| Convictions | 174 |
| Individuals Indicted | 146 |
| Complaints Issued | 199 |
| Cases Referred for Prosecution | 343 |
Message from Mark W. Pearlstein, Assistant United States Attorney
Federal law enforcement agencies have long been involved in the
investigation and prosecution of insurance fraud cases. Although
the Attorney General's Office will continue in its historic role
of prosecuting the largest number of insurance fraud cases, several
factors demonstrate that federal law enforcement agencies in Massachusetts
will be stepping up their enforcement efforts in the coming years.
This message will discuss some of these factors.
One factor pointing in the direction of increased federal involvement
is the message emanating from Washington. Congress has enacted
a sweeping statute, 18 U.S.C. §1033, which federalizes a
number of crimes targeting and/or involving insurance companies,
including many forms of insurance fraud. Health care fraud, which
often involves crimes directed against third party payors such
as insurance companies, is perhaps the top white collar crime
priority of the Department of Justice. Funding for new resources,
in the form of additional special agents and prosecutors, is now
flowing to Massachusetts. In Boston alone, the Federal Bureau
of Investigation has a squad comprised of twelve agents dedicated
to health care fraud investigations.
The upshot is clear: the enhanced priority assigned to this area,
coupled with additional agents and prosecutors, should result
in an increase in insurance fraud convictions.
In Massachusetts, a second factor enhancing the federal presence
in this area is the partnership which has developed between the
Insurance Fraud Bureau (IFB) and
agencies such as the FBI and the Internal Revenue Service's Criminal
Investigation Division. Working closely with special agents from
those agencies IFB investigators have made important contributions
to a number of recent cases involving complex forms of workers'
compensation insurance fraud.
Finally, federal law provides a number of tools to federal law
enforcement which are presently unavailable to our State counterparts.
There is a nationwide service of process for federal grand jury
subpoenas; a subpoena issued by a Boston federal grand jury will
compel a witness in Los Angeles to provide testimony and/or documents.
Undercover investigations are greatly aided by a provision authorizing
a person acting at the direction of law enforcement to covertly
record conversations; e.g., "wear a wire." The money
laundering statutes provide for lengthy terms of imprisonment
for those who conduct financial transactions with the proceeds
of fraud, and create mechanisms for encumbering, and ultimately
forfeiting property involved in this activity. Finally, the Federal
Sentencing Guidelines have dramatically increased the rate of
incarceration, and the length of prison sentences, in all types
of fraud cases.
Working cooperatively with the Attorney General's Office and the
IFB, federal law enforcement agencies in Massachusetts expect
to investigate and prosecute an increased number of insurance
fraud cases. We encourage victims of such fraud to consider bringing
the facts to the attention of the FBI or the U.S. Attorney's Office.
Mark W. Pearlstein
Framingham Attorney Pleads No Contest in Workers' Comp Case
FRAMINGHAM- Additional court activity has occurred on a
case first reported in the October 1996 issue of focusFraud.
A Dedham man broke his ankle while working as a real estate sales
and marketing coordinator and collected over $34,000 in workers'
compensation benefits from the Insurance Company of North America.
During his period of disability he worked full-time at several
real estate jobs, earning over $80,000. The subject's attorney
was aware that he continued to work while collecting benefits
and even wrote him a letter of recommendation for one of the jobs.
Jesse Matuson, a Framingham attorney, pled no contest
in Boston Municipal Court on November 1, 1996 to a charge of conspiring
to commit larceny with his client, Nicholas Milona. Milona
had previously pled guilty to a larceny charge. Matuson was sentenced
to six months in the House of Correction, suspended, and ordered
to pay a $2,000 fine. Milona received a suspended sentence and
probation and he was ordered to pay $14,000 restitution.
Assistant Attorney General Jennifer Renna Ferreira prosecuted
the case.
"Weekend Brawl Results in W/C Claim" Case Update
LAWRENCE- A subject reported to his employer on a Monday
morning that he had sustained an injury to his right shoulder
while working the Friday night shift. An investigation conducted
by Kemper Insurance Company revealed that the subject had actually
sustained the injury over the weekend when he was involved in
a fight.
