Policing Toronto raid highlights high cost of insurance fraud

(Timothy Appleby)

Sometimes the auto “accidents” were crudely staged, police said, but more often there was no accident at all.In early-morning raids across the Toronto area – but focused chiefly on Scarborough’s Tamil community – 37 suspects were scooped up Thursday and charged in one of the largest alleged car-insurance scams seen in years. Arrest warrants were issued for several other people, in what authorities said was an orchestrated, multi-million-dollar rip-off involving about 10 organizers and more than two dozen lesser players. In large part, the 77 incidents scrutinized by police in an investigation dubbed Project Whiplash, involved phony claims for damaged vehicles. The alleged scam also encompassed four rehabilitation clinics and six people associated with them, including paralegals, all charged under Ontario’s Insurance Act with submitting false invoices to insurers.

They are: the McCowan Rehabilitation Clinic, the Ontario Rehabilitation Clinic, the Physiotherapy Clinic, all of Scarborough; and the North York Health & Rehabilitation Centre.

“Staged collisions are a major issue that affect all of us,” said Inspector Gord Jones of the Traffic Services Unit, which together with the Financial Crimes Unit (formerly the fraud squad) headed up the year-long investigation.

Fraud costs the Canadian insurance industry a “staggering” $1.5-billion each year, he said, citing statistics from the Canadian Coalition against Insurance Fraud, and it accounts for 10 to 15 per cent of a law-abiding motorist’s annual premium.

“Insurance criminals take money right out of your pocket,” said Insp. Jones.

Add to that, he said, the costs of policing, health care and the court system.

Along with Police Chief Bill Blair, Richard Dubin, vice-president of investigative services at the Insurance Bureau of Canada, echoed those concerns.

In all, the alleged scheme encompassed estimated losses of between $4-million and $5-million, Det. Sgt. Cameron Field said.

Most of those arrested Thursday were people who had allegedly been persuaded or paid to submit phony medical claims stating they had been injured in a car accident, and in some cases, each of the so-called victims netted $50,000 in bogus claims.

“Most of the persons involved in this investigation were from the South Asian community. … They are being exploited by members of their own community, don't get yourself involved,” Det. Const. Kajamuganathan Kathiravelu said, repeating his message in Tamil.

The investigation was launched in 2009, when two vehicles were brought in to the east-end collision reporting centre and “something just didn't seem right,” Insp. Jones said.

Some of those arrested in the raids were brought to the 43 Division police station on Lawrence Avenue. Others were processed at the Traffic Service’s Unit’s central office on downtown Hanna Avenue.