Insurance Company: Arson Ring Operated in Flint MI for Twenty Years

State Farm Insurance has sued more than a dozen people claiming they operated an arson-for-profit ring in Flint (MI) that bilked insurers out of more than $2 million over two decades, reports

The insurance company claims fires purposely were started at homes that were owned or rented by the group named in the lawsuit. Then they filed insurance claims on the property damage to receive thousands of dollars in insurance payouts. There have been no criminal charges filed against any of the defendants in the case.

The case sparked counter lawsuits by some of the defendants. Six of those named in the State Farm lawsuit have settled — including Flint-based public adjustment company Allied and Associates and its president, Gary Lappin — who dubbed the case a “witch hunt.”

State Farm declined to comment on the case or how long it took to investigate, but the Detroit Federal District Court file outlines an amazingly complex string of alleged associations and relationships dating back to 1992 and involving more than 40 fires.

Genesee County Prosecutor David Leyton said his office does not file charges unless the accusations are brought forward in a police complaint.

The lawsuit claims that Lappin and/or Allied and Associates submitted more than 40 fraudulent claims to insurance companies, including at least 15 to State Farm.

The lawsuit claims Lappin helped submit the fraudulent claims to State Farm, working with two different groups of people allegedly responsible for setting the fires.

Those two groups were comprised of people, most of whom lived in Flint and were connected by family, marriage, friendship or business.

The fires occurred less than a year after the property was insured in 70 percent of the allegedly fraudulent claims handled by Lappin and/or Allied, according to the lawsuit.

In one instance, an insurance policy was purchased the very same day of the fire. At least two other fires occurred within two weeks of obtaining insurance coverage.

Lappin, sitting in his Flint Township office, said that he helped prepare the claims at issue in the lawsuit but he has no way of knowing how the fires started.

He added that nearly three-quarters of his business is obtained through referrals so it shouldn’t be surprising that a number of his clients have personal connections.

One group named by State Farm in its lawsuit included some friends and family of Flint resident Derwin Sykes, who testified in a deposition that he has personally experienced 30 fires in his lifetime, two of which resulted in claims to State Farm.

“I’m clumsy with the cigarettes and I’m clumsy cooking, you know,” Sykes said in a deposition with State Farm attorneys. “And everybody in town know that, so, you know.”

Sykes could not be reached for comment and did not have an attorney listed in court records. He had a default judgment issued against him because he did not respond to the allegations.

The lawsuit claims a second group Lappin worked with included some friends and associates of Flint landlord Bruce Goodman. Goodman reached an undisclosed settlement in the lawsuit and his attorney, Loyst Fletcher Jr., declined to comment on the case.

At least 17 claims were filed by four of Goodman’s family members combined, State Farm claims.

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