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Eric R. Dinallo   Superintendent of Insurance  25 Beaver Street  New York, N.Y. 10004

ISSUED 2/13/2008 FOR IMMEDIATE RELEASE

 

DELAWARE COUNTY MAN ARRESTED FOR SELLING AUTO INSURANCE AND REGISTRATIONS TO UNDOCUMENTED IMMIGRANTS

The New York State Insurance Department on Tuesday arrested the operator of a Delaware County junk yard for fraudulently insuring cars that he then registered for undocumented immigrants without drivers licenses.

William Hrazanek, 61, of Old Route 28 in the Village of Fleischmanns, near Middletown, was arrested by Mark Howard, an Investigator with the Department’s Frauds Bureau, assisted by State Police. He was charged with insurance fraud and offering a false instrument for filing. He could be sentenced to up to 15 years in prison if convicted.

Hrazanek is accused of fraudulently providing insurance and auto registrations for used cars with high mileage that he sold to unlicensed drivers. In some cases, Hrazanek is alleged to have provided insurance and registrations for used cars that unlicensed drivers purchased elsewhere and brought to him.

Police identified the unlicensed drivers as undocumented immigrants living mostly in Delaware and Ulster counties. Under New York State law, only U.S. citizens or legal residents may apply for driver’s licenses and applicants must have valid identification, such as a Social Security card. Investigators said none of the individuals had Social Security cards.

Howard said the cars were improperly added as “garage vehicles” to an insurance policy written under the name of Hrazanek’s business, Rabbit City, a salvage yard in Fleischmanns. A “garage vehicle” policy is intended to provide insurance for vehicles used by employees in or near a business, such as a car lot.

Hrazanek allegedly charged buyers $1,800 a year per vehicle for the fraudulent insurance and registrations. Hrazanek paid $30 to add the vehicles under his Rabbit City umbrella policy, Howard said. He said it is estimated Hrazanek may have collected as much as $30,000 a year from the fraudulent insurance and registration sales.

Investigators said no title transfers occurred when autos were sold.

Hrazanek’s arrest followed an investigation begun when Ulster County Sheriff’s Department deputies noticed an unusually high number of traffic stops and accidents involving vehicles registered to Rabbit City. In each case, the incidents involved unlicensed drivers, who were also undocumented immigrants. One of the vehicles was involved in an accident in Delaware County in which a child was injured while riding a bicycle.

Investigators said it is believed 40 vehicles were fraudulently insured and registered. The cars were later traced to locations such as Buffalo and New York City. One of the vehicles, they said, was being used as a cab. In another case, Hrazanek is accused of leasing a vehicle to an unlicensed driver.

The alleged scam occurred during a four-year period. Hrazanek’s insurance company, American Transit Insurance, calculated their premium loss for 40 vehicles over that span of time at $522,823.

Hrazanek was released in his own recognizance on $5,000 bail after surrendering to police. A hearing is scheduled March 12 in Delaware County Court.

Authorities are in the process of working with the state Department of Motor Vehicles to suspend the invalidly issued registrations. Police would be able to impound the vehicles if they are driven again without valid insurance and registrations.

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