By Emmet Pierce/MoneyTalksNews
Have you ever wondered about cashing in on life insurance without actually dying in the process? Industry experts say plenty of people try it.
Exactly how many is hard to say: The insurance industry doesn't keep data on how many people fake their deaths — or at least doesn't release the information to the public.
Elizabeth Greenwood, author of "Playing Dead: A Journey Though the World of Death Fraud," estimates there are several hundred such cases each year.
In 2016, the Coalition Against Insurance Fraud (CAIF) conducted a survey in which insurance companies were asked if the faking-a-death problem was slight, moderate or severe.
"Fake death fell into the moderate category," said Dennis Jay executive director of CAIF, which is an alliance of consumer groups, insurance companies and government agencies.
"We are seeing a fair number of them," Jay said.
"It happens more than the insurance carriers are comfortable admitting," Steven Rambam, the director of investigative agency Pallorium Inc., who says he's investigated hundreds of such cases during a decades-long career. "They don't want to give anybody ideas."
Tracking mysterious death
Because life insurance payouts can amount to hundreds of thousands of dollars, even a few fraudulent claims can have a financial impact on an insurance company.
So when policyholders die mysteriously, carriers typically hire investigators to look into it.
Often, these suspicious deaths involving U.S. residents occur in underdeveloped countries, where fraudulent death certificates are more easily obtained, according to Jay.
Perhaps even more difficult for the fraudsters than faking the death is staying out of sight after convincing people that they are dead.
Unless they cut their ties with everyone they know and care about, they risk detection by life insurance investigators, Greenwood said.
Not everyone is capable of doing that, the author explained. The lure of friends and family often proves to be too strong to resist.
"The biggest question is, 'Can you really walk away from everyone and everything in your life?'" she said.
Fake death as cottage industry
Another common variation on life insurance scams surfaced in the late 1990s and early 2000s, according to John DeMarr, a California-based investigator who works for insurance companies.
Those cases often involved recent immigrants to the U.S. who committed life insurance fraud with the help of friends and relatives in their countries of origin.
"They would buy life insurance and then go back home and stage their own accidents," he said. "It was so bad there were entities out there selling death kits showing how to get your own death certificate."
In parts of Asia and South America, officials could be bribed to produce paperwork to document a staged death. The families of the insured sometimes would present insurance companies with video recordings of funeral marches as evidence that a death has occurred, DeMarr said.
In such cases, there often isn't a body available to enable investigators to confirm the identity of the deceased. Sometimes insurers are told that the body was cremated immediately following the death. Another ruse is saying that the deceased died at sea.
"Some investigations I have handled for insurance companies or families [involved] persons on vacation who slipped and fell into the ocean," DeMarr said. "There was no trace of anything."
But carriers are very good at tracking down people who have assumed new identities after faking their deaths, said DeMarr.
Once investigators are on a case, they use every tool at their disposal to determine what happened. One thing they look for is a motive for insurance fraud. Often people disappear to avoid criminal prosecution or to escape debts. If someone dies a few months after taking out a large life insurance policy, it raises a big red flag. Investigators frequently monitor the activities of insurance beneficiaries to see if they are in contact with person who allegedly died.
"The insurance industry is a for-profit business," said David Cohen of Investigative Resources of Texas. "Insurance companies will go as far as digging up a gravesite to find out if there is something in that box. They do not mess around."
The difficult art of invisibility
Disappearing involves more than staying in hiding. It usually means acquiring fraudulent identification papers in order to find a new job, rent or buy a home, or open a bank account under a new name.
After faking death, the "deceased" can never contact old friends or visit the places where they once lived without risking capture. That means never attending another birthday party, graduation or wedding anniversary with friends and family.
When perpetrators are caught, they often end up serving jail time for the fraud plus the crimes they committed in the process of creating their new life.
"If you get caught, you will go to prison," said Cohen. "It generally is up to a state attorney general whether he is going to prosecute the case. You are definitely subject to criminal prosecution."
One example of life insurance fraud that ultimately failed is the case of Jose Lantigua, a 63-year-old Jacksonville, Florida, businessman who faked his death in Venezuela to escape financial problems. The Florida Times-Union reported that his family had attempted to collect on $6.6 million in life insurance.
Lantigua had disappeared in 2013 during a trip to South America. He reportedly told associates that he was traveling there to receive treatments for a brain infection. When he was arrested, he was living under an assumed name in a North Carolina home owned by his wife.
Lantigua was sentenced in February 2017 to 14 years in prison for a several crimes, including bank fraud and identity theft. His wife was placed on probation for conspiring to convince people that Lantigua was dead.
There's no way to know how many people are living in hiding after faking their deaths, Greenwood said. It's like being in a witness protection program without the support of law enforcement agencies. You are on your own and very much alone. The person you were no longer exists.
"If you successfully fake your death, you're just considered dead," she said.
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