Twelve individuals have been arrested in connection with a million dollar auto theft ring that cheated car dealerships and insurance companies in the Los Angeles area. The California Department of Insurance reports that charges have been brought against a total of 17 people and more arrests are expected in this ongoing investigation.
The scheme involved the use of phony credit cards and bank accounts to purchase high end vehicles from dealerships in the Los Angeles area. Once the vehicles were insured, the suspects staged wrecks that often involved multiple vehicles driven by members of the scheme. They then filed fraudulent claims on the damage and defaulted on the loans.
The companies hit by the fraudulent claims include: Geico, Farmers, Progressive, Ameriprise, Unitrin, State Farm, Nationwide, Allstate and Wawenesa. The names of the dealerships will not be released to the public until the investigation concludes.
The defendants have been charged by the Los Angeles County district attorney’s office with theft of a vehicle by false pretenses, insurance fraud, grand theft from insurance companies, perjury on Department of Motor Vehicle documents, and giving false information on government documents.
Two individuals involved in this insurance fraud scheme are currently making arrangements to surrender while authorities continue the search for four others.
The investigation involved the Los Angeles Police Department’s Task Force for Regional Auto Theft Prevention, Ventura County’s Auto Theft Task Force, the California Highway Patrol, the Franchise Tax Board, and members of the San Bernardino County and Riverside County district attorney’s offices.
David Glincher, 47, has been charged with 25 counts of insurance fraud after allegedly taking nearly $300,000 from insurance companies by filing claims for other people’s traffic accidents. According to the Florida Chief Financial Officer Jeff Atwater, Glincher was also charged with 22 counts of grand theft, 19 counts of uttering forged instruments, and one count of aggravated white collar crime. Court records show that he has been released from Broward County Jail on $29,500 bond.
Glincher is accused of using his business, Auto Loss Claims Consultants, LLC, to obtain copies of recent crash reports and then sending fliers to the victims. He urged people to file “diminished-worth” insurance coverage claims which would allow them to recover the difference between a car’s value before the accident and after repairs.
Even if the victims did not contact Glincher to complete the forms, he used information in the accident reports to file claims without their consent. Glincher would then have the settlement checks sent to his office. Prosecutors believe that he typically received “a few thousand dollars” per claim.
The Department of Financial Services’ Division of Insurance Fraud worked alongside the Broward County State Attorney to reveal this elaborate scheme that targeted more than 270 victims.
If David Glincher is convicted of these charges, he faces a maximum sentence of 30 years in federal prison.
While he may have recovered millions of dollars on behalf of his clients, personal injury attorney Joseph Haddad needed a good criminal attorney in his firm after a long-standing scheme to defraud insurers was uncovered by the FBI. Haddad recently pled guilty to federal crimes of wire fraud and conspiracy to commit wire fraud under a deal with the United State’s Attorneys Office in which he agreed to repay over $1,500,000 in restitution.
The plaintiff’s attorney scheme worked by hiring “runners” to approach victims of auto accidents. He would pay these “runners” in cash if they were able to convince the auto accident victims to hire his law firm. He would then send these clients to chiropractors and doctors that he was working for and would help pay in return for these medical providers fraudulently inflating the costs of treating these patients. In some cases the doctors submitted bills for procedures that were never performed. These medical providers were also indicted with the car wreck attorney as well as some of the law office employees.
By fraudulently inflating the medical expenses of his auto accident clients, this attorney increased the value of the cases to his clients and to himself. As these claims are typically paid by the insurance company of the at fault driver, it was the insurance companies who were defrauded. Because the funds to pay these claims are transferred via wires, federal wire fraud statutes apply.
What is particularly concerning about this case, is it would appear the now “criminal attorney” Haddad clearly made his own clients conspirators in his insurance fraud and wire fraud schemes. Presumably, some of his clients were aware there injuries were not as serious as claimed or that bills were being submitted for procedures never performed. If so, this lawyer could have subjected his own clients to criminal prosecution and criminal penalties.
This lawyer faces sentencing in March 2014, and faces up to 20 years in prison, although the federal sentencing guidelines will likely result in a sentence substantially shorter. Just based on the facts of the case, the federal criminal attorneys at Parkman White, LLP estimate Haddad will face less than 10 years, and potentially less than 5 years with his agreement to pay the large amount of restitution up front.