A Lawrence man pled guilty to charges of insurance fraud and
attempted larceny on August 13, 1996 in Westborough District Court.
He was sentenced to 18 months probation and a $1,000 fine. Assistant
Attorney General Brian P. Burke prosecuted the case.
Thumbs Up!
WEBSTER- A subject cut his thumb while working, filed for
workers' compensation benefits and was paid $8,665 for scarring
and disfigurement due to his injury. He also received $180 weekly
benefits for almost three years from Travelers Insurance Company.
About five months after the injury, an Independent Medical Examination
(IME) determined that the subject was capable of returning to
work and a second IME confirmed the original finding. It was
found, however, that the subject worked for a substantial period
of the time he alleged to be totally disabled. He listed a different
social security number at his new employment in an attempt to
avoid detection.
A complaint was issued against a Webster man on charges of
workers' compensation fraud and larceny in Waltham District Court
on July 16, 1996. The subject was arrested by Massachusetts State
Police at his new place of employment and later released on personal
recognizance. The prosecutor on the case is Assistant Attorney
General Michael Cullen.
UPS Employees Charged in Separate Cases
FALL RIVER- A UPS employee allegedly suffered a work-related
back injury while getting out of a truck. He collected total
disability benefits from Liberty Mutual Insurance Company for
sixteen months and then partial disability benefits for over a
year. The subject allegedly worked as a financial planner for
a financial services firm during these periods of disability.
REVERE- A part-time UPS employee was allegedly injured
and totally disabled from his work when he was struck in the head
by a package. He collected total disability benefits from Liberty
Mutual Insurance Company for eleven months while allegedly working
a construction job.
MILLIS- A third UPS employee was allegedly injured and
totally disabled from work when she hurt her back while lifting
a package. She collected total disability benefits for more than
fifteen months from Liberty Mutual. She allegedly worked for a
mini-golf and ice cream shop at the same time she collected the
benefits.
Complaints were issued against the three subjects in Dedham
District Court on July 1, 1996 on charges of insurance fraud,
workers' compensation fraud and larceny. Assistant Attorney General
Darlene Luccio is prosecuting the cases.
"Back Injury Doesn't Slow Down This Subject" Case Update
EDGARTOWN- An Edgartown woman who claimed to be totally
disabled due to a work-related injury sustained while employed
at Raytheon Company collected over $22,000 in benefits from Liberty
Mutual. It was determined that despite her claim of total disability
and receipt of benefits, she worked at and later managed a restaurant
in Oak Bluffs.
An Edgartown woman admitted to charges of larceny of workers'
compensation benefits. Her case was continued without a finding.
She was ordered to pay $10,000 in restitution. Assistant Attorney
General Michael Cullen prosecuted the case.
Subject Collects $63,000 in Benefits
WORCESTER- A subject was working at a construction site
when he was injured and allegedly suffered total disability.
Despite his claim of incapacity, the subject was later employed
by a Worcester law firm as an investigator and paralegal. He failed
to disclose his return to work or his income to the insurance
carrier. During the time of his alleged disability, he received
over $63,000 in disability insurance compensation from Aetna Insurance
Company.
In Worcester Superior Court on August 7, 1996, a subject was
indicted on two counts each of insurance fraud and larceny. Assistant
Attorney General Michael Cullen is prosecuting the case.
Watertown Corporation Allegedly Misclassifies Workers
WATERTOWN- A Watertown corporation allegedly failed to pay workers
the prevailing wage rate for asbestos abatement on a public works
project. Through investigation, it was discovered that three
workers that were listed on certified payrolls as asbestos workers
were reported to Cigna Insurance Company as clerical or salespersons.
A complaint was issued in Woburn District Court on September
18, 1996 against a corporation on a workers' compensation fraud
charge. The case is being prosecuted by Assistant Attorney General
Luz Arevalo.
