Sources of Information

excerpted from "Motive, Means, and Opportunity, A Guide to Fire Investigation."
American Re-Insurance Company, Claims Division, 1996.

Who to Interview; What to Ask

1. The Insurer

a. Application for insurance

b. Interoffice memos and correspondence

c. Proof of loss

d. Insured's statement under oath

e. Letter of declination (denial of claim)

f. Appraisal or survey of property

g. Premium payment history

h. Copies of checks which paid premiums

i. Property insurance loss register (PILR) reports

j. Public/private adjuster investigative file

k. Public adjuster's contract

l. Information from insurance company attorney

2. Questions the Arson Investigator should ask the Insurance Claims Adjuster

a. Did you take a statement from the insured?

b. Did the insured provide documents concerning proof of loss:

(1) Invoices?

(2) Bills?

(3) Value of contents?

(4) Value of building?

c. Did you inspect the fire scene?

d. Did you and an adjuster agree on the amount of loss?

e. Have you dealt with this adjuster before?

f. Has this adjuster represented the owner before?

g. Has the insured had any other losses with this company?

3. Questions the Arson Investigator should ask the Insurance Investigator

a. Did you determine the cause of fire?

b. Who collected and analyzed evidence?

c. Any examination of the property prior to issuance of the policy?

d. Any prior fires at this location?

e. Earlier fires with the same public adjuster?

f. Have you had prior investigations involving property insured by the same insurance agent/broker?

g. Does this fire seem similar to other fires in the area?

h. Have you taken any statements in connection with this fire?

4. Questions the Arson Investigator should ask the Insurance Agent or Broker

a. Who is insured?

b. More than one party insured?

c. Is insured party the beneficiary?

d. What kind of insurance was written?

e. Amount of policy?

f. When was policy written and when does it expire?

g. How did agent acquire the business?

(1) Insured applied for policy.

(2) Insured was solicited.

h. Current policy - a renewal or new policy?

(1) How were policy limits established?

(2) Any recent changes in policy?

(3) Any decreases or increases in limits?

i. Premium amount?

(1) Lump-sum or installment?

(2) Payments current and paid regularly?

j. Did agent know insured before writing policy?

(1) For how long?

(2) How well?

(3) Can agent provide information about insured's background?

k. Is agent familiar with insured property (risk)?

(1) Does agent have a photo of property?

(2) Did agent make a physical inspection of property?

l. Other insurance agent is carrying for insured?

m. Agent aware of additional insurance on property?

n. Agent know of any previous losses?

o. Did insured show special interest in the coverage prior to the fire?

p. Has agent been in contact with insured since fire?

5. Information and Documentation Available to the Arson Investigator from Accountants/Bookkeepers

a. Balance sheet

b. Income statement

c. Other financial statements

d. Annual report

e. Journals/ledgers

f. Workpapers

g. Correspondence and memos

h. Income tax returns (federal/state)

i. Bank records (checks, savings accounts, loans, etc.)

j. Articles of co-partnership/corporate charter (if appropriate)

k. Credit history of client

6. Questions the Arson Investigator should ask Accountants and Bookkeepers

a. Skills/Experience

(1) Are you a public accountant or CPA?

(2) What is your training?

(3) How long have you practiced accounting/bookkeeping?

(4) How long has the subject been you client?

(5) How did the subject become your client?

(6) What is the fee for your services?

b. Client's Financial Situation

(1) How would you describe your client's financial condition?

(2) Was the company operating at a profit or loss?

(3) What was the net worth of the business?

(4) Was the business solvent?

c. How is Accounting Handled?

(1) Describe the work you do for your client.

(2) Who do you deal with when doing your financial work?

(3) Describe the subject's books and records.

(4) Do you audit the subject's financial records?

(5) Can you identify the subjects banks - insurance companies - suppliers - creditors, etc.?

(6) Do you have federal/state tax returns on the subject?

(7) Who prepares these returns?

(8) Do you maintain a working file containing: workpapers - correspondence - memos?

(9) Did the subject display any unusual activity before or after the fire in question?

