e-focusFraud…………..An Insurance Fraud Bureau of Massachusetts Publication

The following is the Insurance Fraud Bureau’s March 2003 issue of e-focusFraud.  This e-mailing is meant to supplement focusFraud which will continue to be produced on a semi-annual basis.  This format will bring you information faster.  Information on updated stories can also be found on the IFB website at www.ifb.org.

 e-focusFraud will only be distributed to those on our mailing list who have provided an e-mail address.  Please encourage colleagues who may be receiving a paper copy of focusFraud to sign up for our e-mail version.  All inquiries should be addressed to dterry@ifb.org. 

Ask An Investigator Corner

Question:   We are frequently asked by SIU, claims and other insurance company personnel to provide specific instructions on how to submit a referral to the Insurance Fraud Bureau.  The IFB has a written “Referral Process” which is distributed at IFB seminars and presentations.  The Referral Process is now available, in its entirety, on the IFB website at www.ifb.org along with a copy of our insurance company referral form.  Hotline referrals will continue to be submitted through the IFB website’s online hotline tip reporting form or via telephone at 1-800-32FRAUD. 

The following is a brief overview of what should be referred to the IFB and how to do so.

Answer:  Personnel from insurance companies, insurance agencies, professional associations and law enforcement groups who have reason to believe that an insurance transaction may be fraudulent, or who have knowledge that a fraudulent insurance transaction is about to take place, or has taken place in Massachusetts, are required by Massachusetts law (338 Mass Acts 1990 as amended by Section 99 of 398 Mass Acts 1991, and Section 13 of 427 Mass Acts 1996) to report the suspected fraud to the Insurance Fraud Bureau.  Fraudulent insurance transactions include, but are not limited to, fraud and abuse of the system by attorneys, insurers, employers, medical providers, vocational rehabilitation providers, agents for attorneys or other service providers, claimants, or any other individuals or companies alleged to have engaged in unlawful acts of insurance fraud. 

The IFB investigates cases in all lines of business.  Primary attention focuses on matters involving automobile and workers’ compensation insurance claims and premium evasion matters as these areas can have a significant beneficial impact on insurance costs in Massachusetts.  All referrals should include a completed IFB referral form and sufficient documentation of the suspected fraud to assist the IFB in evaluating the referral.  Specific documentation that may assist the IFB in properly evaluating potential cases to accept for criminal investigation are provided on the IFB website for workers’ compensation fraud referrals, premium evasion/avoidance fraud referrals, automobile fraud referrals and property loss fraud referrals.

Referrals should be submitted to the IFB office for evaluation at 101 Arch Street, Suite 600, Boston, MA 02110.  The mission of the IFB will be carried out through investigation of cases which are determined to have the highest probability of successful criminal prosecution.

Have a question for an IFB investigator?  Questions can be directed to the attention of Deborah Terry at dterry@ifb.org.

Agent Fraud

Suspended Insurance Agent Allegedly Steals Over $100,000

JAMAICA PLAIN- A suspended insurance agent allegedly stole personal checks, forged them, and attached them to policy applications without the knowledge of the checkholder.  Throughout the 1990s, the subject was licensed as an insurance agent with several companies.  He allegedly conducted a number of schemes from 1995 through 2000 to submit false insurance and annuity applications to 11 insurance companies in order to unjustly receive commission payments from these companies.  Although most of these policies were later cancelled by the individuals whose checks were submitted, the subject received a large percentage of his commission at the time that the policy was submitted, and the companies were defrauded of these commission payments.  The subject also allegedly submitted insurance applications in the names of fictitious people, and, without the authorization of actual policyholders, submitted voided checks and bank account information of actual clients in order to set up automatic debit payments to insure these fictitious people.  The subject’s insurance agent’s license was revoked in April 2000 by the Division of Insurance.

