North Dakota case illustrates difficulty in detecting staged auto accidents

In most insurance claims involving auto accidents that are staged, there are no real “victims,” no real pain and suffering. Perpetrators plan the wrecks among themselves, and innocent bystanders usually aren’t involved.

But a recent case in Fargo, N.D., involved more than three dozen real crashes, a number of real victims, and a father-son team who found themselves behind bars after allegedly trying to bilk four auto insurance companies out of more than $70,000.

Sead Mustafic and son Senad Mustafic, both of Fargo, allegedly caused 37 auto accidents from July 2008 to June 2010. More than half involved the father and son closely following an innocent driver and then crashing into that driver’s car as he or she was attempting to change lanes. Many of the drivers told authorities that the lane was clear before the accident. Nevertheless, each of the innocent drivers initially was viewed as the guilty party.

When all was said and done, the Mustafics allegedly had received fraudulent insurance claims totaling $73,697 from the GEICO, Progressive, State Farm and Nodak insurance companies, according to Andrea Fonkert, a spokeswoman for the North Dakota Department of Insurance.

Nationwide, the occurrences of staged auto accidents rose 46 percent from 2007 to 2009, according to the National Insurance Crime Bureau. But North Dakota roads have been virtually free of this kind of fraud. Only eight staged accidents in North Dakota were reported to the bureau from 2007 to 2009, putting it in 45th place among all states in terms of staged accidents.

The insurance companies in the Mustafics’ case didn’t report their suspicions to the National Insurance Crime Bureau because the accidents were fairly typical, says Dale Pittman, a special investigator with the North Dakota Insurance Department’s fraud unit.

The Mustafics may have gone unnoticed if not for Pittman’s efforts. He started working with the North Dakota Insurance Department in December 2009; one of his first cases involved the Mustafics. Actually, the Mustafic case file at that point contained just one piece of paper — a referral from GEICO.

“The report just said it looks like this guy had an accident and added damage to the car afterward with a brick,” Pittman says.

Sead Mustafic and his son are charged in a staged auto accident case in North Dakota.

Pittman, a former police chief at the University of Alaska in Anchorage, started poking around and determined that Sead Mustafic was involved in 27 auto accidents and Senad Mustafic in 10 auto accidents, according to the North Dakota Insurance Department.

After some of the accidents, the Mustafics allegedly would cause more damage to their own cars. Eventually, Pittman figured this out.

“These guys were pretty aggressive,” Pittman said. “They’d cause these accidents, get out of the car very irate, get them (the victims) to give them their insurance information and, in some cases, they’d make the other driver sign pieces of paper saying it was their fault.”

The Mustafics were charged in July 2010 with illegally conducting an enterprise, theft of property and insurance fraud. The pair have pleaded not guilty in this case, but they are expected to change their plea to guilty at a court hearing on Jan. 10, 2011, according to the Cass County District Clerk’s Office in North Dakota. Each defendant faces up to 10 years in prison.

–Kevin Lyons