Maryland Slams Door on
By Christina Bramlet, PropertyCasualty360.com
For years, unscrupulous con- tractors have manipulated homeowners into signing shady contracts that invariably
lead to subpar repairs and fraud. The
predatory practice not only victimizes
consumers but also drives up insurance
Maryland is one of many states to seek a
legal remedy and just yesterday approved
a bill that will ostensibly deter the crime.
In a move endorsed by the Coalition, Gov.
Martin O’Malley signed a new law forbidding contractors from offering rebates.
“The door was slammed on a shame-
ful ruse that lets crooked contractors
[perform] shoddy and inflated repairs,”
says Howard Goldblatt, the Coalition’s
director of government affairs. “Prosecu-
tors now have a focused legal tool that
can better sweep cheating contractors off
Goldblatt deemed the law “a foresight-
ful consumer protection,” praising both
Gov. O’Malley and the Maryland legisla-
ture, noting that SB 736 overwhelmingly
cleared the General Assembly this year.
Shady contractors often use rebates
of insurance deductibles to convince
homeowners to sign contracts. Once in
the front door, quite literally, dishonest
contractors may try to defraud homeowners and their insurers.
“The money that contractors steal
through the repair project can earn a
profit that easily offsets the deductible
they paid,” Golblatt explains. “
Contractors with good reputations do not need
to dole out backhanded bribes to earn
repair [jobs]. Rebating is a last-ditch ploy
by often-incompetent contractors.”
8 New Yorkers Indicted
for Staging Accidents
By Chad Hemenway, PropertyCasualty360.com
Authorities charged eight New Yorkers in connection with a scheme to defraud
multiple insurers out of millions by
staging auto accidents.
According to the U.S. Attorney’s
Office in the Eastern District of
New York, those charged with mail
fraud and conspiracy to commit
mail fraud allegedly rented U-Haul
trucks to then drive to Kings and
Nassau counties to either strike or
be struck by co-conspirators driving and occupying other vehicles.
“These defendants played bumper cars with the lives of unsuspecting New Yorkers, all to enrich
themselves through insurance
fraud,” says Loretta E. Lynch, U.S.
Attorney for the Eastern District
of New York, in a statement.
Various ring members obtained
treatment for supposed injuries
for which they filed claims seeking
more than $2 million from Travel-
ers, Allstate, GMAC, Geico, Pro-
gressive, and Republic Western—
Of these claims, the defendants
received more than $1 million in
In addition to posing a danger
to public health, staged accidents
such as the alleged raise the cost
of insurance for consumers.
New Yorkers Shaquana Basnight,
Allah Brown, Roshon Cooke, Byron
Dudley, Clifford Hawkins, Shawn
McFadden, Daniel Osborne and
Daniel Thompson were indicted
May 8. If convicted, each would
face a maximum of 20 years
in prison; a $250,000 fine; and
forfeiture of the insurance money
Rebating offers are especially common
after storms sweep through neighborhoods and cause considerable home
damage. These “storm-chasing” contractors are often unlicensed and out of state,
the Coalition says.
The lure of saving hundreds of dollars
can carry a certain appeal to distressed
homeowners, who may urgently need
repairs to damaged roofs or other parts
of the home structure.
“Once contractors gain access to the
home, they may demand a large down
payment and then disappear without doing any work,” Goldblatt says.
When inflated repairs are actually
made, they often entail using substandard materials. In fact, the Coalition
notes some contractors have even used
tree limbs to enlarge holes in roofs and
fraudulently inflate insurance bills. Fixing up poorly executed repairs can take
an emotional toll on homeowners. Moreover, a homeowners’ insurance policy
may not be obligated to cover the cost of
Goldblatt stresses the importance of
educating consumers about the flipside
of rebates. It’s likely that other states may
follow Maryland’s lead, too.
“Public and private agencies should
continuously educate homeowners
about the rebating ploy and other contractor scams,” Goldblatt says. “
Educating consumers must happen well before
storms strike. Once the storm hits and
dishonest contractors swoop in, that
may be too late.”