7. Financial Red Flags the Arson Investigator should notice

a. Decreasing Revenue

b. Increasing Production Costs:

(1) Labor

(2) Material

(3) Overhead

(4) Selling General and Administrative

c. New Technology-Makes Current Process/Equipment Cost Inefficient

d. Increased Competition:

(1) New Products

(2) New Competition

e. Level of Research and Development Expenditures

f. Poor Financial Position in the Industry Ratio Analysis

g. Costly Lease or Rental Agreements

h. Unprofitable Contracts

i. Loss of Key Customers

j. Failure to Record Depreciation

k. Excessive Spoilage or Defects

l. Double Payments of Bills

m. Personal Expenses Paid with Corporate Funds

n. Numerous Bank Accounts:

(1) Checking Accounts

(2) Savings Accounts

(3) Possible Kiting

(4) Inter-account Transfers

o. Low or Overdraft Cash Balance

p. Poor or Negative Cash Flow from Operations

q. Frequent NSF ("Bounced") Checks

r. Large or Frequent Currency Transactions

s. Increasing Trend in Accounts Receivable:

(1) Aging

(2) May Be Uncollectible

t. Pledged Assets

u. Hypothetical Assets

v. Liens on Assets

w. Overinsured Assets

x. Factored Accounts Receivable

y. Inventory Levels:

(1) Removal Prior to Fire

(2) Overstocking Caused by Overproduction

(3) Slow Moving Items

(4) Obsolete Items

(5) Exaggerated on Proof of Loss

z. Increased Borrowing

aa.Large or Numerous Overdue Accounts Payable

bb.Inability to Pay Current Bills:

(1) Utilities

(2) Payroll

(3) Etc.

cc. Delinquent Loan Payments

dd.Loans To or From Officers/Employees

ee.Credit Limits Imposed by Lenders or Suppliers

ff. Frequent C.O.D. Purchases

gg.Bills Paid by Cashier Check, Certified Check or Money Order

hh.Delinquent or Late Tax Deposits:

(1) Withholding Taxes

(2) Sales Taxes

(3) Payroll Taxes

(4) Other Taxes

ii. Asset Values Overstated in Proof of Loss Statement

jj. Guarantor or Comaker of a Note with Loan in Default

kk. Subsequent Sale or Auction of Assets Claimed as Loss

ll. Excessive Business Interruption Insurance

mm.Litigation Against Business or Owners

nn.Extraordinary Write-offs

oo.Bankruptcy Proceedings:

(1) Owner

(2) Firm

(3) Affiliated Business

pp.Frequent/Unusual Intercompany Transactions with Affiliated Company

qq.Two Sets of Books Maintained

rr. False/Altered Documents/Records

ss. Weak Internal Controls

tt. Expired/Revoked Business License

uu.Large Unexplained Differences Between Book and Taxable Income

vv. Prior Year Losses

xx. Prior Insurance Claims

yy. Photocopies Instead of Original Source Documents:

(1) Invoices

(2) Receipts

(3) Etc.

zz. Purchase/Sale of Under or Overvalued Assets

aaa. Frequent Resale of Real Property:

(1) Between Related Parties

(2) Alleged Renovations

(3) Increasing Purchase Price

(4) Increased Insurance Coverage

bbb. Duplicate Sales Invoices

8. Sources of Information available to the Arson Investigator from the Municipality

a. Plots or Maps of Real Property (Property dimensions, address, owner, taxable value.)

b. Tax Collector (Legal description of property, former owners, all tax information.)

c. Street Department (City maps showing conduits, street numbers, old street names, etc.)

d. Building Department [Building inspectors, building permits (cost and details of construction, builder)]

e. Health Department (Birth and death certificates, communicable diseases, pollution and health hazard charges, state and local health codes)

f. Sanitation Department [Customers of garbage service, garbage collectors (have access to premises)]

g. Personnel or Civil Service Department (Personal history statements, employment records, efficiency and salary liens reports.)

h. Credit Unions (Savings accounts, loan history)

i. Welfare Department (Case histories)

j. Board of Education (Teachers biographies and student records)

9. Sources of Information available to the Arson Investigator from the County

a. County Recorder

(1) Official records - deeds, mortgages, wills, births, bankruptcy papers, etc.

(2) Index to official records

(3) Location of official records

(4) County recorder's records - marriage licenses, birth & death certificates, etc.

b. County Clerk

(1) Naturalization records - declaration of intentions, record book, etc.

(2) Civil index - index of all civil actions

(3) Civil files - papers in actions on liens, damages, insanity, etc.

