David Morse & Associates - Fighting Insurance Fraud Helps Consumers

"At any given moment, newspapers in dozens of cities across the U.S. feature stories about insurance fraud," says Tom Reitze, President of David Morse & Associates (www.davidmorse.com), providers of third-party administrator services, field adjusting services, specialty claims services, and fraud investigations. "Most consumers don't realize that 25 percent of their insurance premiums are ultimately used to pay fraudulent claims."

Indeed, in San Jose, Calif., 25 people in an auto fraud ring were recently indicted for allegedly staging and reporting two dozen fake car accidents during a five-year period, bilking insurance companies out of an estimated $400,000. David Morse & Associates and other companies provided critical information that led to the arrests and indictments. In Bridgeport, Conn., a woman was recently convicted of torching her home in order to collect from her homeowner's insurance policy. And, in Sutton, Mass., a man pleaded guilty to worker's compensation fraud for collecting $70,000 in disability benefits while secretly working in a physically demanding job.

According to Reitze, David Morse & Associates is committed to combating insurance fraud, which ultimately helps consumers by keeping insurance premiums in check. "The premise of insurance is pooled risk, but when the bad guys bilk insurance companies, honest people suffer through higher premiums," he says. "That's why our fraud investigation unit prides itself in catching fraudsters in the act."

Reitze readily recalls any number of claims where David Morse & Associates fraud investigators and adjustors employed dogged legwork, quick thinking, and expertise to keep their clients from being defrauded and help honest consumers in the process.

In one instance, a David Morse & Associates investigator was assigned to a person alleging total disability who happened to live in a rural farming community. The investigator was inventive in locating the residence of the man, but when he was not at home, the investigator had to turn to townspeople for help. The investigator was told that the "disabled" claimant was building a house in a nearby town. Reitze points out with pride, "Although the investigator was required to videotape the man, he found himself in the midst of fields, with no place to hide his vehicle. Using his imagination, he staged a vehicle breakdown on the side of the highway, and managed to capture video of the man bouncing around over rough ground on a tractor and manhandling bales of hay. Thanks to the inventiveness of the investigator, the videotape was enough to end the disability claim of the farmer."

In another situation, a David Morse & Associates truck adjustor found himself at odds with the California Highway Patrol. After a tractor-trailer collided with a van and overturned on a Los Angeles freeway, the CHP made a determination that the rig had been speeding. Although the adjustor knew that the truck had an engine governor that prevented it from speeding, the CHP wouldn't budge, exposing the trucking company to a million-dollar liability suit. The relentless adjustor duplicated the conditions with a replica truck and load, and had a CHP expert ride along, which convinced the CHP that the truck wasn't speeding. Following his suspicion the van was actually backing up on the freeway when it was hit, the adjustor consulted with David Morse & Associates' reconstruction engineer. His theory was confirmed when the lab discovered the telltale signs of stretched filaments in the van's taillights, indicating that the van had been in reverse and the backup lights were on at the time of impact. Because of the adjustor's diligence, the million-dollar claim was arbitrated for a relatively small amount.

Notes Reitze, "The adjustors at David Morse & Associates know that doing the right thing also means stepping in and helping people who are legitimately injured." When they do so, it often helps both the injured person and David Morse & Associates' insurance client.

As an example, a truck driver was making a turn and didn't see a pedestrian in the crosswalk. The truck screeched to a halt, but the man was knocked backwards and struck his head on the pavement. The David Morse & Associates adjustor arrived on the scene quickly, only to find passersby surrounding the man trying to get him an attorney. Although the man refused ambulance services, the adjustor could see that he was shaken and concerned. The adjustor quickly came up with a solution and drove the pedestrian to the Emergency Room himself. Moreover, the adjustor arranged for the client's Safety Director to pay for the $2,000 medical bill. The pedestrian was given a clean bill of health and was pleased with the outcome and attention he received.

