When the invisible man went to his doctor after breaking his leg, the doctor said, "I'm sorry, I can't see you now."

Both defense and plaintiffs' attorneys in Michigan appreciate the value of private investigators in insurance matters.  However, they often can't see the benefits competent private investigators can provide in other fields--such as the loosely-defined province of white-collar crime. 

The phenomenon of white-collar crime has grown to epidemic proportions in the United States.  Many corporations have no idea how to detect it, much less prevent or minimize it.

When a single Long Island auto dealer using a variation of the old "Ponzi scam" can defraud a company as large as General Motors in an amount approaching $1 billion, it is not hard to envision the magnitude of this problem and the impact it has on the consumer who ultimately pays the bill in the cost of products.

The Association of Certified Fraud Examiners surveyed Fortune 500 companies several years ago.  The question of who is responsible for preventing internal fraud was put to both the security departments and the audit departments of these corporations.  In over 90 percent of the responses, the security department indicated the audit department held this responsibility, while the audit department said the security department did.

Some Michigan attorneys don't see the value of professional investigation services on cases unrelated to insurance claims.  But Michigan lawyers have the opportunity to greatly benefit their clients by recommending the services of competent private investigators.  The following case histories are presented in the hope that attorneys may broaden their understanding of how reputable, experienced investigative agencies can benefit their clients.

Warranty fraud is a common method of fraud, not just in the automotive business, but with any manufacturer that warrants its products.  In these cases, it is the manufacturer's dishonest dealers, not end-user customers, who benefit from the warranty policy.

For example, in one extensive investigation, private investigators documented a long-standing conspiracy involving warranty fraud.  In fact, it had gone on so long that a second generation of fraudster was involved.

In particular, five dealers handling the manufacturer's product regularly submitted a high volume of fraudulent claim forms, going to great lengths to ensure that mail confirmation programs and other routine controls would not alert the manufacturer.  The manufacturer then reimbursed the dealers based on the false claims, which bore the names of fictitious customers.

The manufacturer's field representative covering the area had a yearly salary of $45.000 - but his annual take home pay approximated a half million dollars.  He was in league with the dealers, approving the false claims on units which never existed.  He had learned the trade from his predecessor, who had retired to an affluent life-style on his take from the ongoing fraud.

The investigation was relatively expensive, slightly over $200.000. However, a $10.4 million judgment and an actual cash recovery of $6.4 million provided an immediate return on the investment.

But the real benefit to the manufacturer came later.  Claims throughout the country dropped by over $13 million annually, as other moderately-dishonest dealers got the word that their days of defrauding this manufacturer had ended.  In the industry, the annual cost reduction equates to bottom-line profits on approximately $600 million in new sales every year - and parallels the profits produced by the efforts of over 5,000 full-time employees.

Looking back, this manufacturer found that one product line had been discontinued due to excessive failures.  However, records showed that over 50 percent of all claims world-wide were fraudulent claims submitted by these five dealers.  In another line, it was found that one of the nefarious dealers had submitted a higher number of claims on one type of product than the number of units actually produced!