(4) Probate index - papers in probate actions

(5) Criminal index - criminal actions in superior court

(6) Criminal court - complaints, transcripts of preliminary, probation reports, subpoenas

c. County Auditor

(1) County employees' names, occupations, salaries

(2) Records of all county fiscal business d. County Assessor (Similar to city assessor - maps of county property)

e. County Tax Collection (Similar to city tax collector - on county property)

f. County Surveyor (County maps - elevation, landmarks, roads, etc.)

g. Registrar of Voters (Rosters of voters, affidavit of registration, county candidate nominations)

h. Coroner of Medical Examiner (Register: deceased name, inquest date, property found, cause of death, etc.)

i. County Welfare Commission (Files contain a wealth of information about any person on welfare.)

j. County Census Office

10. Sources of Information available to the Arson Investigator from the State Every licensing and regulatory activity is a potential source of information. There's much information in various state offices. Organizational directories of all state offices and their responsibilities are available. Relevant information usually exists in open files in these departments:

a. Secretary of State

b. Controller/Treasurer

c. Department of Agriculture

d. Department of Industrial Relations

e. Department of Natural Resources

f. Fire Marshal's Office

g. Department of Police/Public Safety

h. Horse Racing Board/Gambling Commission

i. Department of Motor Vehicles

j. State Board of Equalization

k. Insurance Commissioner's Office

11. Sources of Information available to the Arson Investigator from the Federal Government The Federal Government maintains files on millions of people, corporations and other organizations. Confidential investigations of individuals suspected of criminal activity may require that an investigator inquire at the Federal level.

a. Government Departments

b. Department of Agriculture - US Forest Service, Consumer Service, etc.

c. Department of Commerce - Central Intelligence Division, Patent Office, etc.

d. Department of Defense - Army, Navy, Air Force, Marine Corps, Coast Guard

e. Department of Health and Human Services - Social Security Administration

f. Department of Housing and Urban Development (HUD)

g. Department of the Interior - Fish & Wildlife, National Park Service, etc.

h. Department of Justice - Antitrust, Civil Rights, Drug Enforcement, FBI, etc.

i. Department of Labor - Labor Management Services, Employment Standards

j. U.S. Postal Service

k. Department of State - Passports, Import/Export licenses, Visas, etc.

l. Department of Transportation - Environment Safety, U.S. Coast Guard

m. Department of the Treasury - ATF, Customs, IRS, Secret Service, etc.

n. Federal Agencies and Commissions - Energy Department, CIA, FCC, etc.

12.Other Important Information

a. Banks

(1) Main Departments: Commercial, Savings, Trust, Loan and Discount, etc.

(2) Subsidiary Departments: Receiving, Paying, Consumer Credit, Safe Deposit, etc.

(3) Records: Signature cards, deposit slips, money orders, etc.

b. Brokers

(1) Security brokers and commodity brokers

(2) Brokers Records: buy and sell orders, cash transactions, dividend records, etc.

c. Transfer Agents. Most large corporations have a transfer agent to maintain a stock ledger for each stockholder in the corporation. Stock ledger gives complete information on all stock transactions.

d. Dividend Disbursing Agents. Most large corporations have a dividend disbursing agent to maintain a dividend disbursement record for each stockholder in the corporation.

13.Other Business Records/Sources

a. Abstract and Title Companies - maps, escrow index and files, title policies, etc.

b. Agriculture Records - veterinarians, transportation companies, farm agents, etc.

c. Automobile Manufacturers - franchise agreements, dealer financial statements, etc.

d. Bonding Companies - records on bonded persons, collateral file, etc.

e. Credit Agency Records - consumer reporting agencies may furnish information:

(1) In response to a court order

(2) Upon written request of the consumer

(3) To a person with a legitimate business need for the information

f. Credit Reporting Agencies - credit ratings, mortgage loans, manufacturers, etc.

g. Savings and Loan Associations - property transactions, financial statements, etc.

h. Specialized Commercial Credit Organizations - United Beverage Bureau, Jewelers Board of Trade, etc.

14. Insurance industry-funded organizations

a. Insurance Crime Prevention Institute - investigates insurance fraud.

b. Fire Marshal Reporting Service (RMRS) - receives and indexes reports of property losses through fires, burglaries and theft.

c. Property Insurance Loss Register (PILR) - similar to RMRS

d. Index Bureau - lists all casualty claims of member companies.

15. Other organizations:

a. Distributors records

b. Drug store records

c. Hospital records

d. Laundry and dry cleaning records

e. Public utility company records

* Excerpted from the Department of the Treasury, Bureau of Alcohol, Tobacco and Firearms, ATF Arson Investigation Guide, Superintendent of Documents, U.S. Government Printing Office, 1990.

Reprinted with permission.