Detroit auto arsons top U.S., cost $22M; few culprits caught

Bill Eisner Detroit firefighters answer a call about a burning car on Georgia near the Hamtramck border. Last year, 3,300 vehicle arsons cost the city and insurance companies about $22 million.

Fraud adds $130 to each insurance bill

Stalled legislation, controversy blamed for growing problem

By Melvin Claxton and Charles Hurt / The Detroit News

    DETROIT — More cars are intentionally set on fire each year in Detroit than in any other U.S. city. And the numbers are rising, according to a Detroit News analysis of national arson statistics.

    Detroit saw an 18-percent increase in auto arsons over the past decade, a time when most cities reported a drop. Last year, more than 3,300 cars — about nine a day — were intentionally burned, according to fire department estimates and records.

    So severe is the problem that Detroit is one of only a handful of cities to create a full-time auto arson squad. But the persistence of the crime wave has stymied efforts by the four-member team of investigators, formed a year ago, to stop the increase.

    Fueling the fires are many factors, including insurance fraud, a fire department stretched too thin and a justice system that rarely punishes offenders. The problem is compounded by Detroit’s abundance of deserted lots, back alleys and side streets that allow arsonists to operate undetected.

    Detroiters pay a heavy price for the arsons, some of which involve cars from the suburbs burned inside the city limits.

    Car owners in the city pay on average an additional $100 to $130 in premiums to cover losses by insurance companies from arson and fraud, according to the Michigan Association of Insurance Agents. These numbers, along with auto theft and accidents, have helped make Michigan the 15th most expensive state in which to buy auto insurance, according to the National Association of Insurance Commissioners 1999 report.

    “Many people see vehicle arsons as a victimless crime,” says Neal Wisner, senior special agent for National Insurance Crime Bureau. “But insurance companies must figure arson claims into their cost of doing business. Ultimately, this increases the premiums every Detroit car owner pays.”

    Insurance companies pay out an estimated $18 million annually in claims on auto arsons in Detroit and the city spends another $4.3 million putting out and investigating the fires. That’s more than $220 million in the past 10 years.

    Fire department investigators believe that more than half the auto arsons in the city involve people burning their cars for insurance money. The culprits, who often have no criminal history, are rarely caught and almost never serve time in jail, according to court and fire department records.

    “Insurance fraud is the most significant factor in auto arsons in the city,” says arson squad chief Jon Bozich, an investigator in Detroit for 21 years. “I think most people would be extremely concerned if they knew the seriousness of the problem.”

Unit under fire

etroit’s selection by arsonists is no accident.

    Those who burn cars realize the chances of prosecution here are slim. Arsonists have a less than 2 percent chance of getting caught in the city, fire department records show.

    Of the 19,000 estimated incidents of auto arson insurance fraud in Detroit over the past decade, fewer than 10 resulted in an arrest, conviction and jail time, according to fire department and court records.

    “In all my years of investigating auto fires in the city, I think I can recall only one case where the owner of the car actually went to jail for insurance fraud,” says Walter Herndon, whose private detective agency has investigated more than 30,000 auto fires in the city for insurance companies since 1983. “And in that case the woman wouldn’t have gone to jail if she had accepted the plea agreement offered.”

    The problem extends well beyond lax punishment.

    By its own admission, the Detroit Fire Department’s efforts have been ineffective. A year ago, the department tried to change that by forming a special four-member car arson squad.

    But with one investigator for every 1,000 car fires, the unit has failed to make a serious dent in the problem. The numbers tell the tale.

    There have been more than 3,000 suspected auto arsons since the unit was created. But arson squad officials concede the unit has fully investigated fewer than 400 cases, obtained only 104 warrants and arrested just 53 people.

    Lack of money and people are to blame, Bozich says.

Morris Richardson II / The Detroit News Lt. Steve Stone, left, and Lt. Gery Victor look for clues around a burned-out Jaguar in Detroit. Investigators say more than half of the cars are torched for insurance money.

    The auto arson squad has no budget — the salaries of its investigators are paid through a much larger arson unit that handles everything from house to boat fires. Every piece of equipment the auto arson squad uses, including cars and computers, had to be scavenged or begged for from insurance companies or other fire department units.

    The lack of resources and staff place the unit at a disadvantage and help make Detroit a magnet for arsonists, fire officials and insurers say.