A Jamaica Plain man was arraigned on ten counts of larceny, ten counts of agent fraud, eight counts of perjury, eleven counts of forgery, eleven counts of uttering, three counts of identity fraud, one count of attempted larceny and one count of attempted agent fraud on January 22, 2003 in Suffolk Superior Court.  Assistant Attorney General John A. O’Leary of Attorney General Tom Reilly’s Insurance and Unemployment Fraud Division is prosecuting the case. 

Former Agent Allegedly Nets More than $150,000

from Insurance Fraud Schemes

BURLINGTON- A former Burlington insurance agent allegedly submitted loan applications to a California credit company which loans money to companies to pay for their workers’ compensation insurance.  As part of his scheme, the former agent allegedly submitted applications to the credit company on behalf of several bogus Massachusetts companies that, investigation revealed, did not exist.  The address for each of the companies traced back to a post office box allegedly being rented by the subject.  Further investigation with the Secretary of State’s Office revealed they allegedly had no record of any of the companies existing in 2001.  With the majority of the credit applications submitted, the subject would include a copy of a fake check that he allegedly claimed was a down payment that he submitted to the insurer providing workers’ compensation insurance to each bogus company.  The credit company forwarded $132,944 to the subject to pay the insurance premiums for each of these bogus companies.  In a second scheme, the subject allegedly embezzled $25,023 worth of auto insurance premium payments from 75 of his customers.  The subject allegedly converted these premium payments for his own use instead of forwarding them to the insurance carrier.  The subject’s license to practice as an insurance agent was revoked by the Division of Insurance in August 2002.

On January 8, 2003 in Middlesex Superior Court a former Burlington insurance agent was arraigned on six counts of larceny by false pretenses, five counts of larceny by making false financial statements in order to obtain credit, four counts each of forgery and uttering a forged instrument and one count each of insurance agent embezzlement and identify fraud.  The case was investigated by the IFB and the Division of Insurance and is being prosecuted by Assistant Attorney General David B. Andrews of the AG’s Insurance and Unemployment Fraud Division. 

Multi-Lines Fraud

Brockton Man Charged with Identity and Insurance Fraud

BROCKTON- In July 1996, a Brockton man allegedly sustained a back injury on the job as a landscaper.  He collected partial disability benefits from October 1998 to September 2000 totaling more than $25,000.  During this time, the subject allegedly filed several documents with his insurer and the Department of Industrial Accidents indicating that his only source of income was his workers’ compensation benefits checks from Kemper Insurance Company.  However, investigation revealed that the subject, allegedly using a falsified Massachusetts ID card, applied for and received a job as a property manager in October 1998 under the name of another man.  The subject, allegedly posing as the other man, worked as a property manager from December 1998 through August 2000.  The position allegedly required the subject to do relatively physical tasks including repainting all vacant apartments, patching wall cracks and holes, removing old carpeting and installing new carpet.  The subject allegedly earned more than $20,000 as the other man while simultaneously collecting more than $25,000 in benefits. 

A Brockton man was arraigned in Brockton District Court on January 29, 2003 on one count each of workers’ compensation fraud, larceny and obtaining a false Massachusetts ID card.  The case is being prosecuted by Assistant Attorney General Tracey A. Turner of the Attorney General’s Insurance and Unemployment Fraud Division.

Workers’ Compensation Fraud

Big Dig Worker Commits Insurance Fraud

EVERETT- In August 2000, a laborer on the Central Artery Tunnel project reported that he sustained an on-the-job back injury.  He began receiving workers’ compensation benefits from National Union Fire Insurance Company, a member company of the American International Group, Inc.  The subject continued to receive partial disability benefits in February and March 2002 after reporting to the insurer that he was still disabled and unable to work.  Investigation revealed that the subject worked for five weeks as a van driver for a transportation company in Malden which had paid him in cash. 

