‘Crash for cash’ fraudster jailed for 21 months
11 October 2012
The head of an accident management company who processed fraudulent insurance claims has been jailed for 21 months.
The sentencing of Asif Mallu, along with an order to repay £7,250 concludes one of the country's biggest and most successful investigations into a ‘crash for cash’ scam.
Mallu of Bolton, pleaded guilty to conspiracy to commit fraud at Manchester Minshull Street Crown Court. Under the Proceeds of Crime Act, it was heard that he benefited from his criminality by £12,107.50. Mallu has been ordered to pay a Confiscation order of £7,250 and has been given 28 days in which to pay.
Mallu ran 24/7 Direct Claims Ltd, a Bolton company which managed insurance claims. He organised 10 fraudulent claims between May and December 2005 following collisions deliberately caused by a man called Mohammed Patel (convicted in 2009), acting within an organised crime network.
The scam ensured that all of those involved would earn money at the expense of the other parties' insurers. In October 2008, Patel admitted being the driver in more than 90 forced collisions between 2005 and 2008, all of which led to exaggerated and fraudulent insurance claims.
The claimants would earn compensation for personal injuries and Patel would earn a fee for driving the cars. The biggest profit, however, went to claims management companies such as 24/7, who processed the claims. The company made money from solicitors' referral fees, courtesy car hire and the storage and recovery of cars involved in the collisions, which on many occasions were never even needed.
The police investigation, Operation Contact, supported by the Insurance Fraud Bureau (IFB), exposed the scam which potentially could have led to insurers having to pay out millions of pounds in false claims.
In 2005, workers at an office block at the Eden Point roundabout on the A34 in Cheadle became suspicious at the alarming regularity with which collisions were taking place at the same spot on the roundabout. They noticed the collisions were always at low speed, and often, the same man was driving.
AXA insurance, one of the companies affected by the scam, investigated a number of the claims. In January 2008, the findings were presented to Greater Manchester Police.
The investigation revealed Patel deliberately caused collisions for whichever client was willing to give up his car keys and insurance details. He would be paid a fee while the claimants demanded compensation for personal injury, courtesy cars and legal fees at the expense of the other party's insurers.
Operation Contact found that Asif Mallu processed five of the Eden Point roundabout claims and a further five at nearby roundabouts. The company used an engineer to examine the cars involved in the collisions. To back up the claims, reports from the engineer exaggerated and in some cases made up the damage that was caused. An examination of 24/7's finances showed the company attempted to make thousands of pounds from these claims.
Chief Inspector Mark Dexter said:
"Mallu's company was registered under the terms of the Ministry of Justice, with a visible business premises in Bolton, and yet this was all a front for fraud. A long and complex investigation has proven that he profited significantly from the scam.
“This result sends a clear message to others that if they intend to defraud insurance companies the consequences are severe. We also want to make it clear that while insurance companies are victims, the innocent drivers involved in these collisions were made to feel as though they were in the wrong. The scam left these victims feeling cheated and violated, often with their premiums increased, so the idea that this is a victimless crime is nonsense.
"This sentencing concludes Operation Contact, which I can safely say has played a profound role in the fight against insurance fraud, but the officers who have been involved are now continuing to tackle organised road crime.”
Phil Bird, Director of the Insurance Fraud Bureau (IFB), said:
"Today's verdict concludes this landmark joint-operation between Greater Manchester Police and the IFB, sending a clear deterrent message to fraudsters targeting the insurance industry - you will be caught, and you will face the consequences of a criminal record, heavy fines and imprisonment.
"The IFB uses highly-sophisticated counter-fraud software to interrogate over 130 million insurance records on a daily basis. As a result, IFB fraud analysts proactively uncover suspicious networks of people, policies and claims and work alongside police forces up and down the country to bring criminals to justice.
"Honest policyholders, who ultimately pick up the bill for fraud through increased premiums, can report insurance fraudsters through the IFB's free and confidential Cheatline on 0800 422 0421, or report online at www.insurancefraudbureau.org."
Mark Beales, Director of Law Enforcement Liaison at Bolton-based law firm Keoghs which represented numerous insurers, said:
"So called 'professional enablers' are the conduit for fraudsters to pursue fraudulent insurance claims. They are the portal for fraud through which claims are legitimised allowing fraudsters to succeed. Dealing firmly with these facilitators is key and the conclusion of Operation Contact sees the end of a very successful investigation demonstrating how working collaboratively with the police can achieve positive results."
As a result of Operation Contact, 50 people have been convicted, including Mohammed Patel of Bolton who was sentenced to four and a half years in prison, having pleaded guilty to conspiracy to commit fraud.
Rezwan Javed and Rehan Javed, both of Burnley, Lancashire, were found guilty after a trial at Manchester Minshull Street Crown Court of conspiracy to defraud and possession of an article for use in fraud. Rezwan Javed was sentenced to six years in prison and Rehan was sentenced to five years in prison.
Under the Proceeds of Crime Act, it was heard that they each benefited from the scam by £995,915.27 and were ordered to pay £156,000.
The Javed brothers ran North West Claims Centre Ltd, a Burnley company which managed insurance claims. They organised fraudulent claims following collisions deliberately caused by other members of an organised crime group, including Mohammed Patel.