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Crime gangs offer prestige cars to crashed drivers

Andrew Johnson's old smash repairs business was burnt down by someone trying to claim insurance for a staged crash of their car.

Tow truck operators are offering drivers at crash scenes prestige cars while repairs are carried out on their vehicles as an incentive to send them to panel beating shops linked to organised crime gangs. The criminals even pay excesses on policies to sweeten the deal - and then charge insurance companies up to $200 a day for car rentals.

In another scam, the gangs are buying crashed luxury cars at auction, insuring them for full worth and then claiming the insurance in bogus crashes.

The underhand practises are just some of those used in an industry plagued with criminal activity, prompting the New South Wales government's announcement last week of an inquiry into the smash repair business and insurance companies.

THE PRESTIGE CAR LOAN BAIT

"In the trade it's referred to as having the vehicle 'captured' and in many cases held hostage by the smash repairers," an industry source said of the tow truck bait. "In one case we were given a bill for $36,000 for seven days' car hire of a luxury Porsche."

THE FAKE CRASH SCAM

In an effort to tackle the bogus crash scourge, undercover police attend car auctions posing as buyers to gather intelligence and make sure genuine buyers are not intimidated out of bidding for vehicles.

"The auctions have cleaned up a lot but we still go there undercover to keep an eye on what is going on because we know bikies and other gangs are involved in illegal activity in some of the motor trades," NSW Crime Squad boss Superintendent Arthur Katsogiannis said. Most insurance companies employ former NSW police officers to investigate fraudulent claims, staged accidents and theft of vehicles.

It's estimated there is at least one bogus crash every day involving an over-insured prestige vehicles. "There are multiple claimers, whose names or families pop up constantly," an insurance industry source said. "Then there is the time and location of the accident, which is invariably at night in an isolated area."

Typically, a staged accident involves buying a damaged high-end car cheaply at auction, patching it up just enough to get it roadworthy and then insuring it for a lot more than has been spent. It is then involved in an "accident" and written off, allowing the policy holder to make a tidy profit of between $20,000 and $70,000.

On November 29 last year, a Sydney panel beating shop on the north shore was allegedly burnt down after the insurance company decided to repair a "staged" vehicle instead of writing it off. It's claimed the damaged Mazda RX8 was on the premises on Salisbury Rd, Asquith, when a fire broke about 10.30pm. After a three-month investigation police claim the business was torched in order to destroy the car. Five people have been charged.