Fire for hire

By ALDEN SOLOVY

Arson for prof it has reached epidemic proportions in Illinois and the nation. Professional and juvenile arsonists burn buildings for pay, and their employers reap the benefits of insurance fraud. Governor Thompson has signed seven bills seeking to stem the tide of arson for profit.

FIVE GALLONS of gasoline and a quart of oil, a dark night, a homemade fuse or a Molotov cocktail; put them together and use them and you are an arsonist. The tools are available at gas stations and hardware stores; the technique is ridiculously simple, and the chances of getting caught ridiculously low.

Arson is the fastest growing crime in the U.S. today. More than 1,000 people die each year in the U.S. in fires set by arsonists; property damage runs to $4 billion. In 1979 there were an estimated 5,200 arsons in Illinois alone. State legislatures nationwide have passed a range of legislation in an attempt to curb arson, and the U.S. Senate is considering legislation which would make arson-for-profit a federal offense. But government action has had little effect so far.

There are three chief motives for arson: vandalism (lighting fires is an easy way for delinquents and the deranged to get their kicks); revenge (burning down someone's house is devastating way to get even); profit (arson is an easy way to make a fast buck). Terrorism and the desire to cover up other crimes are also motives.

Conflagrations for cash

Arson-for-profit is insurance fraud, an illegal method of collecting money on an accidental fire loss policy — often on a building that is overinsured. Some arsonists-for-profit are the owners of failing businesses who are trying to recoup some or all of a bad investment. The majority of profit-motivated arsons, however, are committed by individuals who buy, overinsure and then torch old buildings. These arsons are often the culmination of a long series of acts of neglect. The property taxes on such buildings are often in arrears. Unscrupulous owners remove valuable items — appliances, equipment, lighting fixtures, even antique doorknobs — and then hire a professional torch or light the match themselves.

The overinsuring and torching of buildings has become common in parts of Chicago. Recent exposes by the Better Government Association and the media have revealed a thriving number

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of arson-for-profit rackets in the city. Arson rings are reportedly responsible for the rash of fires in Chicago's Uptown area where an estimated 20 percent of the buildings have been destroyed by fire. The arson rings can all but guarantee their success by paying off insurance adjusters and arson investigators. They operate by purchasing property (usually dilapidated) and selling it back and forth between members of the group, inflating the price of the building with each sale. A building purchased initally for $50,000 can be sold and resold until the final sale price is three or four times greater. Then a fire insurance policy on the overinsured building is obtained, the building is torched, and a bloated insurance payoff is collected.

These arson rings often use secret land trusts (see Illinois Issues, March 1979, p. 10) to hide their operations. Most land trusts, of course, are not used for unscrupulous reasons. These trusts are both legal and defensible on the grounds of the confidentiality they provide in estate planning, joint ownership and the transfer of property. But this confidentiality also prevents insurance agents from knowing that new fire policy requests are coming from owners who have collected once or more on other policies written by the same company. In short, arsonists can milk funds from the same company over and over again with impunity. Such fraudulent claims can lead to huge losses for the company and inevitably result in higher premiums for the company's honest policyholders.

The standard procedures of some companies often exacerbate this problem. Because insurance companies do not always send investigators out to examine property before insuring it, dilapidated buildings filled with fire hazards are often routinely insured. According to James M. Skelton, assistant director of the Illinois Department of Insurance, the investigation of all property to be insured is not considered to be cost-effective by insurance companies. Consequently, clues which could indicate that a building is targeted for the torch — missing fixtures, no tenants, etc. — are often overlooked.

Another problem is that insurance companies are required by law to insure property for fire damage in areas where they might otherwise routinely reject applications. This, the companies claim, forces insurers to write fire insurance policies for property in slum or deteriorating neighborhoods where the risk of arson is greatest. Under the Fair Access to Insurance Requirements Plan (FAIR Plan), insurance companies are required to provide property owners in high-risk area with the same coverage provided elsewhere.

