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Arrests Made In Home Insurance Fraud Ring

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South Florida Crime

MIAMI (CBSMiami) — Nearly two dozen people have been arrested after the state went after a major home insurance fraud ring operating in South Florida.

At a news conference Tuesday afternoon, Miami-Dade State Attorney Katherine Fernandez Rundle and state Chief Financial Officer Jeff Atwater said 22 people were charged in Operation Flames and Floods.

Fernandez Rundle said the group set fires and created floods in a number of homes in the Miami over the last seven years and made millions by filing fraudulent claims.

The alleged ring leader of the group Jorge Fausto Espinosa Sr., a public adjuster, reportedly received 20 to 30 percent of each fraudulent claim. Espinosa and his wife are facing up to the 30 years in prison if convicted.

Prosecutors said the ring included crooked contractors who recruited money hungry homeowners to make the fraudulent claims.

“The crimes outliined in this particular insurance fraud operation that we call Flames and Floods use both arson and deliberate flooding as their tools to defraud various insurance carriers out of approximately $7 million,” said Fernandez Rundle.

So how did the state find out about the ring? Fernandez Rundle said a man facing federal charges tipped them off.

“There was someone who was already being prosecuted who was looking at federal prison time who said I know some people who have been doing fraudulent claims and I can give you some information,” said Fernandez Rundle.

Investigators said the ring would decide in advance whether it was better to fake a fire or flood to see which would be a bigger claim. They were good at it, according to the state’s Fire Marshal’s Office.

“This alleged racket was pretty good at setting the fires, so that even experienced fire investigators at first couldn’t tell they were fraud,” said Joe Steadman with the Fire Marshal’s Office. “In doing our research, the fires were set in such manner that even the local fire department couldn’t tell and not know to call a fire investigator to the scene.”

Atwater said it’s crimes like these that all homeowners pay for.

“That money, that $7.6 million is embedded in every one of our fellow neighbors insurance costs. They’re the ones picking up the tab. They’re the victims of this crime and it is time they got a break,” said Atwater.

Prosecutors said they still have arrest warrants out for an additional seven people they suspect were involved in the ring. At least one of those people is believed to have fled the country.

Last month, Atwater announced the arrests of 12 Miami residents in their ongoing insurance fraud investigation known as ‘Operation Leaky Pipes’. The investigation uncovered a scheme between a licensed public adjuster and a plumber to coach homeowners on how to file fraudulent insurance claims for pre-existing or non-existent water damage. The homeowners filed fraudulent claims in an attempt to claim money for home remodeling.

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