An Eden Prairie businessman has admitted scamming his insurance company out of at least $7 million and using some of the money to buy a private airplane and other items.
Eden Prairie man admits to insurance scam
June 2, 2011 at 1:30AM
Travis M. Scott, 34, pleaded guilty Tuesday in federal court in St. Paul to wire fraud and money laundering. In total, Scott admitted he is responsible for losses to insurer Zurich North America of $7.1 million to $10 million. According to the plea agreement:
From from mid- to late 2008, Scott submitted false claims to Zurich North America on behalf of his business, Security Management Technologies. The policy covered both the property of the business, which included supercomputers, and business interruption. If the property was damaged, Scott could either take the cash value of the damaged property, as determined by Zurich, or replace the property up to his policy's $9.5 million limit.
On June 1, 2008, about a year into the policy, Scott reported that a lightning strike seriously damaged his business.
Scott exercised the "replacement option" on his policy for up to the $9.5 million policy limit, prosecutors said.
Later that month, Scott told Zurich that a new computer system had been delivered, prompting the insurer to deliver three checks totaling about $9.5 million to him. However, Scott used the money for a $290,000 Beech aircraft and other items.
Zurich also paid Scott more than $1.9 million to cover business interruption, based in part on reported profits of Scott's company from his tax return. Officials determined that the tax return was falsified.
Law enforcement searched Scott's home and airport hangar last November. They also searched and seized bank accounts and other property.
IRS investigators seized three planes, a boat, three vehicles and more than $5 million from various bank accounts. The federal government seeks forfeiture of these items.
Scott faces up to 20 years in federal prison for wire fraud and 10 years for money laundering. Sentencing has yet to be scheduled.
Paul Walsh • 612-673-4482