The corporate culture at David Morse & Associates can be summed up by the maxim, "doing well by doing good." With 42 branches in 16 states, the company values the expeditious and personalized service they provide to their clients. "In the process, we do our part to help fight insurance fraud, which benefits both insurance companies and consumers," concludes Reitze.

Kris Nickerson
http://www.articlesbase.com

How Insurance Fraud Affects you

If you have tried to renew your home or car insurance recently you may well have noticed insurance premiums starting to increase. One of the main contributing factors in this increase is a rise in fraudulent insurance claims.

Fraudulent claims are made mostly on home and car insurance policies and according to the Association of British Insurers false claims cost UK insurance companies some £1.6billion a year.

So how does this affect you? While insurance companies have indicated a commitment to tackling the issue the fact remains that the problem costs them around £4million a day. This loss has to be recouped in some way and in many instances is passed onto the consumer. You are effectively paying for the fraudulent actions of other people; on average the impact of fraudulent claims adds around £40 onto your insurance premiums.

When it comes to car insurance you are effectively being hit with a double whammy. Not only are you paying for other peoples fraudulent activities but you are also paying to cover the UK’s growing number of uninsured drivers.

With these two factors forcing up the cost of car insurance it is no surprise that some people are noticing a rise in their premiums. These price increases are commonly found in the renewal letter sent by your insurance company.

However, rather than simply accept the increase you have the option to act and switch you car insurance to another provider. The car insurance market is fiercely competitive with companies eager to increase their customer base. You, the customer, can use this to your advantage. An online search for car insurance can quickly illustrate the possible savings you make by moving to another insurance company.

If, like many other honest individuals, you are unwilling to pay for other people’s insurance fraud you can put pressure on your insurance company by switching your motor insurance to another provider. You could even make a worthwhile saving in the process.

Peter Ecob
http://www.articlesbase.com

New Hampshire Insurance Commissioner and AG Announce Insurance Fraud Conviction

December 20, 2007 -- New Hampshire Attorney General Kelly A. Ayotte and Insurance Commissioner Roger A. Sevigny announced today the conviction of Terri Chase for one count of Insurance Fraud following an automobile accident.

Chase, age 26, of Fremont, NH, pled guilty to one count of Insurance Fraud under RSA 638:20 at the Rockingham County Superior Court. She was sentenced to 6 months in the Rockingham County House of Corrections, deferred for 2 years and suspended for an additional year following the deferment. The sentence is expressly conditioned upon good behavior, payment of $450 restitution to Allstate Insurance Company for rental car payments, payment of a $4000 fine and an apology letter to Allstate. Chase was given the option of performing community service in lieu of the fine.

“My fraud investigation team is committed to stopping the crime of insurance fraud, and will continue to work with the Attorney General’s office to bring criminals to justice,” said Insurance Commissioner Sevigny. Attorney General Ayotte said, “This case is an example of our teamwork with the Insurance Department to seek justice and prevent insurance fraud for the benefit of New Hampshire citizens.”

The charges stem from an automobile accident, on or about March 28, 2007, that resulted in front-end damage to Chase’s car. At the time of the accident, Chase’s insurance policy with Allstate had lapsed and she was aware that this accident would not be covered. Following the accident, the insurance policy was reinstated. Chase then made a claim to Allstate, pursuant to this insurance policy, for payment for front-end damage to her car. During a meeting with an Allstate investigator, Chase falsely claimed that the damage to her car occurred on April 5, 2007, while she had insurance coverage. Chase knew that her statement about the date of accident was false, incomplete or misleading and that this information was material to her claim for payment for damage to her car. Chase’s purpose was to deceive or defraud Allstate. The damage to Chase’s automobile was estimated at $4097.26, with a $250 deductible.

The charge is a Class A felony which carries a maximum penalty of 7½-15 years incarceration and a fine of $4000 or an amount not to exceed double the amount of property gained in the commission of a felony.

The case was investigated for Allstate by Alan Vigneau, an investigator in the carrier’s Special Investigations Unit. The case was then referred by Allstate to the New Hampshire Insurance Department Fraud Unit, as required by RSA 417:28.

