HandcuffsBogus burglaries, fake funerals, self-inflicted air rifle assaults -- people go to great lengths to convince insurers to cut a check to cover their personal and financial losses. But the financial gain from phony pain and suffering is often short-lived.

Here are a handful of outlandish insurance claims that were overturned in 2011.

1. Art Heist Hijinks

While Jason Sheedy waited for work to be completed so he could move into his new condo in Minneapolis in 2007, he packed some of his prized possessions -- almost $275,000 in fine art and collectibles -- into a van that he left parked outside of his St. Paul, Minn., home. Cue forehead slapping and eye rolling. Sheedy informed his insurer that the truck's precious cargo was stolen after a thief cut open the padlock. He then collected more than $250,000 from AXA Art Insurance Corp.

Flash forward to Spring 2011, when works by Rembrandt, Salvador Dali and Peter Max -- the very same pieces stolen from Sheedy four years earlier -- were put up for auction on Artbrokerage.com. The art, according to AXA, was put up for sale (cue ominous organ music) by none other than Sheedy himself. After further digging, investigators discovered that this wasn't the first time the collector has trotted out his "stolen" collection for personal gain. Several times Sheedy used it as collateral at a pawn shop to get loans which he then paid off and then reclaimed the artwork, according to an FBI statement.

2. Crocodile Tears and an Empty Casket

The first funeral for James Davis was lovely -- a touching graveside ceremony at a Los Angeles-area cemetery. Later his coffin was exhumed, his remains cremated, and his ashes reportedly scattered at sea. But it turns out the only true thing about the entire charade was the $950,000 in life insurance proceeds paid out to two funeral home workers who concocted the whole plan.

According to the Coalition Against Insurance Fraud, the elaborate charade included fake mourners and a coffin filled with cow meat and bones and a mannequin (so the weight of the casket would feel right). When an insurance investigator started looking into the scheme, the workers turned the evidence into ashes. Their plan went up in smoke when they attempted to bribe a doctor into creating fake medical documents for the non-existent Davis and the doctor would not cooperate. In January, one of the perpetrators was sentenced to 2 years in a federal penitentiary.

3. The $2 Million Car Wash

In November, a federal judge ruled that that an alleged insurance fraud case surrounding a 2009 car crash should be tried before a jury. The ruling made headlines because this wasn't just any run-of-the-mill wreck: The car was a multimillion dollar Bugatti Veyron carrying $2 million in collector-car insurance.

The complaint alleges two men conspired to defraud the insurance company: The original owner of the Bugatti gave the second man a $1-million interest-free loan to buy the car, which he drove into a Galveston, Texas, saltwater lagoon. The driver claims to have been distracted by a low flying pelican which made him drop his cell phone and veer off the road. The costly car wash -- minus any pelican cameo -- was captured on video and posted on YouTube by a bystander.

4. Ice heist inspired by Hollywood



Supposedly inspired by the movie Snatch, two New York diamond dealers -- desperate for cash to pay off their failing business's debts -- were convicted in May of scripting and acting out an elaborate plan to steal their own baubles for the insurance money. Now they will spend between 20 months and 5 years in jail -- plenty of time to review the many ways their bungled heist and $7 million insurance claim backfired.

The biggest blunder was their inability to disarm their own security cameras. The failed attempt was, ironically, caught on tape. As cameras continued to defiantly roll, we see the pair removing the contents of the safe before the "burglars" even arrive, and then place the empty boxes back inside for the crooks to confiscate. In the next scene the two hired accomplices -- dressed as Hasidic Jews and armed with plastic guns -- are buzzed in without even being asked, "Who's there?" Spoiler alert: The stolen goods have not been recovered, and the costumed extras have simply vanished.

5. Lone Gunman Nabbed for (Very) Personal Assault

Talk about going to extremes. A longtime insurance fraudster was finally caught after being shot in the chest in March. It turns out that the gunman was -- pause for effect -- also the victim. According to the U.K.'s Financial News, the man confessed to turning the barrel on himself so he could collect compensation for the harm.

Personal injury claims, it turns out, has been a specialty of his for the past 16 years -- including an air rifle injury in 1995, an accidental stabbing by a family member in 2004, and an injury sustained after slipping in a public toilet in Corwen in Wales.

Bonus Claims: Travel Travails

Cancelled flights, lost luggage, stolen wallets, food poisoning -- there are a lot of things that can ruin a vacation. Insurers are used to dealing with ho-hum claims for things like cancelled cruises and damaged property. But some vacationers are beset by more unusual maladies -- concussions from falling coconuts, a herd of cows licking the paint from a parked car. According to the Telegraph, insurers paid the claim submitted by a couple who said that marauding monkeys broke into their lodge and flung their clothes across a Malaysian rainforest. A family camping in Wales wasn't as lucky: Their claim for damage to camping equipment due to a parachutist landing on their gear was denied.

Motley Fool writer Dayana Yochim has made no outrageous claims in 2011.


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