Small Business Arsons on the Rise

Susan Lukjan’s specialty gourmet shop had financial problems. She’d also just signed a lease that committed her to the large expense of moving her Louisville, Ky., store to another location.

Her Campbell’s Gourmet Cottage mysteriously went up in flames before she made the move. Investigators quickly flagged her money problems as a motive.

Lukjan also had just increased the coverage on her shop from $350,000 to $550,000. She told her insurance agent the value of her business had shot up because she bought a new range hood and cooking island valued at $100,000. But her new equipment actually was worth less than $10,000.

She was convicted. Noting that Lukjan showed little remorse, the judge handed her 12 years in prison in August.

Lukjan isn’t alone. Anxious small business owners are lighting up their firms for insurance payouts. The exact numbers have yet to be definitively measured. But with the economy stuck in low gear, it’s no surprise that more than one-third of state fraud bureaus reported an increase in commercial arsons, according to a survey by the Coalition Against Insurance Fraud. In fact, small businesses defaulted on nearly 12 percent of SBA loans in 2008 — when the economy started tanking — compared to 2.4 percent who defaulted 2004.

But being an entrepreneur is a high-risk venture in any economy. Even in normal times, small businesses face an imposing failure rate in their first few years of operation. Most typically lack the deep pockets of larger corporations, and can’t easily absorb serious financial blows that siphon often-limited reserves. Many owners also simply can’t manage a business, or they run into bad luck, or are out-competed.

Regardless, some owners thus grow desperate enough or greedy enough to torch their operation for an insurance payday no matter what the economy.

Courts land hard on insurance arsonists. The threat to people’s lives and large size of the attempted dollar thefts earn fire-starters jail sentences of around seven and half years, according to the Coalition’s database.

Dan Thornton was falling behind on the mortgage for his small El Dorado Springs, Mo., office building.

He hired a crony to light up the place, and didn’t care that he was about to ruin the livelihoods of his innocent tenants — a pizza parlor, video store and cigarette shop.

Thornton lied to his insurer afterward that the fire was a hate crime because he’s gay. But alert investigators checked security cameras inside a nearby Lowe’s department store. Footage showed the crony buying kerosene — a fire-starting accelerant. Wal-Mart footage showed the crony buying more fuel plus dark clothes that made a good nighttime disguise. Thornton received five years in prison in September.

Joseph Ray Beilharz ran a merchandise-liquidation business called Deadwood Liquidators. The Fairfax, Va., man hired cronies who filled empty beer bottles with gasoline and stuffed t-shirts into the tops. They broke open windows with a hammer and threw the lit bottles inside. Beilharz received nearly eight years.

Arson schemes can cause serious injury or even death. Innocent bystanders are killed. Some insurance arsonists also are bunglers; they light up themselves while trying to polish off the buildings.

Cash-poor landlord Jeffrey Alnutt owned several businesses that were flopping because he was spending too much time with his girlfriend.

So the Johnstown, N.Y., man lit up his apartment building. Second-floor tenant Debra Morris died after dashing back inside to rescue her cat.

Investigators found four places where someone had fired up gasoline — a staircase, enclosed porch, living room and kitchen. A red gas can also was found melted to the floor. Alnutt received 25 years to life.

Michael Tuley was having financial troubles with his Fun Merchandise arcade game store. His lease was expiring in only two months, so the Loveland, Ohio, man decided an insurance payout would make his problems go away.

But Tuley’s hired arsonist, Robert Shriefer had little talent and less luck. He flicked on his lighter after spreading gasoline around. The fuel exploded, blowing Shriefer out the door and into the parking lot. The flames coated him with second- and third-degree burns on his arms, legs and face. Tuley was convicted in September and awaits sentencing.

Musa Shteiwi wanted to torch his Steak Thyme Subs eatery in West Chester, Ohio. But his hired gun screwed up three times and caused little damage. A frustrated Shteiwi decided to finish the job himself. He and his son poured gasoline around the floor, then lit cigarettes during a smoking break. They were standing in the pool of gasoline, which quickly ignited. Both men later died of burns.

Call these insurance arsons calculated acts of greed or final shows of desperation by distressed small business owners. But these entrepreneurs won’t know what desperation really means until they’re packed off to prison for a long stay and permanent criminal record.

Jay is executive director of the Coalition Against Insurance Fraud. Web site: www.insurancefraud.org