The FAIR Plan

Arson is the fastest growing crime in the U.S. today. One motive is profit. Someone buys an old building, overinsures it, and then torches it

The FAIR Plan is a by-product of legislation passed by the U.S. Congress in 1968. As a result of the massive destruction caused by the civil unrest of the late 1960's, Congress created the Federal Riot Reinsurance Program to aid insurance companies suffering major losses due to rioting, looting and vandalism. To receive program benefits, the property insurance industry had to agree to develop and administer statewide programs which would make insurance in high-risk areas easier to obtain. The result in Illinois was a program in which all property insurers share the responsibility for writing accidental fire loss policies in high-risk areas. The FAIR Plan provides fire protection; it does not provide complete homeowner's policies and excludes theft and liability coverage.

Under the FAIR Plan — also called the Assigned Risk Plan — property owners must make three attempts to insure their property through regular insurance carriers. Failing to obtain accidental fire loss insurance, the owner is then eligible for FAIR Plan insurance. The property is assigned to one of the insurance companies operating in Illinois which offers fire insurance. That company must insure the property. All property insurers in the state are required to participate in the plan, and fire insurance risks are assigned to the insurers on a rotating basis. Chicago has 90 percent of all FAIR Plan insurance policies written in the state; East St. Louis has 5 percent; and the rest of the state has 5 percent. FAIR Plan rates are set by the state Department of Insurance. Although it is known that most cases of arson occur on property insured under the FAIR Plan, complete and accurate statistics on arson in Illinois are still difficult to obtain. The problem lies in the number of law enforcement agencies responsible for investigating and prosecuting those involved in suspected arsons. Law enforcement agencies in cities and counties have the option of running their own arson investigations, or using either police or fire departments or a combination of both. Chicago, Peoria, Rockford and Springfield, are among those cities which investigate arson independently, that is, without state assistance. Fires in other areas of the state are first investigated by the State Fire Marshal, who is charged with determining the cause and origin of a fire. If it is determined that a fire was not accidental, the case is turned over to the Illinois Department of Law Enforcement for further investigation. Once the investigation is completed, the case is turned over to either city or state's attorneys for possible prosecution. Each investigating agency keeps different kinds of records, and similar fires in two counties could be called arson in one county and of suspicious origin in the other. Reporting periods for the different agencies also differ.

Consequently, it is difficult to say with precision how many arsons took place in Illinois last year. Nor can anyone in the Fire Marshal's office or the Department of Law Enforcement give statewide statistics on the value of

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property lost due to arson, the number of cases brought to trial, the number of convictions for arson or the number of convictions for other crimes — disorderly conduct or damage to property — due to arson investigations. Overall statistics must be pieced together from several sources and are somewhat unreliable. Although the statistics that are available give only a partial picture of the arson problem in Illinois, the picture is grim. The Fire Marshal's office investigates about 1,200 fires yearly. At least 50 percent of these are found to be arsons. About two-thirds of these arsons are prosecuted, but the number of convictions is unknown. These figures refer only to arsons investigated by the Office of the Fire Marshal. Figures from a 1979 Illinois Legislative Investigating Commission report on arson and the Illinois Uniform Crime Reports, covering all of the state but Chicago, indicate that arson in the rest of the state has increased from 1,027 incidents in 1973 to 3,370 in 1979. Figures from Chicago's Bomb and Arson Unit show 1,855 arsons in the city during 13 police reporting periods roughly corresponding to 1979. Earlier figures for Chicago are unreliable, according to the arson unit statistician.

Statistics on the value of property lost as a result of arson are even more elusive. The Uniform Crime Reports (again, excluding Chicago) lists Illinois as having lost $5.81 million in property due to arson. This figure, however, excludes the value of property for more than 900 incidents listed as arsons but never investigated. Chicago's arson unit does not keep a running total of the value of property lost due to arson, but the Metropolitan Chicago Loss Bureau — a clearing house for fire insurance, usually under the FAIR Plan — estimates about $26 million in property damage from arson in the city last year. (This estimate is based on only 80 percent of the fire loss claims made in Chicago and does not include claims of under $500.) It may be impossible to total up the monetary value of Chicago property destroyed by arson.

Juvenile arsonists

There is one statistic, however, on which most law enforcement officials in Illinois will agree: juveniles commit over half the arsons in the state. Not surprisingly, most arsons motivated by vandalism are the work of juveniles. What is surprising is that many arsons motivated by profit are the work of youths. Torch jobs are often subcontracted to juveniles or juvenile gangs who are paid as little as $5 to burn down a building. Some fires motivated by vengeance are also set by youths, including the January fire in Bolingbrook which gutted an elementary school and caused $2 million in damage.

