Many people accept the high cost of auto insurance as a necessary cost associated with owning a car in Massachusetts. The average cost of an insurance premium varies greatly by city and even by zip code. If people were able to fraudulently give a home address in a lower cost insurance area, they could save thousands. That is just what an insurance fraud scheme touted to individuals in New York, to claim residence in lower cost areas of Western Massachusetts to save them big money on their auto insurance premiums.
About 40 Chinese nationals are accused of defrauding auto insurance companies to the tune of hundreds of thousands of dollars by fraudulently claiming to live in Massachusetts. The individuals were residents of New York, but claimed to be living in Greenfield, Northampton, and Eastampton. The scheme allegedly went on for six years before being discovered by a team of government investigators. The Northwestern District Attorney (NWDA) cites this case as the largest car insurance fraud investigation and prosecution in Western Massachusetts history. A total of nearly 300 indictments have been handed down in association with this case.
According to the NWDA spokesperson Mary Carey, the indictments came after a year-long investigation involving the Insurance Fraud Bureau (IFB) of Massachusetts, Northwestern District Attorney's Office, Massachusetts State Police, and the Department of Homeland Security. Several insurance company special investigation units were also involved. The IFB is a public-private investigative agency which refers their investigations to the appropriate agency for criminal prosecution. It gets its funding from Massachusetts auto and workers comp insurers.
The individuals were turned onto the scheme by an ad placed in a New York-based Chinese-language newspaper. Lefen "Helen" Chen, of Flushing, New York, placed an ad in the paper with the promise of lower car insurance rates. After contact, Chen would travel with the person to Massachusetts to help them fill out their insurance applications, and affirm that the person lived at the address provided, instead of their actual New York addresses. Some of the given addresses proved non-existent.
Some of the individuals charged with defrauding the insurance companies have gotten a lucky break. In exchange for paying the difference in what they would have paid for auto insurance in New York, the prosecutor has agreed to drop the charges. This amounts to payments from $1,400 to $875. According to carinsurance.com, the premiums in the Northampton and Greenfield areas average about $800 or $900. New York premiums vary greatly by zip code, with parts of Manhattan averaging $2,000, and areas of Brooklyn averaging as much as $4,000.
Chen, who allegedly headed the scheme, has not been so lucky. Chen has been charged with 160 counts of fraud, conspiracy, and suborning perjury (procuring another person to commit perjury). She has been held on $100,000 bail at the Massachusetts Women's Correctional Institute in Chicopee since her arraignment in August. Chen and her lawyer Jeffrey Brown have asked Hampshire Superior Court Judge Mary-Lou Rup to schedule a date for a possible plea deal.