Subject Accused of Forging Receipts to Support Theft Claim
MILLIS- A subject's work truck, while reportedly locked
and parked in his driveway, was allegedly robbed of over $8,700
worth of the subject's personal property. The subject produced
receipts for the items reported stolen, however Commerce Insurance
Company discovered through their investigation that at least two
receipts, totalling $3,379, had been forged.
A complaint was issued against a Millis man on charges of insurance
fraud, attempts to commit a fraud and forgery in Wrentham District
Court on November 14, 1996. The case is being prosecuted by Assistant
Attorney General Darlene Luccio.
Missing Pearls Never Lost
ATTLEBORO- A subject submitted a claim on a homeowners
policy alleging the loss of scheduled jewelry, specifically a
pearl necklace valued at $600. The subject was in the process
of a divorce when she filed the claim with Pawtucket Mutual Insurance
Company. When her husband requested his insurance agent to change
his address for insurance purposes, he became aware of the loss
report filed by his wife claiming the loss of the necklace. The
husband notified Pawtucket Mutual that he was in possession of
the pearl necklace and produced the necklace for photographing.
A complaint was issued against an Attleboro woman on August
12, 1996 in Wrentham District Court on charges of insurance fraud
and attempted larceny. Assistant Attorney General Sean Kealy
is the prosecutor on the case.
"Former Insurance Appraiser Indicted" Case Update
FRANKLIN- A former in-house appraiser at Hanover Insurance
Company submitted a large number of falsified appraisals of automobiles
that were supposedly repaired at a number of auto body shops.
He also conspired with one body shop owner to stage accidents
in which the appraiser would arrange to personally assess the
damages. As part of their scam they also used altered invoices,
car rentals receipts and phony photographs. Other individuals
were recruited to help stage the accidents.
Richard Merchant pled guilty to insurance fraud charges
in Norfolk and Essex Superior Courts on October 22, 1996. He
was sentenced to 3-5 years in state prison with one year to serve.
Merchant admitted he conspired with Christopher Kalogeropoulos,
owner of Euro-Tech Auto Body, to submit fraudulent claims. Kalogeropoulos
was convicted of fraud-related charges on May 3, 1996 and he served
90 days in the House of Correction. At a restitution hearing
held on November 14, 1996, Kalogeropoulos was ordered to pay an
additional $11,000 in restitution. This amount is in addition
to the $36,000 he was ordered to pay stemming from Essex County
charges. Trials for other subjects in the case are still pending.
Assistant Attorney General Brian P. Burke is the prosecutor.
As part of Kalogeropoulos' sentence, he was required to write
an open letter to auto body shops. This letter, in its entirety,
is reprinted below.
"To All Collision Repair Shop Owners
"To Tell the Truth" Case Update
BROCKTON- A subject submitted false claims to Commerce
and Safety Insurance Companies stating that he was rear-ended
by another vehicle. The collision caused damage to his vehicle
and injuries to his head, neck and back in which he collected
over $3,000 in medical expenses. The driver of the other vehicle
reported separately to his carrier that his vehicle was tapped
lightly from behind by the subject's vehicle but neither vehicle
sustained any damage. A passenger verified this report. An accident
reconstructionist concluded that the damage to the subject's vehicle
was inconsistent with the profiles of the two vehicles and the
accident as reported.
A Brockton man admitted to sufficient facts and his case was
continued without a finding on September 13, 1996 in Brockton
District Court. He was ordered to complete one year probation,
to pay restitution of $3,084 and to perform 100 hours of community
service. Assistant Attorney General Sean Kealy prosecuted the
case. This case was first reported to the IFB's hotline by the
driver of the adverse vehicle.
"Staged Auto Accident and Theft" Case Update
CAMBRIDGE- Three men staged a hit-and-run accident in which the
driver and his passenger claimed injuries to Trust Insurance Company.
A third subject supplied his mother's car that was intentionally
driven into the principle subject's vehicle. The "hit-and-run"
vehicle was then hidden and reported stolen to corroborate the
driver's claim that he was involved in a hit-and-run accident.
