Fraud News continued ...

PUBLIC OUTREACH

Costly insurance swindles will raise the cost of rebuilding the ravaged Gulf Coast, the coalition warned in a news advisory.  Insurance scams almost always pop up after a natural disaster. Crooked contractors will do shoddy work and disappear with a victim’s money, or try to convince homeowners to inflate repair costs. Homeowners may make claims for jewelry, stereos or other luxury goods they never owned. Business owners may seek insurance money for equipment or inventory that didn’t exist, or inflate the amount of business they lost. Crooked public adjusters may try to entice disaster victims into inflating claims, or may charge desperate victims too much for their services. Insurers will have an especially hard time verifying claims for homes and businesses that were completely swept away, the coalition warned. For the full alert, click here.

CRIMINAL CONVICTIONS
Two people died and four firefighters were hurt in a hotel blaze. Juan Ortiz started to collect insurance money. Ortiz owned the aging Palomar Hotel in Hollywood. He torched the 76-year-old building with gasoline to collect insurance money and avoid paying hundreds of thousands of dollars to fix code violations. Hotel tenant Norma Galindo fell to her death from the fourth floor moments after passing her two children to firefighters. Ortiz’ brother Arturo also died, and probably was the torch. He was found near the fire’s ignition point, bent over a bucket, and wearing two layers of clothing. Four firefighters and two children also were hurt. Ortiz was convicted of insurance fraud, and will be sentenced later. The jury deadlocked on murder and arson, and he’ll be retried on those charges.

Two Marines screwed up a scheme to torch a 1986 Corvette for insurance money. Timothy Kiefer and Joseph D’Agostino wanted to scam $28,000 in insurance money after Kiefer had paid just $5,000 for the car.  Kiefer reported the car stolen about the time firefighters found it burning off a rural road near Spotsylvania, Virginia.  Officials quickly determined someone had burned the Corvette with gasoline, and discovered Kiefer had bought a $28,000 auto policy just 10 days earlier.  Then another Marine said he overheard the pair talking about the scheme before and after they launched it.  Finally, another accomplice confessed he and D’Agostino bought gas and a lighter and set the car on fire themselves. Kiefer and D’Agostino each received six months in state prison.

A Lexington, KY insurance agent received 20 years for stealing $150,000 from clients. Michael Heathman, who did business as Preferred Financial Service, deposited into his own account money that clients had paid to buy insurance or make investments. But there’s a catch to Heathman’s unusually long sentence – he could receive probation if he repays the stolen money within four months. Kentucky’s fraud bureau partnered with the commonwealth attorney in a year-long investigation.

School bus driver Terry Lee Villers tried to bulldoze a fraudulent workers’ comp claim. The Wirt County, West Virginia man said he hurt his knee while climbing off a county school bus sitting in a parking lot. Villers collected nearly $12,000 in workers’ comp money until an anonymous tipster revealed he actually was hurt by jumping off a bulldozer while working in his private contracting business. The inspector general’s fraud unit within the state insurance department led the investigation. Villers was convicted and faces up to 13 years in state prison when sentenced.

The North Carolina insurance department is on high alert for fraud by so-called professional employer organizations (PEOs), and just scored its first PEO conviction.  A firm called Outsource Leasing bilked six client businesses out of $139,000 by failing to provide workers’ comp coverage for the employees it provided the clients. Hardin Ross received 19 months in federal prison. The insurance department is watching PEOs closely for fraud, and says it is working five other PEO criminal cases.

A police dispatcher could be dispatched to jail for faking a workers’ comp claim. Anita Beatriz Blick said she hurt her knee when she fell down while answering phones for the Atherton, California police department. She had surgery and claimed she couldn’t work anymore. Blick collected more than $100,000 in workers’ comp money until she was caught on videotape squatting and lifting heavy rocks. Blick was convicted, and faces up to five years in prison when sentenced in December.

Michael Moreira told Hanover Insurance that someone stole his 1999 Ford Explorer one night in June 2004. Police recovered the SUV the next day. But it was so badly damaged that Hanover declared it a total loss, valued at more than $9,000. But it turns out the Brockton, Massachusetts man paid a crony $500 to take the Explorer, and bang it up so it would seem stolen and vandalized, the Massachusetts fraud bureau found after investigating. Moreira pleaded guilty; he received 15 months probation and must perform 100 hours of community service.

An innocent back injury revealed a plot to steal workers’ comp premiums. An employee of a San Diego-area masonry firm hurt his back on the job and filed a routine workers’ comp claim. While checking out the claim, investigators found owner Kevin Vint was paying him cash under the table to reduce his firm’s comp premiums. Payroll size is one factor in determining premiums. Investigators then found Vint had paid other employees nearly $400,000 in cash as well so their salaries wouldn’t appear on his firm’s books. Vint had ducked nearly $120,000 in comp premiums, but couldn’t duck three years of probation the court handed down to him.
Gary Tumbarello crashed his 2003 Toyota Corolla into another car in Lowell, Mass.
Two passengers were hurt. The Lowell, Mass. man then panicked. He fled the scene, and reported his car stolen. Tumbarello filed an auto-theft claim with Liberty Mutual, but his wife found the car soon after the crash. His shaky claim didn’t wash with Liberty or a statewide taskforce looking into widespread auto-fraud cases around the state. Tumbarello received 18 months in state prison with another six months of probation.