The conviction is the result of a joint investigation conducted by the Attorney General’s Office and the Insurance Department Fraud Unit. Pursuant to RSA 417:23, the Fraud Unit was formed to investigate Insurance Fraud and other insurance-related criminal activity. Fraud Unit Investigator Karen L. McCallister conducted the investigation on behalf of the Insurance Department.

The collaboration between the Insurance Department and the Department of Justice in investigating and prosecuting insurance fraud crimes is unique. The agencies have entered into a special agreement to join forces to fight insurance crimes. The insurance fraud prosecutor position was created within the Insurance Department, but the prosecutor functions as an Assistant Attorney General, and has the same authority as all Department of Justice prosecutors to act on behalf of the State of New Hampshire. The insurance fraud prosecutor is able to focus exclusively on insurance related crimes, and thus these complex cases are handled by a prosecutor who has expertise in this highly technical field.

Source: New Hampshire Attorney General
http://www.allamericanpatriots.com

Special interview with Summit TV

Summit TV speaks to Jacqui Jooste from Coface about the spate of credit applications where fraudulent operators posing as blue chip companies take delivery of goods and then vanish into thin air

ERIKA VAN DER MERWE: Welcome to Business and Insurance, my guest is Jacqui Jooste from Coface. Jacqui, you’re highlighting a new form of identity fraud - this time targeting companies - and I understand it has significant financial consequences for businesses?

JACQUI JOOSTE: Yes, especially over the last six weeks or so we’ve picked up a huge increase in this identity fraud - and it has huge financial implications. On the insurance side we at Coface South Africa offer credit insurance - however criminal activities and fraudulent activities are not covered under that insurance policy.

ERIKA VAN DER MERWE: So that’s a warning about why companies should listen to your story today - what is it that these fraudsters do?

JACQUI JOOSTE: They will misrepresent themselves as being part of a large well-known company open up accounts with a whole lot of suppliers and then go - and then go and collect goods at those premises. Obviously the company - and us as the credit insurers - will grant that credit without batting an eyelid because they are well known companies, however these fraudsters misrepresent themselves totally.

ERIKA VAN DER MERWE: How can something like this happen? I understand you’re talking significant amounts of money - hundreds of thousands of rands...

JACQUI JOOSTE: Yes, it can be. What we believe is they will obtain copies of documentation from these companies - so they really are the proper application forms, even VAT registration numbers, copies of RD cheques - and they will use that to apply for credit.

ERIKA VAN DER MERWE: How do they get past the system? Surely there must be rigorous credit checking procedures and order procedures?

JACQUI JOOSTE: Yes. On the face of it, it’s all 100% legitimate - the directors listed are correct - so in the checks that you do you won’t pick up any devious action. What you do however need to look out for however is if they’re going to collect the goods - because that’s obviously a sign that you aren’t delivering it to the premises, they’re collecting the good from you - and how they’ve submitted the application. We find very often only cell numbers are provided and not full company details - and the application might not have been faxed from the premises so the fax isn’t actually identified.

ERIKA VAN DER MERWE: You’ve said that you’ve seen an increase in this kind of activity in the last month or so - is this typical for this time of the year and why?

JACQUI JOOSTE: Historically we have definitely seen an increase in fraudulent activity around this time of year - I think mainly it’s the end of the year people are closing off, and people are trying to push sales in the last month of the year, there’s skeleton staff, and just maybe not 100% focused on what we should be focused on at this time of year.

ERIKA VAN DER MERWE: Can you put it into perspective - how many of your clients have been affected this year, and could you put amounts to the fraud?

JACQUI JOOSTE: In the last month or so we’ve had four cases that we know of, and you’re probably looking in the region of R1.2million…

ERIKA VAN DER MERWE: None of which will be insured?

JACQUI JOOSTE: No.

ERIKA VAN DER MERWE: So just finally as a word of warning what can companies be on the lookout for? What sort of checklist?