Andrew Otero pled guilty to charges of motor vehicle
insurance fraud, attempted larceny, conspiracy to commit larceny
and procuring a false certificate of registration in Cambridge
District Court on May 30, 1996. He was sentenced to a suspended
sentence and ordered to pay $2,550 in fines and to perform 250
hours of community service. Assistant Attorney General Anne Berlin
prosecuted the case.
Malden Auto Glass Company Allegedly Bills for Work Not Done
MALDEN- The owner of a Malden automobile glass replacement
company allegedly billed for glass replacement jobs which were
never done. One such claim involved a subject who reported that
the rear hatch window of her vehicle had been broken when she
had parked the automobile at Kenmore Square in Boston. The glass
company allegedly replaced the windshield and back glass and billed
the carrier, Hanover Insurance Company. A year later, the subject
again claimed that the rear window of her vehicle had been broken
when the vehicle was parked unattended. The glass company once
again allegedly replaced the rear window and billed the carrier.
Upon inspection, the Hanover appraiser concluded that all of
the glass on the vehicle was factory installed and had never been
replaced.
Twenty-five counts of insurance fraud, larceny, attempted larceny
and conspiracy were filed against the owner of an automobile glass
company and two other subjects involved in the case. The complaints
were issued from Malden and Chelsea District Courts. Assistant
Attorney General David Marks is prosecuting the case.
Haverhill Ring Allegedly Collects Over $100,000 in Phony Lost Wage Claims
HAVERHILL- Over a two year time span, four subjects allegedly
staged automobile accidents, claimed injuries and then filed false
claims for lost wages from a phony Saugus vinyl siding contractor.
A fifth subject in the ring allegedly filed a lost wage claim
from a phony Virginia company. The amounts allegedly received
from ten different insurance carriers total over $100,000.
Five people were indicted in Suffolk Superior Court on July
16, 1996 on a total of 64 counts of insurance fraud-related charges
for allegedly filing over $100,000 worth of phony claims for lost
wages with ten insurance companies. Charges include insurance
fraud, larceny and conspiracy. A prosecutor from Attorney General
Scott Harshbarger's Insurance Fraud Division will prosecute the
case.
Moral of the Story: Pay Your Bills on Time!
TAUNTON- The manager of a self-storage building contacted
the Taunton Police Department when he failed to receive the rental
money owed on one of the units. When the manager and the police
opened the storage unit, a 1991 Volvo was discovered. After a
check on the vehicle, it was found that the vehicle had been reported
stolen to Brockton Police in 1994. The Taunton Police Department
notified the IFB of the recovery of the stolen vehicle. Commercial
Union Insurance Company paid almost $20,000 for the alleged theft
of the vehicle.
A complaint was issued against a Taunton man on charges of
concealing a stolen motor vehicle and concealment of a motor vehicle
to defraud the insurer in Taunton District Court on August 15,
1996. Assistant Attorney General Steven Thomas is prosecuting
the case.
Boston Police Officer Charged with Insurance Fraud
BOSTON- A Boston police officer allegedly submitted false
claims with two insurance carriers reporting that he was injured
in an auto accident and claiming to have lost approximately $25,000
in wages as a result of the accident. The officer allegedly returned
to work the day after the reported accident and worked for several
days. In addition, he allegedly was on paid leave from his police
officer duties for an unrelated injury during the time he was
collecting lost wage benefits from the automobile accident. Travelers
Insurance Company paid out more than $10,000 in lost wages to
the subject. Sentry Insurance Company denied the claim.
A Boston police officer was indicted in Suffolk Superior Court
on one count of larceny, two counts of insurance fraud, two counts
of uttering a forged instrument and one count of attempting to
commit a crime on August 26, 1996. Assistant Attorney General
Kevin P. Brekka is prosecuting the case.
Jump-In Passenger Serves Six Months
SPRINGFIELD- A Springfield man claimed to be a passenger
in a vehicle that was involved in a hit-and-run accident. However,
the subject was actually a witness to the accident and reported
to the police and Liberty Mutual Insurance Company that he was
in the vehicle at the time of the collision and injured as a result.
