By JOEL BERG, a freelance journalist and college professor.
Travis Magdalena Scott succeeded in defrauding a U.S. insurer out of millions of dollars, but he was unable to fool an alert employee at a Canadian pharmacy.
In late December, Scott tried to pass a forged prescription on to the pharmacist, but was arrested by Winnipeg police soon after, according to a press release from the Winnipeg Police Service.
So ends the tale of a particularly brazen insurance swindler.
The 34-year-old Scott, of Eden Prairie, Minn., had fled to Canada in early September while awaiting sentencing on one count of wire fraud and one count of money laundering. A few years ago, he had submitted false claims of lightning damage to his company's computers, netting a payout of roughly $11.5 million from Zurich North America. But before a judge could mete out jail time, Scott allegedly faked his own suicide, left the United States in a Piper aircraft and tried to start a new life in Canada.
"I have had a number of people who haven't shown up at sentencing because they get scared," said Marsh Halberg, Scott's attorney in the U.S. "But usually they're just over in their mom's basement. They don't want to go. I've never had one with allegations that are this elaborate."
Winnipeg police said they found a loaded handgun and more forged prescriptions in a vehicle linked to Scott. He also was carrying IDs under other names.
A search of Scott's Winnipeg apartment turned up additional forged prescriptions, about $35,000 in Canadian and U.S. currency, gold coins worth about $85,000 and more than $750 in silver coins, as well as computer equipment, assorted medications, bear spray and a Taser.
The insurance fraud dates back to 2008. Scott claimed a lightning strike ruined supercomputers at his business, Security Management Technologies. The business was covered by a policy taken out a year earlier with Zurich North America. A spokesman for Zurich declined to comment.
The insurance company ultimately paid Scott $9.5 million to replace his computers and roughly $1.9 million for business interruption but he pocketed the money rather than buying new computers. He admitted falsifying receipts for the replacement computers, and he had falsified tax returns submitted as part of the business-interruption claim, said Halberg, his attorney.
Scott instead spent much of the money on himself. In late 2010, federal investigators seized three aircraft, a boat and three cars, including a 1981 DeLorean (the car from the "Back to the Future" movies), from Scott's home and an airport hangar.
Halberg said his client repaid about $5 million and had been cooperating with authorities.
"We really worked hard ... " Halberg said, "in trying to maximize the liquidation of assets to put more money on the table."
Sometimes, the more brazen the fraud, the easier it is to pull off, said Frank Scafidi, spokesman for the National Insurance Crime Bureau in Des Plaines, Ill.
While technology has its place, investigators on the ground are often the most effective way to discover these crimes, Scafidi said.
"[Insurance companies] rely more on applications and technology to find fraud. Some companies do that and feel the results are fine," he said, noting that others rely on sending out investigators for face-to-face contact.
Insurers are also under pressure to deliver quick payments. If a claim appears fraudulent, "then the race is on. Can you develop enough information to show it is fraud before the clock strikes midnight and you have to pay?" Scafidi said.
January 16, 2012
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