said that the accused defrauded the insurance company a total of €3,000.
Inspector Rennie Stivala told the court that the accused in this case was cooperative. Magistrate Bugeja however expressed his concern at the fact that the accused is involved in 3 seperate cases. It was noted that the accused did not benefit financially in any of the cases, however the offense had been repeated.
Representing the Malta Insurers Association, Dr Jason Grima asked the court to take into consideration the extensive planning involved in the case.
Magistrate Bugeja was told that one of the accused had repaid the amount owed to Atlas Insurance in its entirety. The accused has not been named due to ongoing investigations.
Defence lawyer Joe Giglio stressed that while there were multiple offenses, his client had repaid the amounts. He also pointed out that where possible his client had stopped the claims.
“We have 22 individual cases. The people you have before you today likely do not know each other. I am confident that the court will treat the cases individually. You’re missing the wood for the trees. Gasan Mamo did not pay anyone for the claim.”
Dr Giglio made reference to a judgement in the case of Lawrence Fenech, a former CEO of Malta Air Traffic Services who had admitted to committing fraud, misappropriation and abuse of public office. Fenech was handed a suspended sentence and ordered to repay the amount defrauded. He was also perpetually interdicted. The magistrate expressed agreement that this should be a benchmark for sentencing purposes.
He also noted that the police record of the accused is clean. The Magistrate instructed the Director of Probation to prepare a report about the accused.
Dr Giglio continued by saying that in the future, it is possible for the accused to be called in to testify against a third party and would not benefit from the reduction in punishment afforded for cooperation.
A claims manager employed by Gasan Mamo Insurance was heard telling the court that the company received a claim in 2013 regarding a collision between a Mitsubishi and a Nissan.
The company came to the conclusion that the two aforementioned vehicles were beyond economic repair. It was reported that no payment had been made and the claim up till now have not been withdrawn.
Statement made by the Malta Insurance Association
The Malta Insurance Association has issued a statement this afternoon in response to today's proceedings. It wrote:
"Today’s arraignments are the latest episodes in the insurance industry’s ongoing battle against insurance fraud, and follow intensive police investigation triggered by state-of-the-art anti-fraud software which motor insurers have heavily invested in. The alleged fraud incidents were a combination of staged accidents, inflated claim requests and the submission of multiple claims with different insures utilising the same damaged vehicles."
"The Malta Insurance Association wishes to take this opportunity to thank the Economic Crime Unit of the Malta Police, particularly Inspector Rennie Stivala and the insurers concerned for their effort and for the strong collaboration which helped achieve these results."
"Insurance Fraud is often perceived as a victimless crime. The reality is very different. The amount of premium paid by policyholders is affected by additional costs induced by insurance fraudsters. Insurers are therefore relying on greater vigilance of suspicious claims to ensure that honest policyholders do not end up subsidizing fraudulent claims through higher premiums."