David Rodriguez Lopez, the behind the scenes owner of Indian Rehabilitation Center, Inc., has been convicted in a Jacksonville insurance fraud case that bilked insurance companies out of at least $228,000. Lopez was convicted by a jury last Friday on charges of scheme to defraud in the amount of $50,000, filing false insurance claims totaling over $100,000, and knowingly participating in an intentional car crash.
On March 14, 2012, Lopez and four other individuals are guilty of staging an auto accident in Jacksonville. Lopez then filed a personal injury claim through Indian Rehabilitation Center and received $35,000 for fake treatment he and the others in the vehicle received.
The press release also details that Lopez, 46, also arranged for a straw owner of the clinic, directed how to operate the clinic fraudulently, controlled the Indian Rehabilitation Center’s bank accounts, and directed others as to which insurance companies should be targeted.
The State Attorney’s Office and Florida’s Division of Insurance Fraud shut down the clinic last year and obtained an arrest warrant for Lopez. He was found by investigators six months later hiding at a remote fish farm outside of Tampa.
Lopez faces a maximum sentence of 45 years in federal prison and his sentencing hearing has been scheduled for November 22, 2013. He is among 30 individuals currently being prosecuted in this case.
Five Tampa Bay residents have been arrested for organizing an unlicensed insurance business with the intent to defraud customers. They were booked into Pinellas County Jail.
The individuals arrested according to a statement from Florida Chief Financial Officer Jeff Atwater’s Office are:
- John Acton Lewis, 51, of Clearwater
- Otto Biltres, 41, of Tampa
- Charles Brown, 38, of Tarpon Springs
- Kelly Bree Brown, 34, of Tarpon Springs
- Joseph T. Jordan, 50, of Palm Harbor
Investigators revealed that Biltres, owner of a temporary staffing agency called Preferred Staffing of America Inc., mislead consumers into believing his company was licensed to provide insurance coverage to client companies. Biltres charged client companies over $130,000 for services and workers’ compensation insurance that was never provided.
Charles Brown is accused of assisting Biltres in the insurance fraud scheme by falsifying certificates of insurance. Kelly Brown, John Lewis, and Joseph Jordan are accused of referring clients to Biltres’ company for a commission fee. Lewis and Jordan were unlicensed insurance agents.
All five members of this scheme face maximum sentences of up to 30 years in prison if they are convicted.
The investigation of this case was led by the Department of Financial Services’ Division of Insurance Fraud.
Lincoln County sheriff’s deputies arrested William Minford Chatham III, 38, on Monday after a trailer and motorcycle he had reported stolen were found hidden in a Cleveland County storage facility.
Last year, Chatham told a police deputy that the trailer was parked beside his driveway when he went outside to walk his dog at 11: 30 p.m. on October 12th. He said when he woke up the following morning at 6:15 a.m. to take the dog out; the trailer and the motorcycle inside it were gone. According to the news release, Chatham then submitted an insurance claim to State Farm for the missing property despite knowing that the claim contained false information.
The Harley Davidson FLHX Street Glide motorcycle was valued at $25,000 and the trailer was valued at $2,748.
Shelby police learned earlier this month that the trailer and motorcycle had been placed in a storage facility in their city. The Lincoln County Sherriff’s Office was alerted that the property had been found and Detective Robin Powell recovered the items on May 8th which led to the charges being filed against Chatham
William Chatham, was charged with two counts of felony insurance fraud. He has been released on a $5,000 unsecured bond and is scheduled to appear in District Court on July 24th.
A grand jury in Birmingham indicted a local woman for making a fraudulent claim for disaster benefits following the tornadoes that hit Northern Alabama on April 27, 2011.
The indictment alleged that Charlotte H. Browning made fraudulent representations to the Federal Emergency Management Agency (FEMA) in an application for disaster benefits concerning her home on the day the tornadoes struck.
The indictment alleges that Browning falsely stated that she lived at 1st Avenue South in Birmingham, which was damaged by the storm. She was also charged with making false representations to FEMA by submitting a false lease to the agency when applying for disaster relief benefits.
Browning was also charged with mail fraud in connection to a $11,647 U.S. Treasury check that was mailed to her based on a false FEMA benefits application that she filed using someone else’s name, without the other person’s permission. According to the indictment neither Browning nor the person whose name she filed lived at the address in Birmingham.