Two Miami doctors and their cronies bilked Medicare and private insurers out of $5.5 million by bribing Medicare beneficiaries to act as fake patients in billing schemes. Jose Garrido and Edgard Zamora’s sentencing finished the rollup of a 20-person fraud ring that included patient recruiters, physician assistants, a clinic office manager, crooked patients and others. The ringleaders faked doctors’ notes and patient medical records, added false patient complaints, and fabricated diagnoses and treatment plans. They also ordered needless tests, equipment and physical therapy. Garrido and Zamora approved the fake records and fraudulent prescriptions at Miami Health, and submitted the bogus claims. Ring members also staged auto accidents, bribed phantom victims to get fake treatment at Miami Health, and then submitted fake injury claims to auto insurers. Garrido received 33 months in federal prison and Zamora received 27 months. They also must repay their share of the stolen money.

A Central City, KY councilman spent four years swindling the feds out of workers’ compensation money by lying that he wasn’t working a side job while receiving comp money. Danny Miller told the US Labor Department that he wasn’t working, even though he ran a consulting business all along. Miller's guilty plea means he'll serve less than the maximum possible 40 years in federal prison when he's sentenced in December. He also must repay $107,693.

Katy Wood dodged a possible death penalty by copping a 30-year plea for having her husband Thomas shot for life-insurance money. The Cord, Arkansas woman hired a hitman to shoot Thomas for insurance and property worth $150,000-$200,000. She called police early the morning of July 13, 2000 to report she thought someone had shot him. Police found him on the ground outside their home with a gunshot wound in his head. She also twice tried to torch their home for insurance money in 2002, and earlier received 10 years in state prison for those scams.

ADMINISTRATIVE ACTIONS
From our "Could It Happen Here?" file: France’s best-knownbrain surgeon claimed he was hurt in a car crash, and arrived at his insurer in a wheelchair. Stephane Delajoux collected nearly US $63,000 but actually hurt his back while skiing in back country earlier. His policy didn’t cover back-country skiing injuries, so he lied about the car crash so his insurer would pay for his hospital stay, officials said.   Delajoux used medical certificates from the skiing accident, and simply altered the dates to make it seem he was hurt in the more-recent car crash. His license was suspended for six months.

GULF WATCH
Dirty Katrina and Rita claims already are rolling in, and here’s a laugher from one insurer: A Florida man claimed flood damage to his $200,000 Rolls Royce, but the insurer analyzed the water and discovered it was chlorinated. Apparently, the man had filled up his Rolls with a garden hose and thought the insurer would rubberstamp the claim. Wrong – claim denied.

More than a dozen suspicious home fires already have broken out in the New Orleans area, and investigators suspect people torched their homes to illegally collect for insured fire damage when they discovered their homeowner policies didn’t cover flood damage. The fires have ruined dwellings that had no electricity or gas service. Fire burned the garage and one section of a home during the day, but firefighters put it out. Then another fire with a different ignition point broke out on the same home that night.

Consumers can protect themselves from flooded Gulf-region vehicles and boats with unsafe electrical systems by checking ID numbers listed on a free database from the National Insurance Crime Bureau (NICB). NICB is collecting the ID numbers of vehicles and boats from the flood region and logging them into a database. This will help potential buyers avoid being defrauded by shady sellers. Many vehicles and boats will be cleaned up and their titles washed to hide their soggy history. In many cases, they’ll have dangerous and unsound electrical systems. NICB also is making the database available to insurers, DMVs, fraud bureaus and law enforcement. It’s available at www.nicb.org, and is part of a partnership with the insurance fraud unit of the Louisiana State Police.

ETC.
Staged-accident rings may be setting up shop in Northern Virginia. Officials have busted three rings in the last six months, shutting down more than $1 million in fraudulent claims. The fraud rings used a variety of approaches. Sometimes they maneuvered innocent drivers into crashes with their own cars. In fact, one ring forced four motorists into crashes, costing one motorist his auto insurance. Other times ring members crashed cars into stationary objects. Sometimes ring members also crashed their cars into each other. Then they filed bogus injury claims, using forged bills or shady doctors who rubberstamped soft-tissue injury claims. A state-federal task force is probing staged accidents in Arlington. About 20 suspects are being tried. One ringleader already has received six months in state prison.

Wendy’s will pay $100,000 in rewards to two people who ratted out a woman who cost the fast-food chain millions by conspiring to make a bogus insurance claim for a human finger she’d placed in a bowl of chili herself. Anna Ayala said she bit into a finger while chowing down at a Wendy’s in San Jose, California.  But Ayala and her husband were recently convicted of planting the finger. He’d obtained the finger from an injured co-worker at a paving company where they both worked. The paving firm’s owner and another anonymous person will split the $100,000.

Fraud News from the Industry
Source: Coalition Against Insurance Fraud
Reprinted with Permission