This case originated from a hotline call to the IFB by the operator
of the vehicle.
Calvin Scott pled guilty to a charge of insurance fraud
in Springfield District Court on November 26, 1996. He was sentenced
to serve six months in the House of Correction. Assistant Attorney
General Amy Sharff prosecuted the case.
McDonald's Manager Witnesses Vandalism
AGAWAM- A subject reported to West Springfield police that
he had discovered his car damaged at a McDonald's restaurant with
broken windows, slashed tires and items missing from the vehicle.
A witness at the scene, the manager of the restaurant, observed
and then reported to Commerce Insurance Company that the subject
vandalized the vehicle himself.
Joseph Iarusso pled guilty to insurance fraud and submitting
a false report of a crime to police on October 10, 1996 in Springfield
District Court. He was sentenced to one year in the House of
Correction, suspended with probation, and ordered to perform 50
hours of community service. The case was prosecuted by Assistant
Attorney General Amy Sharff.
Stolen Vehicle Shipped to Nigeria
QUINCY- A subject shipped a vehicle to Lagos, Nigeria and
then reported the vehicle stolen to his insurance carrier, National
Grange Insurance Company. A Bill of Lading bearing the vehicle's
stolen VIN was secured when the National Insurance Crime Bureau
(NICB) and Customs shipping records were cross-matched.
A complaint was issued against a subject in West Roxbury District
Court on August 7, 1996. He was charged with motor vehicle insurance
fraud, attempted larceny and concealing a motor vehicle to defraud
an insurer. Assistant Attorney General Sean Kealy will prosecute
the case.
Woman Admits to False Theft Claim
LAKEVILLE- A subject reported her Ford Escort stolen to
police. The vehicle was recovered the same day with extensive
body damage. Commercial Union Insurance Company paid the subject
more than $6,000 for repairs to the car. However, further investigation
by the carrier revealed that the subject was involved in a one-car
accident when she ran her vehicle off the road early the morning
she reported the theft. She admitted the staged theft to an ex-boyfriend.
Additionally, the ignition was not defeated and could only be
operated with a key.
Fawn Orten pled guilty in Wareham District Court to
motor vehicle insurance fraud, larceny, concealing a motor vehicle
to defraud an insurer and filing a false theft report on November
22, 1996. She was sentenced to a one year suspended sentence
and ordered to pay $1,540 in restitution. The case was prosecuted
by Assistant Attorney General Darlene Luccio.
Assistant U.S. Attorney
Chief, Economic Crimes Unit
U.S. Attorney's Office
District of Massachusetts
Workers' Compensation Highlights
Premium Avoidance Highlights
Property Highlights
Automobile Highlights
I'm writing this letter to inform you that I was caught
doing insurance fraud in the state of Massachusetts by the Attorney
General's Office Insurance Task Force. The reason why I decided
to write this letter is because it wasn't worth it. To me, my
family, and my business reputation.
I know that we are underpaid by the standard's in the automotive
industry by the insurance companies but it shouldn't be the reason
to rob them. I know that alot of shops know adjusters and they
help each other out on claims, but that's not right to cheat out
the insurance companies. In the long run we lose by getting caught.
The second reason why I wrote this letter is that none of us should
go to jail for any period of time trying to help people to defraud
insurance companies. I did and I went to jail. In jail nothing
is productive, you just sit there and wonder what you did wrong.
Instead of wasting time wondering what I did I decided to write
this letter to inform all collision repair shop owners, what they
should do if ever you are confronted by an adjuster who is looking
out for his pocket. Call his supervisor or the A.G.'s Insurance
Task Force. You will feel better knowing that you are not in
here, like I am.
So remember specifically for collision repair shop owners, its
better to think twice before dealing with an adjuster that might
hurt you, your family or your business reputation."
Chris Kalogeropoulos
Owner of Body Shop [Euro-Tech Auto Body]