Insurance Fraud Weekly ePort: Week Ending May 23

May 23, 2008

 

Insurance Fraud Weekly ePort
Week Ending May 23, 2008
http://www.InsuranceFraud.org
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LEGISLATION & REGULATION

  • The District of Columbia is creating a fund to improve efforts to combat auto thefts, including owner giveups. Officials are increasingly concerned about drivers who lie that someone stole their vehicles in order to scam a quick insurance payout. Fines for violating the district’s no-fault auto law will take care of most funding, though insurers will help fund the startup phase.
  • Illinois needs dedicated insurance-fraud prosecutors and a stepped-up effort to educate consumers about the unacceptably high cost of fraud. Those were the key conclusions of a fraud summit held on Wednesday by the Illinois Insurance Association and NICB. A major shortfall in enforcing existing laws is the lack of prosecutors with the expertise and job focus to zero in solely on insurance schemes. Nor are there effective efforts to tell the anti-fraud story to the public. Strategies for stopping dishonest adjusters also were discussed at length.

Note: Texts of anti-fraud bills are available on the coalition’s website here.

PUBLIC OUTREACH

  • “There is a moral backslide on this nation on insurance schemes. Americans are more willing to turn their heads to it, or even do it,” the coalition’s Jim Quiggle told the Newark Star-Ledger in an article about owner giveups in the Newark area. “Normal, honest people who wouldn’t steal a candy bar from a drug store won’t hesitate…to rip off an insurance company.” Three local educators were arrested in the last month for allegedly torching their vehicles for insurance money.
  • A fire fighter and his arson dog were among the high-achieving Virginia fraud fighters honored by the Virginia State Police this week. In that case, a driver tried to unload his car because he simply didn’t like it. First he cut down a tree to try and crush it. That didn’t work, so he set the car on fire with gasoline. Lt. Mark Nash of the Bristol Fire Department and ATF K-9 Axel helped bust the case. The suspect and his family even launched a local slander attack on Nash’s qualifications and reputation, but the suspect was convicted anyway. The awards were presented at the annual fraud summit held by IASIU’s Virginia chapter.

CRIMINAL CONVICTIONS

  • Fraud fighters threw water on moldy mold claims. Three Texans bilked insurers out of millions by flooding homes with water hoses, then making large mold claims after letting the damp interiors sit for several days in the heat. Furniture and other household goods also were moved from a warehouse into the flooded homes to inflate claims. The trio also made bogus claims for living expenses while the homes were being repaired. One of the three, Angela Armstrong, made a pile of insurance money as a contractor who repaired some of the damaged homes. The gang also recruited family members into the scheme. Armstrong received nearly eight years in federal prison. Debbie Rampiarie Ramcharan received nearly four years and Daniel Hunger one year.
  • Payback turned from sweet to sour for Ira Klein. Serving 10 years for stealing millions from insurers, Klein tried to have an 18-wheeler flatten the federal prosecutor who convicted him. The Houston gastroenterologist had billed insurers $10 million for phantom services, and was nailed by prosecutor Samuel Louis. Stewing in jail, Klein asked a fellow inmate to “make him look like a pancake.” Klein also allegedly plotted to have acid thrown in the face of an FBI agent, and have his former wife shot. Both played key roles in Klein’s fraud bust, but those hit charges were dropped in a plea deal over the truck plot. Klein received a year Thursday for plotting against Louis. Klein’s upset former wife called the sentence a “slap on the wrist.”
  • A biochemist knocked out her husband Timothy and tossed him, still alive, into a vat of acid in a grab for life-insurance money. Larissa Schuster received life without parole for killing Timothy. Schuster owned a research lab in Fresno, Calif., and was divorcing him. She and a former employee broke into Timothy’s home, chloroformed him, then stuffed him into a barrel she then filed with hydrochloric acid. Her crony also received life without parole.
  • Construction worker Odir Fuentes hurt his back on the job in California. He was told to wear a back brace, and limit his mobility and work hours. But he soon began working at the construction firm — including overtime — under the stolen name of Francisco J. Ceja. Everest National asked the investigative firm MJM, Inc. to look into the case. MJM discovered that Fuentes was working under Ceja’s Social Security number at Fuentes’ employer and two other employers while receiving comp money. MJM prepared the prosecution package and referred the file to the state insurance department. Fuentes received four years and must repay nearly $67,500.
  • Paula Garst saddled small businesses and self-employeds with fake health coverage. She peddled low-cost coverage using a variety of names such as Direct Marketing Services, Healthcare Solutions and Advanced Marketing Group. She also convinced staffing agencies to offer the bogus policies to their clients. Garst received three years in federal prison Wednesday, and must repay more than $32,000 in stolen premiums. She was sentenced in Amarillo, Tex.
  • A UK dentist used fake patients for billing insurers — including a dog. Newton Johnson also used the names of dead people, relatives, friends and neighbors. He and his wife spent tens of thousands of UK insurer pounds on fancy restaurants and renovating their home in Wales. A suspicious colleague turned them in. Newton received 21 months, and his wife eight months.

