Faking Death: A Growing Insurance Scam?

For a select group of individuals, working hard for a living is too difficult. These fraudsters would prefer to “get rich quick” through more devious and expedited means. Faking their deaths, they collected hundreds of thousands of dollars in life insurance and lived happily ever after — almost. These insurance thieves were nabbed in the act of staging their deaths or sicknesses to collect their retirement early:

Death Scams

  • Jennifer Lynn Eden: In South Carolina, a 33-year-old woman by the name of Jennifer Lynn Eden falsely reported in 2008 that she had six months to live as she was dying of Acute Monoblastic Leukemia. Her policy terms allow for collection of early payments if the holder has six months or less of life expectancy; under this pretense, Eden allegedly received $500,000 in compensation. The accelerated death benefit requires a doctor’s confirmation of illness or sickness and it was discovered that Eden had forged the signature of her doctor. According to Schuyler Kropf with The Post and Courier, her first court appearance is slated for May 22, 2012 where she will face charges for life insurance fraud, as well as falsely representing herself as a “financial expert and businesswoman” to an unnamed victim who reportedly invested $100,000 in her company, Entsminger Holdings LLC. Furthermore, she was accused of misappropriating that money for personal use. Charged with mail fraud and wire fraud, Eden could potentially be put in prison for 20 years and be fined $250,000 on both counts.
  • Hugo Sanchez: Following a six-year international investigation, Hugo Sanchez was finally located and convicted for an insurance scam worth nearly $20 million by faking his death and escaping to Australia, the Huffington Post reports. Sanchez and his wife found themselves buried in debt in 2005 and planned an elaborate hoax to collect on his insurance policy. Prior to fleeing the country, Mrs. Sanchez reportedly traveled to their hometown, Farnham, Surrey, to attend his “funeral.” Upon providing a death and cremation certificate, she was awarded a death benefit payment of nearly $20 million.After rumors circulated from friends and relatives that Sanchez was indeed alive and located in Costa Rica, an insurance investigator was hired by the larger companies involved in the scam to locate the fraudulent Sanchez. When the detectives discovered fingerprints belonging to Sanchez on his own death certificate, the couple was jointly charged with fraud.At Heathrow Airport, Mrs. Sanchez was arrested en route to her sister’s wedding and admitted the location of her husband. After pleading guilty on all six fraud charges, she was given a two-year prison term sentence. The U.K. Government has requested the extradition of Sanchez in order to process his charges. Authorities say they are certain of a lengthy incarceration but the case is still being built to collect the plethora of evidence against Sanchez.
  • The Teacher and The Funeral Parlor Owner: Although not faking their own deaths, a 35-year-old teacher and 37-year-old funeral parlor owner used the deaths of others to scam insurance companies and collect on policies. Working in collaboration, the duo claimed insurance from companies associated with the dead bodies from the funeral parlor. The teacher apparently stole ID books from people to process the funeral policies after eight months, and then claimed that the victim had died of natural causes. Her partner in crime at the funeral parlor would release a body of the same age as the one insured from the mortuary. A doctor, unaware of the scheme, would pronounce the death of natural causes after inspecting the body.The plan worked without a hitch for several years until a police officer who wished to remain unnamed discovered she had been pronounced dead. Following an extensive three-month investigation, both suspects were found and arrested on the charge of fraud and money laundering. Their activity had generated $1.5 million in revenue in laundered money. The investigations are currently ongoing and as of yet, a court date has not been set for the pair of scammers.

Impact on Insurance Companies

FoxBusiness.com released an article about the trend of faking deaths as a means to collect big money on policies and the impact such activity has on insurance companies. Unfortunately, the difficulties associated with this kind of fraudulent activity make it hard to significantly discourage the trend from continuing. Even in the U.S., prosecutions are as unlikely as they are likely, even though the fraud method is clearly a felony.

Often times, fraud involves multiple parties and occurs internationally. Even dealing with false death certificates poses a significant problem as less developed countries are ripe with bribery and document forgers. Insurance companies are primarily focused on dealing with the area that they have the strongest influence over, handing out million-dollar policies. They do their best to prevent scams and forged documents from being used to collect on expensive policies. Despite their best efforts, they still lose millions each year to fraud.