Flames, floods engulf Florida homes in adjuster’s $14M plot

Corruption came naturally — and prolifically — to public adjuster Jorge Fausto Espinosa.

The South Florida man recruited dozens of homeowners to burn or flood their places for about $14 million of inflated insurance claims as Espinosa helmed one of the most legendary adjuster plots in a state where brazen insurance scams sprout like sawgrass.

Espinosa earned a percentage of the insurance payouts he lined up for client homeowners via his firm, Nationwide Adjusters. The bigger the damage, the fatter his insurance take — around 30% of the payout.

Espinosa inflated claims like a hot-air balloon. He was adept at manufacturing damage to homes. An insurance insider, Espinosa gamed the insurance system like Picasso colored canvasses.

He paid a squadron of marketers to recruit homeowners. Fires were set and pipes clogged, all to seem like an innocent home accident. Espinosa then pushed the insurers hard for overblown claims payouts.

Related:  Courts to determine allowable evidence for suits involving insurance claims

Free kitchens lured homeowners

Homeowners gladly signed onboard, encouraged by the lure of free kitchen or home remodeling, all paid for by their unsuspecting insurers.

Some claims were rigged fires or water damage, depending on which would net the largest claim payout. The arsons resembled electrical, kitchen and vehicle fires in homes or garages. Water damage looked like faulty water lines or clogged sewer lines. Espinosa and a crony stuffed small children’s dolls into one drain, then demanded more than $200,000 for water damage to the kitchen.

In another case, Espinosa placed bed sheets, stuffed animals and clothing under a Christmas tree and ignited the pile with a propane torch. “Wow! Look at my masterpiece!” Espinoza told a cohort while watching the fire spread. The fire earned a payout of more than $317,000.

Another home absorbed fire damage thusly: Espinosa went to a grocery store, bought a frying pan, lard and croquettes. He put half the lard in a frying pan and then used a paper towel to spread lard on the kitchen cabinets. He told the homeowner to wait a few days, cook croquettes and leave the stove on. But a temperature switch on the oven prevented the fire. Espinosa then returned, bought a new stove, installed it and told the homeowner the same thing.

This time it worked. The insurer paid nearly $400,000.

Related:  Auto insurance appraiser gets 10 years for involvement in staged collision ring

Rigged power strips, loosened pipes

In yet other cases, an electrician rigged power strips to look like they shorted and started fires.

A homeowner in South Miami-Dade had Esponosa’s people loosen a pipe under the sink of the bathroom in master bedroom, then let the water run. And to speed up the damage, the men also used a garden hose.

Then there was the yellow-hammer dodge. Espinosa and a trusted employee arrived at Angela Frye’s home, where a small kitchen fire had occurred the day before. She’d collect much more if just one tile was also damaged, they said. So Espinosa smashed the floor with a frying pan, then a yellow hammer. The actual damages amounted to about $9,000, although Espinosa enlarged the claim into a $70,000 insurance haul.

Espinosa spread the damage claims among numerous insurers no single insurer would easily see a pattern worth investigating. At least 14 insurers were bilked by more than 50 inflated claims.

The state CFO, fire marshal and other agencies launched two full-scale probes called Operation Flames and Flood l and ll. Insurers also provided plenty of evidence and investigative firepower.

The dogged probes finally cracked open Espinosa’s ring. Yet even while languishing in prison after his arrest, he plotted with a fellow inmate to hire a hitman and rub out the prosecutor. The courtroom wizard was Laura Uriarte, who earned the Prosecutor of the Year Award from the Coalition Against Insurance Fraud — in part for taking down Espinosa and his ring.

The murder plot fizzled. Still, Espinosa was sentenced to 20 years in state prison for numerous major charges, including racketeering and insurance fraud. In the end, Operation Flames and Floods flamed out Espinosa’s legendary fraud plot.

Dennis Jay (dennisjay@insurancefraud.org) is the executive director of the Coalition Against Insurance Fraud.