They deceived the insurance company and received unlawful money from them; what should the one who has repented do?
Question

I and two other people tricked an insurance company with a fake accident. We had agreed amongst ourselves to share out the money, which is approximately 21,000, with each of us taking 7,000. I went and collected the cheque and cashed it, and I took 1,000 from it. What was left was 20,000, which the second guy took on the basis that he would divide it into three equal parts between us, then after that he denied that. I only took 1,000, and all ties between us have been cut off since that day. I have repented to Allah, and I want to return the money. Should I return only the amount that I took, which was only 1,000, or what?
Praise be to Allah.Firstly:
Allah, may He be exalted, has opened the gates of His mercy to people, and He has told us that whoever repents from sin, He will turn in mercy to him and forgive him his sin. He, may He be exalted, says (interpretation of the meaning):
{And whoever does a wrong or wrongs himself but then seeks forgiveness of Allah will find Allah Forgiving and Merciful}
[an-Nisa’ 4:11]
{Say, O My servants who have transgressed against themselves [by sinning], do not despair of the mercy of Allah. Indeed, Allah forgives all sins. Indeed, it is He who is the Forgiving, the Merciful}
[az-Zumar 39:53].
One of the conditions of repentance, if the matter has to do with the rights of people, is that their rights should be restored to them.
The conditions of perfect, valid repentance are:

Giving up the sin
Regretting what has happened in the past
Resolving not to go back to it.

If repentance is from having wronged people with regard to their wealth or honour, then a fourth condition is added, namely:

Seeking pardon from the one who was wronged, asking for his forgiveness or giving him what is rightfully his.

Secondly:
Tricking anyone by means of deceit and cheating in order to take the wealth of others unlawfully is a major sin, and the one who does that has combined two grievous sins: taking money unlawfully, and deceiving and cheating.
Allah, may He be exalted, says (interpretation of the meaning): {O you who have believed, do not consume one another’s wealth unjustly but only [in lawful] business by mutual consent…} [an-Nisa’ 4:29].
It was narrated from Abu Hurayrah (may Allah be pleased with him) that the Messenger of Allah (blessings and peace of Allah be upon him) said: “Whoever deceives (people) does not belong to me.” (Narrated by Muslim, 102).
Thirdly:
If the action of tricking and cheating the insurance company, on the basis of which they issued the cheque, was done with the participation of all of you, each according to his role, whether his role in the deceit was small or great, then you three should all carry the burden of your actions and your plan to share the ill-gotten money among you equally, regardless of in whose name the cheque was written, and also regardless of what each person actually got. Even if you did not take any of this money, and your friend cheated you and took it all, that was a separate act of betrayal, and your burden of sin is because you all tricked the insurance company and took its wealth.
Ibn Qudamah (may Allah have mercy on him) said:
If a group of people take part in killing a person, they must pay one diyah (blood money), a responsibility to be shared among them, because it is a payment for something that has been destroyed that can be divided, so the burden is to be shared among them, as in the case of a financial penalty. (End quote from al-Kafi (4/3).
Al-Bahuti (may Allah have mercy on him) said:
If a group of people participate in killing a game animal [whilst they are in ihram], then they must offer one penalty, because it is a penalty for what they killed, which varies according to what animal was killed, and the penalty to be paid can be divided. So it is one penalty, as in the case of compensation paid for destroyed property or blood money (diyah). (End quote from Kash-shaf al-Qina`, 2/467).
Fourthly:
Do you have to return the money that you owe to the insurance company, or can you spend it on charitable causes on the grounds that the activities and dealings of commercial insurance companies are prohibited? What appears to be the case is that the amount that you owe must be returned to them, and the fact that their activities are prohibited does not make it permissible to spend their wealth on charitable causes. Rather it must be returned to them, so that they can regain possession of it.
Shaykh Yusuf ash-Shubayli (may Allah preserve him) was asked:
Is it permissible to trick insurance companies in order to receive compensation?
He replied:
It is not permissible to trick insurance companies by lying to them in order to take compensation unlawfully. If someone does that, the wealth that he takes is stolen wealth, which he must return to the company from which he took it. It is not valid to dispose of it by spending it on charitable causes; rather he must return it to the insurance company. (End quote from the shaykh’s website)
Fifthly:
It is not stipulated that the one who wants to return something to its rightful owners must disclose his identity, because the aim is to return the thing to its rightful owners.
If he is afraid of being charged, or he is concerned about the consequences of disclosing what he did, then he should look for an appropriate way that will enable him to maintain his dignity and restore the thing to its rightful owners, without bringing embarrassment upon himself. For example, he can send the money by mail, or delegate someone to deliver it, or he can deposit it in their account.
See also the answer to question no. 31234.
And Allah knows best.