The biggest fight in the crackdown on arson-for-profit was over who would get the credit for the anti-arson legislation

Unlike juvenile arsonists, professional torches command high pay; their proven skill reduces the risk that arson will be suspected or proven. And a professional torch is better able to bring about the heavy destruction which will result in the highest possible insurance payoff. It is a myth that all arson-for-profit is the work of professional torches, yet the number of professionals operating in Illinois is unknown. According to a member of Chicago's arson unit, professionals are rarely discovered. They are too good.

Nailing a professional torch is not only made difficult by their skill, but also by the problems connected with conducting a proper investigation. The greatest single problem in arson investigations is protecting the evidence from vandalism or inclement weather. During arson trials, the prosecution must prove that the scene of the fire was protected until evidence indicating arson was removed by investigating officials. Most prosecutors won't press arson charges unless they can prove the scene was protected during the investigation. Without such proof, arson cases are nearly impossible to win. In order to be effective, arson investigations must begin before the ashes have cooled. This means that a preliminary judgment as to the cause of the fire must be made at the scene, usually before the fire has been extinguished.

To the trained eye, the cause and origin of a fire can be determined even while it rages. At the scene of a fire, law enforcement officials can often determine what is burning by the color of the smoke. Accelerants (flammable liquids or explosives, such as gasoline or turpentine), which arsonists use to start and speed up a fire, change the color and thickness of the smoke. Accelerants also increase the size of the fire, and officials at the scene compare the size of the fire with the size of the building. They also note whether the fire moves up the walls rapidly (natural origin) or spreads horizontally with the flow of accelerants (arson). And they look for containers which may have been used to bring accelerants to the scene. Any of these can trigger an arson investigation. Unfortunately, some law enforcement officials don't know what to look for, especially in areas of the state that rely on volunteer fire departments or where arson is infrequent. Even when officials do suspect arson, investigations can be hampered by the number of investigators and the difficulty of protecting the scene before investigators arrive.

Once an investigation begins, officials examine the building for evidence of arson. Samples of burned material are taken from the building and tested for traces of accelerants. The fire's intensity and its path are studied and compared with fire patterns associated with arson. The place where the fire began is checked to see if a blaze could have actually begun there without the help of an accelerant. Professional arsonists, of course, attempt to foil investigators by placing accelerants near fuse boxes or other electrical works. This trick is usually not successful, however. Arson investigators also look for multiple points of origin which may indicate that accelerants were placed at strategic points in an effort to guarantee the total gutting of a building. Standard police detective work is also used, including the interviewing of neighbors, fingerprint checks and so on. Many arsonists assume that fingerprints, along with accelerant containers and other evidence, will be destroyed by the fire. This assumption is false: investigators can find fingerprints in burned buildings, and accelerant containers left in the fire are rarely destroyed completely. To eliminate this possibility, some

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arsonists carry the accelerant to the scene in heavy plastic trash bags that are easily consumed by the fire.

Legislative response

Arson-for-profit was the target of both the governor and the General Assembly this year. In response to the exposes on Chicago's arson racket, Gov. James R. Thompson and members of the Department of Insurance collaborated to produce a series of bills aimed at cracking down on this type of insurance fraud. The six-bill package was introduced in the Senate (S.B. 1990-1995) with Sens. James H. Rupp (R., Decatur) and Steven G. Nash (D., Chicago) as chief sponsors. At a Chicago news conference April 4, Thompson and Insurance Director Philip O'Connor announced the introduction of the package, claiming it contained many of the solutions to the arson-for-profit problem. The arson issue then became mired in a political name-calling battle when three Chicago Democrats — Rep. William A. Marovitz and Sens. Richard M. Daley and Dawn Clark Netsch — teamed up to push a House anti-arson package (H.B. 3270-3275, and H.B. 3333 with Reps. Marovitz, Arthur A. Telcser (R., Chicago) and Robert M. Terzich (D., Chicago) as chief sponsors. On April 7 they held a news conference with Better Government Association (BGA) executive director J. Terrence Brunner in an attempt to steal some of the governor's thunder. At that conference Brunner accused Thompson of siding with real estate interests by supporting a weak anti-land trust bill — a corner stone of the anti-arson program. Thompson countered by calling the statement "sleazy" and demanded that the BGA board officially reprimand Brunner. The next day Cook County State's Attorney Bernard Carey accused Brunner of trying to aid Daley in his November election bid for Carey's job.