JACQUI JOOSTE: Look out for if cell numbers are provided, if trade references are not provided correctly. Just be extra aware and extra vigilant - contact the company that is applying for credit and say “we’ve got this credit application form” and just confirm that directly with the company. That would be a good way to pickup potential fraud…

ERIKA VAN DER MERWE: Is this the dominant form of fraudulent activity within companies?

JACQUI JOOSTE: In terms of our experience as Coface South Africa in the credit insurance side yes. We have had cases in the past which are slightly different - where a company would trade for two or three years with a very good credit record, then all of a sudden increase their credit limits to all the suppliers - and then over night disappear with millions of rands worth of goods never to be found again. That’s a different type of fraud we’ve experienced in the past.

ERIKA VAN DER MERWE: As you indicate this time of the year is certainly a time to be on the lookout - be vigilant and don’t be too relaxed.

www.summit.co.za
http://transcripts.businessday.co.za

Pa. Attorney Charged in Insurance Fraud Case

A Pennsylvania solo practitioner was charged Tuesday with leading a personal injury insurance fraud scheme since 1981 that bilked insurance companies out of more than $2 million.

Personal injury attorney H. Allen Litt, 58, of Bryn Mawr, Pa., has been charged along with 14 others in a scam involving falsifying personal injuries from made-up or exaggerated slip-and-fall and auto accident cases and submitting fraudulent insurance claims, Philadelphia District Attorney Lynne Abraham said.

Litt was charged with 73 criminal counts, including 31 third-degree felonies of insurance fraud and one first-degree felony of corrupt organizations.

Litt, who was admitted to practice law in 1975, is accused of working with 100 runners who both located potential imposter claimants or posed as claimants, according to a grand jury presentment charging Litt and his co-defendants.

The imposters would obtain medical care from physicians selected by Litt and rack up inflated medical bills via numerous visits to the Litt-selected doctors, the grand jury charged. Some claimants actually took falls or had an injury from another instance but still participated in a fraudulent fall or accident claim at the behest of the runners, the grand jury charged.

Litt would file fraudulent insurance claims based on the doctors' bills and bogus photographs taken by the runners, the grand jury charged. Four runners alone brought in 300 claims for which insurance companies paid $2.5 million, according to the grand jury presentment. Runners received commissions for bringing in cases and for taking pictures of fraudulent accident scenes, the presentment charged.

Abraham cited the Charles Dickens' story "Oliver Twist" about an orphan sucked into a crime ring and called Litt the equivalent of the story's Fagin, the Dickensian criminal mastermind.

The 25 years of alleged fraud and "hundreds upon hundreds and hundreds of fake accidents" probably involved much more than the $2.5 million, Abraham said.

Abraham's office plans to seek a judge's imprimatur on an exception to the statute of limitations in order to be able to prosecute Litt for more fraud-based charges.

Litt was scheduled to be arrested at the office of his attorney, Marc Neff, at noon Tuesday, Abraham said. A call to Neff's office was not returned. There was no answer at Litt's office.

Litt also was charged with one first-degree felony count of conspiracy; 21 third-degree felony counts of theft by deception; 13 third-degree felony counts of attempted theft by deception; four counts of second-degree misdemeanor of false swearing; one first-degree felony count of dealing in proceeds of unlawful activities; and one third-degree felony, count of criminal use of a communication facility.

Litt could face up to 20 years in prison and a $25,000 fine for each first-degree felony, seven years in prison and up to a $15,000 fine for each third-degree felony, and two years in prison and up to a $5,000 fine for each second-degree misdemeanor.

The grand jury evidence included testimony from three alleged runners for Litt: Lewis Crump, a northern Philadelphia man who said he was in the "accident business," James "Big Frank" Guinn, a taxi driver who based himself at 27th and Tasker streets in southern Philadelphia and Nathaniel Shaw, who said he was a real estate investor and landlord in northern and western Philadelphia. All three men have already pleaded guilty to insurance fraud as part of plea bargains.