A grand jury has the power to press criminal charges against a person and refer them to the district attorney for prosecution. In many cases the charges come after a thorough investigation by the grand jury. Cases of government fraud such as this can be brought by private individuals in what are called qui tam claims. In these claims the private individual sues the alleged fraud maker in order to recover an award based on the amount of money the fraud maker wrongfully obtained.
With rising unemployment looming over the state the Alabama Department of Industrial Relations estimates that unemployment fraud has increased as well. Unemployment fraud cost the state nearly $15 million in 2011.
However, new legislation seeks to curb this problem. Last month Governor Robert Bently signed into law House Bill 72. This bill increases the penalties against individuals who commit unemployment compensation fraud.
Among the new penalties is a provision to ban persons convicted of unemployment fraud from receiving unemployment benefits for up to 52 weeks for the first offense. Second time offenders will be barred for 102 weeks.
The law also requires full repayment of all benefits fraudulently received before any new benefits can be received.
Prior to this new law persons convicted of fraud often were sentenced to jail time but had their sentences suspended if they repaid the amount fraudulently received.
Governor Bently said that “This legislation sends a clear message to anyone who would defraud the system, and that message is, ‘Don’t do it.’ We have a new set of penalties, and we will use these tools to preserve benefits for the people who need them.”
Representative DeMarco of Homewood Alabama, sponsor of the bill, said that “Committing fraud to obtain unemployment benefits is a serious crime, and its punishment will soon match the serious offense as these provisions go into effect,” Representative DeMarco further stated, “With its passage, the taxpayers and business owners have been given another layer of protection from fraud, and those who seek to steal taxpayer-funded unemployment benefits will be forced to think twice before breaking this law.”
A former employee, Carl Crawley, successfully settled a lawsuit against Rural/Metro of Central Alabama for $5.4 million.
Crawley’s lawsuit alleged that Rural/Metro requested reimbursements of federal money for non emergency ambulance trips by dialysis patients.
Rural/Metro claimed that the patients were bedridden or medically required an ambulance trip. However, Crawley alleged that the ambulance trips by patients were not medically necessary. Medicare regulations only allows reimbursement for ambulance services that are medically necessary for patients whose medical condition requires the use of an ambulance.
The suit was first filed in 2009 by Crawley’s attorney in the United States District Court in the Northern District of Alabama. The suit was filed under the whistleblower provision of the False Claims Act; this means that Crawley sued his former employer on behalf of the U.S. government in order to be repaid the amount that the company wrongfully acquired.
The U.S. government intervened in the lawsuit in March 2011 and helped to investigate the company for wrongdoing.
Crawley will receive a substantial award for calling out the medical services company. The settlement agreement provides Crawley with more than 1 million, in addition to attorney’s fees, which amount to over $200,000.
Crawley’s attorney Henry Frohsin stated that his client should be applauded for bringing the Rural/Metro’s wrongdoing to public light. He further stated “This country needs more heroes like Carl who are willing to sacrifice for what they believe. He deserves to be rewarded.”
Crawley is currently pursuing a degree in criminal justice from an Alabama college.
Dallas-based Tenet Healthcare Corp. will pay a record-setting $42.3 million settlement to the Department of Justice over charges of fraudulent Medicare claims. Instead of admitting patients to other, less expensive hospitals for care, Tenet redirected them to more expensive inpatient rehabilitation hospitals. Tenet’s internal investigators found that many of these patients would not otherwise have been eligible for admission. This meant that Tenet intentionally overbilled Medicare over a two-and-a-half-year period, from May of 2005 to December 2007, a violation of the False Claims Act.
It’s interesting to note that the fraud was exposed from within. After Tenet’s compliance department discovered the fraudulent claims, the company notified the Justice Department of its own volition.
Shares of Tenet Healthcare fell two percent after the settlement was announced.
The full report from Reuters can be found here.
The False Claims Act dates to 1863. Known also as the “Lincoln Law,” the bill originally targeted the 19th-century equivalent of the military-industrial complex: some suppliers of weapons, provisions, and pack animals knowingly sold defective goods to the Union Army, prompting Congressional action. The bill was updated substantially via amendments passed in 1986 and 2009. In addition, the Patient Protection and Affordable Care Act (“Obamacare”) further strengthened the FCA with respect to payouts associated with Medicare and Medicaid. It seems likely that the government will continue to crack down on cases similar to Tenet’s as lawmakers struggle to rein in the cost of programs like Medicare and Medicaid.