CRIMINAL CHARGES

  • An insurance agency owner killed the fraud investigator who was probing him for a possible insurance scheme, North Carolina prosecutors charged this week. State insurance auditor Sallie Rohrbach went missing for several days last week while investigating the Charlotte-based Dilworth Insurance Agency. Worried family members called police, who found Rohrbach’s vehicle in the parking lot of a fast-food eatery less than a mile from the agency. Evidence obtained from the vehicle led police to question agency owner Michael Arthur Howell. Police found Rohrbach’s body on Tuesday and charged Howell with first-degree murder. Several of Howell’s customers complained that they paid their premiums, but that the agency did not forward them to the insurance companies.
  • Fake police reports supplied by a corrupt Philadelphia cop greased a staged-accident ring that stole more than $1 million in fake injury claims from 10 insurers, the DA’s office charged this week. Deshane Riggins filled out 45 reports based on phony crash details provided by alleged ringleader Wallace “Pops” Morris, prosecutors say. Morris’ suspected gang allegedly recruited 268 friends, family members and other cronies who lied to insurers that they were hurt in setup crashes. They made nearly 200 injury claims. The suspected ring members usually pursued quick cash settlements with insurers, and some claims involved rental cars. Morris received $500 to $800 for each “passenger” he recruited during the two-year scheme, prosecutors allege, plus a cut of each insurance settlement. Riggins received $400 to $500 for each fake police report he prepared. Thirty-eight people have been arrested and are cooperating. Morris awaits trial, and Riggins pleaded guilty early this month.
  • An elaborate staged-accident scam has landed a Tampa, Fla.-area man in hot water. Rafael Grau reportedly set up a phony chiro clinic in downtown Tampa, using it as a front for scam artists to trigger hefty medical claims stemming from staged car crashes. Grau and accomplice Geraldo Larracuente banged up cars and drove them to four-way intersections and faked the crashes. Then they reported the accidents to police and headed to Providence Chiropractic to be “treated” for lower back and neck injuries, authorities say. Insurers got wise when some of the same people kept showing up in car crash claims. One person allegedly was involved in three crashes per week. Potential losses could reach $68,000, investigators say.
  • At $1,500 per crash, Ramon Espinal was happy to act as the “at fault” driver in two staged accidents in Lawrence, Mass., officials charged this week. That decision doesn’t look too savvy right now. Espinal first denied being involved in the crashes, one in Lawrence and another in nearby Lowell. But Espinol allegedly admitted that a Dominican “runner” named Joel Vega, aka “Nikko,” had paid him $1,500 in cash to take the blame as the driver in each accident. Vega is a major organizer of phony accidents in the Lawrence area, officials say. Local lawyers and chiros allegedly paid Vega to refer them clients looking to cash in on phony accident claims. Vega and Espinal face felony fraud charges.
  • An agent stole more than $1 million in premiums from client businesses, the Illinois workers comp fraud bureau says. Rueben Collier took in the workers comp and general liability premiums but allegedly never bought the promised coverage. The Waukegan-area producer usually talked people out of making claims. He allegedly told them they’d be cancelled or their premiums would triple, the fraud bureau says. The suspected scam was uncovered when a client business called an insurer about the coverage, only to discover no policy was in effect. Collier allegedly funneled much of the money into gambling, including high-limit blackjack. The workers comp fraud unit played a lead role in the investigation.
  • A Folsom, Calif. man’s inability to keep his theft story straight has led to a courtroom date. Jeff Carter and Donald Walker allegedly burned Carter’s 1995 Chevy pickup truck for $30,000 in insurance money. Carter reported the truck stolen the day after the charred remains were found in El Dorado Hills. Carter first said he lent the truck to Walker, who he’d met only the day before, prosecutors say. But he sang a different tune under oath: He denied giving Walker permission to use the truck. The suspected twin torch artists each faces up to five years in prison plus hefty fines.
  • An elementary school principal had her car torched for insurance money, New Jersey prosecutors charged Wednesday. Amanda Wright-Stafford’s 2000 Honda Passport was found on fire in East Orange. The Hillside woman said she’d parked it on a Newark street before meeting with her church group. But the vehicle showed no sign of forced entry or ignition-system tampering, and wasn’t stripped of parts, prosecutors allege. And why didn’t Wright-Stafford simply park her car in the church parking lot? She faces up to 10 years if convicted.
  • A seeming hatchet attack involving cows was an attempted murder for $300,000 in life insurance, Minnesota prosecutors said this week. Brenda Kay Shorter smacked her brother in law with the blunt end of a hatched in a seeming dispute over how he treated his cows. But her husband William allegedly had bought a life policy in his name without telling him, with hubby as the beneficiary. He forged his brother’s signature to the policy, prosecutors charge. The Shorters are in debt and behind on loans for their dairy farm, officials say.