They revealed Litt "relied on a stable of runners like themselves to recruit friends and family members who pretended to fall and faked injuries in order to file false insurance claims. He then paid the runners, usually between $100 and $1,000 per case," the grand jury charged.

According to the grand jury presentment, the 132 claims brought by Shaw to Litt involved more than $1 million, and Shaw was paid $47,000. The 36 claims brought by Guinn to Litt brought in $100,000, and Guinn was paid $12,000, the presentment said. Crump allegedly brought 10 to 12 cases to Litt.

The runners "worked on commission and they were more than happy to recruit," Abraham said.

Shaw, who first met Litt when he was involved in a legitimate trolley accident, said Litt was aware the 132 cases he brought him were fraudulent, but Litt would pretend with these clients that he was not involved in the fraud, the grand jury charged. Litt, however, coached Shaw to choose accident sites that involved a cracked sidewalk or a broken step and no surveillance cameras; Litt also told Shaw to instruct the imposter claimants to go to an emergency room and complain of injuries from a fall, the grand jury charged.

Shaw's imposter-accident recruits complained that Litt promised them big money if they made frequent appointments with the doctors he referred to them, but that their share of settlements were tiny, according to the grand jury presentment.

Litt dismissed the complaints, the grand jury charged, and said: "Don't worry about it. They're not hurt anyway, and I got to pay the medical bills and got to pay the doctors."

Iris Kurtz, the receptionist in Litt's office, testified that Litt directed her to improperly notarize releases of settlements without obtaining the signatures of the clients, the grand jury charged.

According to the grand jury presentment, Shaw learned that an investigation was being undertaken of his and Litt's activities from two women he had recruited to take part in fraudulent claims.

In response, according to the grand jury presentment, Litt got Shaw to obtain retraction statements from both women. Those statements were not submitted to the district attorney, but instead were turned over to an investigator and were introduced as evidence in front of the grand jury.

Files were seized from Litt's office in December 2005, and Litt asked Shaw to contact the claimants involved in the cases in those files, but Shaw refused during a phone call with Litt, the grand jury charged.

"In response, Litt announced, 'things are going to get ugly,' and hung up," according to the presentment.

Guinn said that he drew claimants from 16 of his neighbors that he called the "Tasker Street Crew," according to the presentment. Guinn said he followed Litt's instructions to find holes in front of "well-off, but not too big, businesses" that didn't have a lot of attorneys to fight a case but would have more money to pay out than Chinese or Korean businesses, the grand jury charged.

Abraham said that the investigation is continuing into at least 10 doctors that Litt allegedly referred fraudulent clients to.

The investigation into Litt and his alleged cohorts began with an October 2004 tip from an insurance fraud investigator with Chubb Insurance Co., Abraham said.

A search of Litt's office revealed hundreds of documents, including accounting file cards, canceled checks and accident scene photos, according to the grand jury's presentment.

Litt was "really very helpful to us," Abraham said. "He kept great records."

Linda Perkins, chief of the District Attorney's Office's Insurance Fraud Unit, said Litt is an exception to the rule and that most attorneys are honest and withdraw a claim for a fraudulent accident.

Joshua Pitts, 63, of Philadelphia, was Litt's most active runner, according to the presentment. Over 400 checks totaling more than $190,000 were issued to Pitts from Litt, according to records seized from Litt's office, the grand jury charged.

Pitts and three of his adult children were charged each with one count of insurance fraud and related offenses, according to the District Attorney's Office. Ten alleged co-conspirators, including Crump, Guinn and Shaw, have already been arrested. Some have pleaded guilty as part of plea bargains and have agreed to testify against Litt.

Samuel Stretton, an attorney who writes an ethics column for Pennsylvania Law Weekly, The Legal Intelligencer's sister publication, and who often represents jurists in legal quandaries, said that Litt will most likely be able to continue practicing law pending the outcome of his court case.

But the Disciplinary Board of the Pennsylvania Supreme Court can seek more immediate action on Litt's law license by requesting that a hearing be held on suspending Litt from practicing law on an interim basis, Stretton said.

http://www.law.com

Detectives Seek Insurance Fraud Victims

PORTLAND, Ore. -- Portland police detectives are asking victims of fraud on the part of a Portland insurance company to contact them.

