Audit: NYS fund to combat vehicle theft, auto insurance fraud poorly managed

A state-run program funded by $10 annual fees tacked onto insurance premiums is supposed to help combat auto theft and auto insurance fraud, but a state audit found it was poorly managed and lacked oversight from 2018 through 2021.

Run by the Division of Criminal Justice Services, registered vehicle owners bankroll the 3-decade-old initiative, which steers money to law enforcement and prosecutors throughout New York. Stolen cars and false claims drive up insurance rates in the state, which had a 15% increase in stolen vehicles in 2023 compared to 2022, according to the National Insurance Crime Bureau.

The audit, conducted by the office of State Comptroller Thomas DiNapoli, found the Motor Vehicle Theft and Insurance Fraud Program was inconsistently run, stating it “hindered DCJS’ ability to conduct Program business.”

The report determined that at least $1.1 million was put into a state general fund annually.

Nearly $14 million was dispensed to counties from 2018 through 2021, and a total of $7.9 million was diverted to a general state fund during that period.

Additionally, counties with the highest auto theft and insurance fraud crimes are eligible to apply for program grants and are ranked using criteria involving past program performance, countywide collaboration and past prosecutorial or investigative insurance fraud efforts, according to the audit. 

Notably, crime statistics from 2016 through 2018 were used to extend awards through 2021 and subsequently through 2023, which “may not have adequately considered county needs,” according to the report.

Nassau, which was awarded $260,169 in 2018 out of a maximum $300,000 for its tier, was one of five counties highlighted in the report for the highest surge in crime, 86%, when comparing 2021 theft and suspected fraud incidents to 2016-18 data. Nassau had the third-highest spike, behind Albany, which had a 137% jump for those periods, and Richmond, which had a 95% jump, the report shows.

The program also lacked the required 12 board members and failed to hold a mandatory four annual meetings in 2019, 2020 and 2021. Annual board reports were also issued late.

“My office’s latest audit found the program’s administration needs improvement. New Yorkers deserve a well-run program that uses more recent crime data to target its efforts,” DiNapoli said in a statement.

The Division of Criminal Justice Services did not immediately respond to a request for comment. But in response to auditors, the agency wrote it receives the data and stats needed to compile an annual report after a Feb. 15 deadline. The agency also said it will turn to the issue of using current crime data “once a quorum is reached and Board meetings can resume.”