Introduction

Operation Herring was commenced to target an organised crime syndicate defrauding IAG through the lodgement of false scooter accident claims. The objective of the operation was to disrupt and dismantle the syndicate in the first instance and ultimately gather sufficient evidence to pursue a criminal investigation.

Operation Herring successfully identified 157 fraudulent claims. Fraud losses to IAG amounted to $376,796.83, prevented losses totalled $29,516.79. The projected saving over the proceeding 12 months following dismantling of the syndicate equated to $203,156.81. A criminal investigation ensued, culminating in an offender receiving a custodial sentence of three years and nine months imprisonment.

 

Detection

A cluster of three scooter claims which shared various commonalities and contained proof of loss documents with discrete irregularities was first detected within IAG’s claims department. Anomalies identified included: the use of similar invoice templates; recycling of mobile numbers for invoices against different business names; and incorrect ABN numbers on invoices. A further alert was received by the Fraud Hotline from the Insurance Fraud Bureau of Australia (IFBA) which identified a person of interest (POI), an address of interest, several suspect ABNs, phone numbers, and scooter registration numbers exhibiting a similar modus operandi (MO) previously identified by the IAG claims team.
 

Intelligence

The IAG Intelligence team produced and ran a query, based on known data points of interest, through IAG’s main data hub aimed at detecting claims containing the identified phone numbers. The initial data query detected 14 claims linked to this syndicate. The scripting was subsequently run on a weekly basis to detect any new claims. A profile of the POI was produced based on information gathered via multiple sources, including internal systems, Equifax and Open-Source Intelligence (OSINT).
 

Modus Operandi

The POI incepted motor policies under false identities and subsequently lodged a claim within one to three months. The fraudulent claims involved at least one scooter in which the alleged loss event (usually a minor traffic accident) had been fabricated to claim damaged personal items and receive a quick cash settlement into numerous, repeating bank accounts. The documents subsequently submitted by the claimant purporting to substantiate the alleged personal losses were manufactured, recycled and/or fraudulent. The scooter was never presented for assessment, nor any repairs pursued.
 

Investigation

A taskforce was formed in October 2021 consisting of one triage consultant, three investigation consultants and three intelligence analysts, led by two Investigation Specialists. Strategic meetings discussing the investigative plan and the ongoing direction of the investigation were held fortnightly. Investigative analysis of the known suspicious claims was undertaken at the outset and resulted in identification of further recurring data points, such as mobile numbers, scooter registration numbers, addresses and bank accounts. These recurring data points were run against internal systems, leading to the identification of 137 claims associated in some way to this syndicate.

A sample of the suspicious claims was thoroughly examined, determining that the customer name and address were highly likely falsified. The preferred method of contact for each of these identities was via email. A tactical decision was made to send written correspondence via postage to each customer’s address notifying them of our intent to investigate their claim in an effort to confirm whether the corresponding names and addresses were real. Majority of our letters were returned to sender, confirming our suspicions. Additionally, a number of customer addresses were canvassed in the western suburbs of Melbourne, revealing many addresses were not residential.

Attempts were made to contact the POI via email in order to complete full factual investigations on five unpaid claims, however the POI failed to respond and each of those claims were abandoned.

Recurring and fictitious information

Despite the limited avenues of enquiry, IAG had evidence that the claims subject to investigation were fraudulent through the use of recurring credit card numbers used to pay for policies, repeating mobile numbers, addresses, and scooter registration numbers associated with different identities. Policy payments were compared, exposing the use of approximately 10 credit cards across the 137 policies. Majority of mobile numbers provided were disconnected or not in service, and claimants’ identities did not reside at the reported addresses. Motorweb searches on the recurring scooter registration numbers found no matching registration details in the alleged registration state.

Additionally, the same bank accounts were settled against various different payee names. Some accounts were used against as many as 17 identities and were paid in excess of $40,000.¹ This sum is significant when considering the average claim cost of approximately $2,500. A majority of the bank account BSB branches cited by the POI were concentrated around the western suburbs of Melbourne, even when the alleged claimant lived interstate.

Proof of loss

Further investigative analysis revealed the use of recycled images of damaged protective gear coupled with suspicious invoices as proof of loss. The images were recycled across a number of claims as evidenced in the examples below.

The invoices submitted by the POI as proof of ownership contained logos and location details matching legitimate businesses. Notwithstanding, the examination of all invoices uncovered a number of administrative errors including, incorrect or missing ABNs, missing invoice numbers, inaccurate calculation of the Goods and Services Tax (GST), spelling errors, misalignment, varying fonts within the one invoice and repeated use of invoice layout. Examples below.

Enquiries with a sample of suppliers confirmed the invoices were not legitimate, supporting our concerns that they were fabricated.

The taskforce developed and successfully facilitated training to the relevant IAG motor claims teams to improve awareness and detection of scooter claims that fit the Operation HERRING MO. Recommendations were made to withhold any cash settlement to claimants for personal items until such time that their vehicle was assessed and authorised, or a total loss recorded.

Police referral

A decision was made that sufficient evidence had been gathered to warrant a fraud referral to police. The taskforce began a lengthy, and labour-intensive task of examining all 137 associated claims followed by compilation of all evidence pertaining to each claim.

The POI initiated their fraudulence in August 2020, growing the number of fraudulent claims exponentially, peaking between August 2021 and October 2021, before abruptly halting the fraudulent behaviour as of 22 October 2021 due to the ensuing investigation.² POI fraudulent behaviour was disrupted, and no new claims were lodged between November 2021 and February 2022. Notwithstanding, the POI resumed the fraudulent claiming behaviour in March 2022 for a short period while police assessed IAG’s brief of evidence, till his arrest in August 2022. During this time, a further 20 fraudulent claims were lodged by the POI bringing the fraudulent claim number to 157.

A brief of evidence was submitted with corresponding police statement detailing the fraudulence committed against various IAG brands across 157 claims to the Victoria Police Financial Crime Squad on 22 March 2022.

Outcome

A police investigation ensued and on 23 August 2022, the POI was arrested and subsequently charged with 137 counts of obtain financial benefit by deception and remanded in custody. Further evidence was submitted to Victoria Police Financial Crime Squad pertaining to a further 20 fraudulent claims linked to POI, resulting in a total of 157 charges to which he pleaded guilty.

An outcome letter was sent to the POI via legal representative on 23 November 2022 declining 157 claims for fraudulent misrepresentation pursuant to Section 28(2) of the Insurance Contracts Act (1984), and fraud, pursuant to Section 56(1) of the Insurance Contracts Act (1984).

On 31 August 2023 the offender received a custodial sentence of three years and nine months imprisonment, with a mandatory 15 months to be served before eligibility for parole. The County Court Judge also noted that the offender would undoubtedly face deportation at the conclusion of his time served.

1 See Chart 1: Sum paid and count of claims paid into recurring bank accounts.

² See chart 2: Visual offending behaviour over time.