John Feeley pled guilty to charges of workers’ compensation fraud and larceny.  He was placed on one year probation and ordered to pay $2,300 restitution.  The case was investigated by the IFB and the Suffolk County District Attorney’s Office and was prosecuted by Assistant Attorney General Timothy A. Malec of Attorney General Tom Reilly’s Insurance and Unemployment Fraud Division.

Automobile Fraud

Brawling Fraudster

SPRINGFIELD- A Springfield man was involved in a motor vehicle accident and reported that he broke his jaw in the accident.  Evidence revealed that the subject allegedly broke his jaw in a fight two days before the accident occurred.  The subject allegedly fraudulently collected approximately $1,000 in medical benefits from Hanover Insurance Company.

Complaints were issued against a Springfield man on one count each of filing a fraudulent insurance claim and larceny in Springfield District Court on January 10, 2003.  Hampden County Assistant District Attorney Tim Rogers is prosecuting the case.

Alaskan Journey Still Not Far Enough

WORCESTER- A Worcester man reported his 1998 Toyota RAV 4 stolen from a Worcester nightclub parking lot on August 4, 2001.  The vehicle was subsequently recovered in Anchorage, Alaska on August 1, 2002.  Alaska Registry information revealed that the vehicle had been inspected and registered in Alaska on July 27, 2001, prior to the report that the vehicle had been stolen.  Commerce Insurance Company paid the subject $16,684 as a result of the alleged theft of the vehicle. 

The case against a Worcester man was continued without a finding for one year in Worcester District Court.  He was ordered to pay restitution of $16,684 and court costs of $300.  The subject had been charged with concealment of a motor vehicle to defraud an insurer, larceny, perjury by statements alleging motor vehicle theft, and motor vehicle insurance fraud.  Worcester County Assistant District Attorney Robert Campomizzi prosecuted the case.

Malden Auto Repair Shop Owner and Employee Plead Guilty to Fraud

MALDEN- The owner of a Malden auto repair shop was allegedly involved in staging auto accidents and inflicting enhanced damages upon vehicles.  One of the employees of the repair shop helped inflict additional damage on vehicles to be repaired and was involved in the staged ring conspiracy.  A 1988 BMW owned by the repair shop owner and a third subject was used in one of the staged accidents. 

Two men associated with a Malden auto repair shop pled guilty to insurance fraud-related charges on January 15, 2003 in Malden District Court.  An employee of the Malden shop pled guilty to insurance fraud and conspiracy.  He was placed on 18 months probation and ordered to pay a $500 fine and restitution of $5,550 to be paid joint and severally with the repair shop owner.  The owner pled guilty to insurance fraud, attempt to commit a crime and three counts of conspiracy.  He was placed on two years probation and ordered to pay a $1,000 fine and restitution of $5,550 to be paid joint and severally with his employee.  The BMW co-owner has been charged with insurance fraud, attempt to commit a crime and larceny.  He is currently wanted on an outstanding default warrant.  Assistant Attorney General Tracey A. Turner is the prosecutor.

“N.Y. Rates Too High for this Brooklyn Man” Case Update

SPRINGFIELD- In February 2001, a Brooklyn, New York resident applied for Massachusetts auto insurance with Premier Insurance Company and provided a New York motor vehicle title and driver’s license at the time of application.  He also filed an RMV-1 to register his vehicle in Massachusetts.  All documents were signed in the presence of his insurance agent.  The subject was subsequently involved in two motor vehicle accidents, both in the city of New York.  Premier paid a total of $10,136 for the two accidents.  During an investigation, it was revealed that the subject was never a resident of Massachusetts and he admitted to the insurance company SIU that he registered his vehicles in Massachusetts because the insurance was too costly in New York. 

The case against a Brooklyn man was continued without a finding on March 5, 2003 in Springfield District Court.  The subject had been charged with three counts of filing a fraudulent insurance claim and one count of larceny.  He was placed on probation for one year and ordered to pay $2,600 restitution.  Hampden County Assistant District Attorney Tim Rogers prosecuted the case.