CIVIL & ADMINISTRATIVE ACTIONS

  • Employers who misclassify workers to illegally avoid paying full workers comp premiums will face growing heat in Massachusetts. The governor has ordered a clampdown against dishonest employers. Employers already face treble damages for wage and hour violations, including misclassifying of the workforce. The attorney general has issued a detailed advisory to help employers properly classify workers.

ETC.

  • Auto schemes are declining across Massachusetts but the shaky economy could reverse many of those gains, officials warned at a fraud summit in Boston this week. Auto claims fell $549 million statewide between 2003 and 2006, according to a report released Monday. Claims fell $26 million between 2003 and 2006 in Lawrence, which was besieged by staged-accident rings until a multi-agency taskforce began dismantling them. Premiums for good drivers will go down an average of 7.1 percent this year, after dropping 11.7 percent the year before. But with the economy in the doldrums and housing in a slump, many people could torch their vehicles or stage accidents for quick cash, officials warned.
  • From our “Sign of the Unruly Times” file: Auto arsons for insurance money are spiking in Ontario, Calif., with the sour economy as a possible influence. A nosedive in Ontario-area housing market coincides with an uptick in arsons of newer, higher-end guzzlers such as late-model SUVs, trucks and Escalades, fire officials say. Many of the drivers face home foreclosures. Suspicious vehicle fires jumped from three in March to 12 in April. “Most times, when I get on the scene of a vehicle fire, the cops are just getting the call the car is stolen,” Mike Huddleston, an investigative supervisor for the San Bernardino County Fire Department, told the Sun.
  • Essex County is New Jersey’s favorite dumping ground for unwanted vehicles. The county, which includes Newark, sees about 500 car fires a year compared with about 20 for the rest of the state. The county’s industrial sites and access to highways make it a popular boneyard for people who torch expensive vehicles and then lie to insurers that someone stole them, officials say. So-called owner giveups are so widespread that any car fire attracts a “small army” of police, insurance investigators and lawyers in New Jersey, Kenneth Pringle, general counsel for the New Jersey Special Investigators Association, told the Newark Star-Ledger this week.

QUOTE OF THE WEEK

“I don’t see this as a prank, it’s not like unscrewing a salt shaker at a restaurant.”

—Indiana Judge John M. Marnocha, referring to a fraud-related arson that caused minimal damage to an apartment but almost killed innocent people.

OTHER HEADLINES THIS WEEK

  • Ex-Massachusetts worker sentenced for comp fraud
  • Mass. police veteran accused of aiding auto scam
  • Pennsylvania woman charged with bogus injury claim
  • Two ex-firefighters in Arizona sentenced for arson
  • Florida chiro arrested on 70 counts of billing fraud

Details at www.InsuranceFraud.org/

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