A Fleischmanns junkyard dealer was arrested Tuesday for allegedly fraudulently insuring and registering cars for illegal immigrants.
William Hrazanek, 61, of Old Route 28, was arrested by Mark Howard, an investigator with the state Insurance Department Frauds Bureau.
Hrazanek was charged with insurance fraud and offering a false instrument for filing. He could be sentenced to up to 15 years in prison if convicted, officials said in a media release.
He is accused of fraudulently providing insurance and auto registrations for used cars with high mileage that he sold to unlicensed drivers, allegedly earning tens of thousands of dollars each year from the practice.
He was released on $5,000 bail and is scheduled to appear in Delaware County Court on March 12.
An investigation began when Ulster County Sheriff's Department deputies noticed an unusually high number of traffic stops and accidents involving vehicles registered to Rabbit City, Hrazanek's salvage yard.
In each case, the incidents involved unlicensed drivers who were also undocumented immigrants, officials said. One of the vehicles was involved in an accident in Delaware County in which a child was injured while riding a bicycle.
Police identified the unlicensed drivers as undocumented immigrants living mostly in Delaware and Ulster counties.
Howard said the cars were insured as garage vehicles on a business insurance policy. A garage vehicle policy is intended to provide insurance for vehicles used by employees in or near a business, such as a car lot, he said.
Hrazanek allegedly charged buyers $1,800 a year per vehicle for the fraudulent insurance and registrations, and he paid $30 to add the vehicles under his Rabbit City umbrella policy, Howard said.
Howard said it is estimated Hrazanek may have collected as much as $30,000 a year from the fraudulent insurance and registration sales.
Investigators said it is believed 40 vehicles were fraudulently insured and registered.
The alleged scam occurred during a four-year period. Hrazanek's insurance company, American Transit Insurance, calculated its premium loss for 40 vehicles during that span of time at $522,823.
The cars were traced to locations such as Buffalo and New York City, and officials said one of the vehicles was being used as a cab.
Under state law, only U.S. citizens or legal residents may apply for driver's licenses, and applicants must have valid Social Security cards. Investigators said none of the individuals had Social Security cards.
Authorities are working with the state Department of Motor Vehicles to suspend the invalidly issued registrations. Police would be able to impound the vehicles if they are driven again without valid insurance and registration.
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