When the squabble died down and the General Assembly had produced its arson package, eight bills went to Thompson's desk. Five were bills the governor had pushed: S.B. 1991, 1992, 1993 and 1994, all from the Rupp-Nash package, and S.B. 1998, sponsored by Sen. Don A. Moore (R., Midlothian). Three were Democratic measures: H.B. 3271, 3272 and 3333, the Marovitz-Telcser-Terzich package. Thompson signed S.B. 1992 July 30 and the rest September 3, with the exception of H.B. 3271, which he amendatorily vetoed September 3, and which will be considered during the fall veto session.

Both H.B. 3271 and S.B. 1991 are designed to eliminate the land-trust dodge used by arson profiteers. Thompson signed the provisions of H.B. 3271 which require insurance firms to disclose trust holders to official arson investigators. However, he vetoed the provisions that would have stopped the transfer of unexpended money left in the Fire Prevention Fund at the end of the year, to the general revenue funds. Under S.B. 1991 (P.A. 81-1426), when a building of more than four units is insured against arson, the beneficiaries of any land trust in which the property is held must be disclosed upon application for the insurance policy. Substantial changes in ownership must also be disclosed. S.B. 1991 also tightens FAIR Plan regulations by providing incentives to foster competition among insurers for residential and commercial fire coverage through a system of credits administered by the Department of Insurance. Further, it gives the department specific authority to approve all FAIR Plan rates.

S.B. 1993 (P.A. 81-1427) is designed to allow insurance companies to protect themselves from possible arson losses on short notice if a policyholder allows a property to run down, making its insured value greater than its actual worth and thereby creating a likely target for arson. The new law permits regular insurers to cancel fire coverage on buildings of more than four units with only 10 days notice, rather than the usual 30, if planned arson is suspected. It sets out conditions for such cancellations and also provides for appeals by the policy holder to the Department of Insurance.

S.B. 1994 and S.B. 1998 are designed to help the Departments of Insurance and Law Enforcement get better information on arson. S.B. 1994 (P.A. 81-1428) expands the immunity provisions for insurance companies cooperating with law enforcement authorities in arson cases so that firms can report arson investigations to the Department of Insurance, and pending claims in those cases may be withheld. S.B. 1998 (P.A. 81-1429) extends the reporting time for local fire investigators to report to the State Fire Marshal.

H.B. 3333 (P.A. 81-1432) is aimed at insurance fraud. It creates a task force to advise the Department of Insurance on policy forms and endorsements used by FAIR to make sure a building is not worth more burned that standing.

H.B. 3272 (P.A. 81-1430), forces policy seekers to shop for regular insurance first by requiring three turn-downs by a voluntary market insurer before a property can be covered by the FAIR plan.

Arson bills which failed to reach Thompson's desk included S.B. 1990 and S.B. 1995, part of the original Rupp-Nash package, and H.B. 3012, sponsored by Rep. Gordon L. Ropp (R., Bloomington).

S.B. 1990 would have allowed insurance companies the option of using one of three methods to calculate the return payment on an accidental fire loss insurance claim. The idea was to tie insured value more closely to the real worth of the property, discouraging the use of inflated values as a tool to profit from arson. The bill failed in the Senate, 22-22, apparently because legislators feared insurance companies would routinely use the calculation options to pay as little as possible on legitimate insurance claims.

S.B. 1995 would have allowed the Departments of Insurance and Law Enforcement to require the insurance companies investigating fraud to release information relating to the actual loss itself. The bill passed unanimously in the Senate but died in a House committee.

H.B. 3012, which had no chance (it was held in the House Rules Committee), would have required beneficiaries of fire insurance payments to take a lie detector test to show that the fire was not arson.

More anti-arson legislation is bound to be introduced next year, but it is too early to tell how significant it will be. Meanwhile, Democrats and Republicans are pleased with this session's bipartisan attempts to dampen, if not drown, the efforts of Illinois arsonists.

Alden Solovy, a graduate of Sangamon State University's Public Affairs Reporting Program, is now a reporter for the Decatur Herald & Review

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