Darlene Jo Rethwill, 46, the owner and president of Trautman Perrin & Hale Insurance, is accused of fraud and violating state insurance laws.

Police said Rethwill wrote insurance policies for people and businesses and then used the insurance premiums for personal gain, instead of forwarding the money on to the appropriate insurance company.

As a result, police said it's possible that hundreds of people were without personal or business insurance and didn't even know it.

Police said Rethwill, who sold personal liability, auto, homeowner, renter and business insurance, was still at large as of early Friday afternoon.

Authorities served a search warrant at the Trautman Perrin & Hale office on Westgate Drive in Portland on Thursday.

Police said anyone who obtained insurance through the company should call their insurance provider to verify their coverage.

If they're not covered, they should call police at 503-823-0450.

http://www.kptv.com/news/

Oakland auto glass workers charged with fraud in insurance billing

The owner and three employees of a national auto glass company based in Oakland have been charged in federal court with conspiring to overcharge insurance companies by inflating invoices to show that more expensive windshields had been installed in cars.

Mehrdad "Tony" Hakimian, the owner of Glass Emporium of Marin Inc., directed his employees at his business' West Oakland headquarters and at its subsidiaries, Glass Pro and Glass Masters, to electronically revise invoices before they were submitted to insurance companies for processing and payment, according to a criminal complaint filed in U.S. District Court in Oakland.

"Make sure you train them like I want it done, to put in a cheap part and bill for a more expensive part," Hakimian told a former regional manager, the complaint said.

Hakimian, 46, of Mill Valley; and employees Emma DeGuzman of Union City, Aldy Antonio of San Leandro and Bobby Guinto of Oakland are to be arraigned Wednesday before U.S. Magistrate Wayne Brazil in Oakland on charges of conspiracy to commit wire fraud and wire fraud.

The defendants allegedly falsified invoices to reflect that a more expensive windshield or other hardware had been installed when in fact they had not, FBI Special Agent William Leoni wrote in an affidavit filed in court.

Investigators believe that the defendants were responsible for the bulk of some 5,900 fraudulent invoices, totaling more than $586,000 in potentially inflated costs billed to and paid by as many as 86 insurance companies, including State Farm, Allstate, Nationwide and Farmers Insurance, the affidavit said.

Hakimian has been in business for 14 years and runs 75 shops in 22 states, according to his Web site ( www.autoglass4u.com).

Reached Saturday at the glass company's headquarters on West Grand Avenue in Oakland, Guinto said, "I have no comment on that." The other defendants and their attorneys could not be reached or did not respond to requests for comment Saturday.

The FBI's investigation began in 2005 when a confidential source who worked at a Glass Masters shop came forward with paperwork showing 10 examples of billing irregularities, according to Leoni.

Several district managers with Glass Masters appeared to have prior knowledge of the scam, and one just shrugged his shoulders and said, "I know, they'll get in trouble for it one day" when asked about it by the source, Leoni wrote.

FBI agents and U.S. Postal Service inspectors searched Hakimian's headquarters in December 2006 and learned that it maintained a computerized billing system that contained detailed information from invoices generated at local shops, according to the affidavit.

Authorities visually inspected a number of cars that had windshields replaced at Bay Area shops operated by Hakimian. In some cases, the revised invoices falsely stated that the windshield contained a specialized solar tinting or was equipped with a rain sensor, Leoni wrote.

Hakimian encouraged customers to file a claim with their insurance company, instead of paying cash, so that he could inflate invoices, the FBI said. As an incentive to get customers to file claims, Hakimian instructed his branch managers to offer to waive the customer's insurance deductible, according to the FBI.

E-mail Henry K. Lee at hlee@sfchronicle.com.