    “People know the chances of prosecution in Detroit are slim,” Bozich says. “We have had people bring their cars from other states and even Canada to burn here.”

    Investigators say they have seen cars from Ohio, Wisconsin and Illinois.

    The city also attracts arsonists from smaller neighboring suburbs, where police face fewer crimes and can more aggressively investigate incidents of auto arson.

    “We have seen a significant number of fraudulent claims from customers who live in the suburbs who have had their cars burned in Detroit,” said David Hurst, national spokesman for State Farm Insurance.

    One possible solution to the auto arson problem — talked about for years — has failed to materialize. Detroit fire officials have lobbied Lansing for a proposed law they say would curb these fires.

    But the bill, which would require car owners to report in person to the fire department and sign a sworn statement that they didn’t burn their cars for insurance money, has stalled in Lansing for more than two years.

    The proposal is opposed by the powerful trial lawyers association lobby and some in the insurance industry. Trial lawyers see it as an encroachment on personal rights and insurance companies see it as bad public relations.

    Still, Bozich says the law is desperately needed.

    “Most of the people involved in this type of insurance fraud are not criminals,” he says. “When they realize that they will have to come down to the fire department and sign a sworn statement to get their insurance money, many of them will come to the conclusion that burning their cars just isn’t worth it.”

Catching the arsonists

hile fire investigators believe most arsons involve insurance fraud, they say making a criminal case is often difficult.

    “These cases take time to work,” says Capt. Earl Sanders, supervisor of Detroit’s auto arson unit. “You have to work the fire scene to gather evidence and eliminate possible natural causes. You have to have the evidence tested and results analyzed. Witnesses must be interviewed. If you think you have a case, you have to prepare a report for the prosecutor who must decide whether to issue a warrant. The whole thing could take months for one case.”

    Because so many otherwise ordinary people are involved in this crime, arson investigators say it’s impossible to develop a profile of the typical insurance cheat. The list of usual suspects, to hear investigators tell it, is unusually long.

    “It could be anyone,” says Pat Parr-Armelagos, section manager of special investigations for State Farm Insurance Co. “I had a case of a successful doctor who had his car burned because he was going to be penalized by the leasing company for being over the mileage limit. We are talking about no more than $1,500 in penalties at the most. We see cases like this all the time.”

    The doctor wasn’t prosecuted because he agreed to testify against the man he hired to burn his car. Detroit arson investigators say this is not uncommon.

    “Whenever possible we try to get the torchers,” Bozich says. “The car owners typically are not criminals, and once they are exposed they will lose the insurance money anyway.

    “The way we figure it, they are out the insurance money and they have lost the car. That’s usually punishment enough for them not to even think about doing something like this again.”

    But because so few car owners or arsonists ever get caught, Bozich says there is no shortage of people willing to burn a car for $200 or $300.

    “In a typical case,” he explains, “a guy is in a bar complaining of having to pay the mileage penalty because his lease is nearly up and then someone says, ‘I know a guy who can take care of it for you.’ Often, it’s as simple as that.”

    Simple and frequent.

    “It’s a vicious cycle for us,” says Capt. Earl Sanders, supervisor of Detroit’s auto arson unit. “Because we’re already swamped with car fires, people just figure they can dump even more on us and we won’t be able to investigate them.”

Beyond insurance fraud

nsurance fraud investigators say their work is further complicated by the fact that there are many other reasons people burn cars.

    “Even after you determine an auto fire to be arson, you can’t assume it’s insurance fraud,” Bozich says. “A car thief will burn a vehicle after stripping it in the hopes of destroying fingerprints and other evidence. And we have seen cases where cars were torched in revenge or jealous rages.

    “I remember right after the movie Waiting to Exhale came out, we had several cases of women torching their husband’s or boyfriend’s car.” In a scene in the movie, a wife sets her husband’s car on fire after discovering he was having an affair.

    “We have to investigate these cases, too,” Bozich says. “We can’t just say we are only focusing on cases where people are trying to rip off their insurance.”

    Auto arson squad supervisor Sanders says the reality is that not every case can be investigated.

    “We choose a case to pursue based on the likelihood of solving it,” he says. “It doesn’t matter if it’s insurance fraud or some other crime. But because insurance fraud makes up such a high percentage of our cases, I can’t see things getting better without the manpower and laws we need to fight the problem.”