Insurance license fraud uncovered!
http://www.moneycontrol.com/india/news/business/

The next time your insurance agent offers you advice, think about this. An unholy nexus is making sure unqualified people can buy insurance licenses. CNBC-TV18’s Priyal Guliani and Khushboo Narayan bring you this uncovered special investigation.

A tiny advertisement placed in a newspaper by a unit manager of a leading private insurance company, invited candidates to apply for a job of an insurance advisor. Posing as Anita Bhatia, a Standard XII pass housewife, we went to one of the company's branches.

Agent: We take this Rs 1,000 as exam fee so that you can sit for the exam. Earlier, it was free of cost but a lot of students are not interested in the job. The company spends Rs 15,000-20,000 on each student. There is a compulsory online training of 100 hours by IRDA that you have to complete before you take the exam. Now, what we do is, we make an id and keep the internet open for 100 hours. The cost of doing this comes to Rs 4,000. We show them that the candidate has completed the training, but actually it is not so. You do it for 2-3 days or at times you just do not do it.

That is not all. A phone call that interrupted our conversation exposed a bigger face of corruption and the company executive had no qualms in admitting it.

Agent: The question paper is out. There is an exam on this Sunday.
Uncovered Agent: Ok.
Agent: So, don't worry about the exam.
Uncovered Agent: So, the paper is out already?
Agent: Yes, big companies like ours buy these question papers for Rs 3-5 lakh.

Our correspondent expressed her apprehension in clearing the exam and suggested if her sister, who is also our correspondent, could write the exam on her behalf. To our shock, the company executive agreed

Uncovered Agent: So, you will make her sit for the exam?
Agent: Yes.
Uncovered Agent: It will be done.
Agent: Yes, surely.

Our correspondent posing as a sister sat for the exam on behalf of our other correspondent and cleared it. Two weeks later, we had in our hands the license that allows us to sell insurance to any consumer in this country.

German court jails three men for aiding al Qaeda
By Matthias Inverardi, Reuters.

DUESSELDORF, Germany (Reuters) - A German court jailed three Middle Eastern men on Wednesday for supporting al Qaeda plots to carry out suicide attacks and attempting to raise funds through dozens of false life insurance claims.

At the end of a 1-1/2 year trial, Ibrahim Mohamed Khalil, a 32-year-old who German authorities believe is Syrian, was sentenced to seven years in prison for belonging to a terrorist organization and attempted insurance fraud.

Yasser Abu Shaweesh and his brother Ismael Abu Shaweesh were given sentences of six years and 3-1/2 years respectively after being convicted of the same offences.

The two men, described by German authorities as stateless Palestinians, are also in their early 30s.

Prosecutors say Khalil was a senior al Qaeda figure with contacts to the leadership including Osama bin Laden, and was responsible for money, logistics and recruiting new members for suicide attacks in Europe.

The district high court in Duesseldorf described the trial as an important "pilot case" regarding al Qaeda's legal status.

"For the first time a court had to rule whether al Qaeda was a foreign terrorist organization under the German penal code," the court said in a statement about the decision.

Prosecutors said Yasser Abu Shaweesh, the elder of the brothers, had publicized his sympathies for al Qaeda and agreed to help raise funds as well as carry out a suicide attack.

He was accused of taking out 10 life assurance policies worth at least 1.3 million euros ($1.92 million) and applying for 23 others worth at least 3 million euros.

His brother Ismael had been attracted to alcohol, tobacco and women as a student in Germany, though he had also absorbed an "Islamist outlook," the court decision said.

The three men, who denied the charges, were arrested in 2005 after police carried out a surveillance operation at their homes. The defence lawyers called the bugging illegal and argued it should not be used as evidence.

The judges rejected this view.

Prosecutors believe Khalil was trained in al Qaeda camps in Afghanistan before the September 11 attacks and later fought against U.S. troops there between October 2001 and July 2002.

Khalil described "violent Jihad" as the duty of every Muslim, they said.

Prosecutors also said Khalil sought to acquire unspecified radioactive material -- which could have been used in a "dirty bomb" -- from Luxembourg, but did not succeed.