Arrests for December 2002
These arrests were made possible through the cooperation of the Frauds Bureau, law enforcement, the insurance industry and the public.
To report suspected incidents of insurance fraud, call 1-888-FRAUDNY
CAUGHT!
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- GUILTY
- On December 20, 2002, R. Hal Kemp, a licensed insurance agent, pled guilty to offering a false instrument for filing in the 2nd degree in full satisfaction of all original charges. Kemp also signed a stipulation with the Insurance Department to surrender all his agent licenses. The date of sentencing has not yet been set. Kemp was arrested on 4/26/02 on charges that he took premiums from nine clients but failed to remit them to the appropriate insurers. He was also charged with issuing six fraudulent auto insurance identification cards and providing documents to a business owner indicating that the business had proper insurance coverage when in fact no coverage existed. An investigation by the Frauds Bureau and the Monroe County Sheriff’s Office led to his arrest. At the time of the arrest, the Insurance Department issued a press release advising any consumers who bought a policy from Kemp to contact their insurer to verify that their policy was valid.
- Menachem Loeffler, a clothing manufacturer from Spring Valley, NY, pled guilty on December 20, 2002 to one count of health care fraud. Loeffler orchestrated a scheme wherein he enrolled individuals in fraudulent group dental plans, claiming they were employees of nonexistent businesses. Those who joined the fraudulent groups paid significantly less in premiums than they would have paid for individual dental plan coverage. Loeffler kept a portion of the premiums collected. First Fortis and Principal Insurance Companies were victims of the scheme. A joint investigation by the Frauds Bureau and the FBI led to the arrest.
- Three men pled guilty in an Erie County Court in mid-December to various charges including arson, insurance fraud, attempted grand larceny and criminal facilitation in connection with the burning of 1997 Nissan Infinity. Michael McGuire, 23, the owner of the car, hired Mark Marrelli, 21, to take the car off his hands so he could file for an insurance settlement. Marrelli then sought the help of his uncle, Glenn Marrelli, 43, who followed Mark to a location in Buffalo where the vehicle was set on fire. Glenn then drove his nephew from the scene. McGuire subsequently filed a claim for $15,592 with State Farm Insurance Company for the loss. The three were arrested in July 2002 following an investigation by the Frauds Bureau, the Buffalo Police Department and State Farm’s SIU.
- SENTENCED
On 12/13/02, a Manhattan federal court judge sentenced Ernest Varacalli, owner of a Brooklyn "chop shop" with ties to the mob, to ten years in prison and three years probation and ordered him to pay nearly $1 million in restitution to a number of insurers. Over a four-year period, Varacalli’s shop chopped up $5 million worth of stolen Mercedes-Benz, BMWs, Infinitis and other high-end cars and sold the parts. Some of the "stolen" cars were actually given up by owners who were behind in their lease payments and who subsequently received insurance settlements. Varacalli was one of 26 individuals arrested in a May 2001 sweep in the New York metropolitan area. He was convicted in U.S. Federal Court for the Southern District of witness tampering, conspiracy to operate a chop shop and interstate commerce of a chop shop. The remaining suspects have active cases in New York State courts. The investigation was conducted by the Frauds Bureau, the Brooklyn District Attorney’s Office and the NYPD. GEICO and CGU Insurance Companies helped fund the undercover operation that led to the arrests.
- REFERRAL FEES
Arrested on 12/29/02
Charged with conspiracy to commit insurance fraud and tax fraud
Four suspects were arrested (one on 12/11 and three on 12/29) in connection with a no-fault fraud scheme. One suspect set up a company that managed MRI facilities. Acting in concert with the other three, he used telemarketers to contact doctors and offer to pay them fees for referring patients involved in no-fault cases to the MRI facilities under his management company. Fees of $250 per patient were paid even when no tests were required. One of the suspects was also charged with tax fraud for failure to report his profits from the scheme to the IRS.
- WORKERS’ COMPENSATION
FRAUD
Arrested on 12/27/02
Charged with grand larceny and fraudulent practices under the Workers’ Compensation Law
A laborer from Jamestown, NY, began collecting workers’ compensation benefits after an on-the-job injury in 1986. However, an investigation by the Frauds Bureau and the State Insurance Fund revealed that he had returned to full-time employment but continued to collect benefits totaling more than $8,800 from January 1999 until the time of his arrest.
- NO COVERAGE
Arrested on 12/23/02
Charged with violation of the Workers’ Compensation Law
An investigation by the Frauds Bureau led to the arrest of a Long Island painter on charges that he presented a Certificate of Insurance stating that he had workers’ compensation coverage when in fact no such coverage existed.
- TAXI!
Arrested on 12/23/02
Charged with violation of the Workers’ Compensation Law
The owner of an upstate taxi company submitted a document to the Workers’ Compensation Board stating that one of her taxis had been stolen and had subsequently been involved in an accident. However, an investigation by the Frauds Bureau, the Workers’ Compensation Board and the State Insurance Fund revealed that an employee of the taxi company was driving the taxi at the time of the accident and was seriously injured. Additional evidence showed that the business owner also provided false information about the number of employees she had on the payroll, thereby fraudulently reducing her workers’ compensation insurance premiums.
- SIDESWIPE
Arrested on 12/20/02
Charged with insurance fraud in the 4th degree
The suspect in this case was accused of reporting to Erie Insurance Company that while driving her car she struck a fence in her driveway, resulting in damage estimated at nearly $2,600. However, an investigation by the Frauds Bureau and the New York State Police uncovered evidence that her boyfriend had actually caused the damage to her car when he sideswiped a parked car and fled the scene.
- FORGERY
Arrested on 12/19/02
Charged with offering a false instrument for filing in the 1st degree
In an effort to clear a lapse in insurance coverage, this defendant submitted a letter to the DMV on 11/19/02 stating that she had insurance coverage with State Farm Insurance Company since 1/26/01. However, evidence revealed that she allegedly forged the letter using the letterhead stationery of a legitimate insurance agent and in fact had no coverage. Her arrest resulted from an investigation by the Frauds Bureau and the Rochester Police Department.
- PAYMENT DUE
Arrested on 12/17/02
Charged with insurance fraud in the 3rd degree and violation of the Workers’ Compensation Law
In April 1999, the suspect in this case applied to the State Insurance Fund for workers’ compensation insurance for his business. In order to reduce the amount of his insurance premium, he allegedly stated that he worked as a laborer rather than his actual riskier job as a carpenter. He subsequently let that policy lapse with premium still due. Then in September 2002, he again applied for workers’ compensation insurance stating that he had never before sought coverage through the Fund. An investigation by the Frauds Bureau, the State Insurance Fund and the Workers’ Compensation Inspector General led to his arrest. Added together, the premium due on the 1999 policy, plus the difference between the premium he should have paid and the lower premium he actually paid, amounted to nearly $4,000.
- NO SERVICE
Arrested on 12/11/02
Charged with grand larceny in the 3rd degree, insurance fraud in the 4th and 5th degrees and falsifying business records
A New York State-certified social worker and psychotherapist was indicted on felony charges of stealing $4,622 from Oxford Insurance Company. The suspect was accused of submitting 99 fraudulent claims for reimbursement over a two-year period from June 1999 to August 2000. The claims listed dates of service for patients or patients’ family members on which he did not see these patients. An investigation by the Frauds Bureau and the Rockland County District Attorney’s Office led to his arrest.
- WHERE’S THE DOCTOR?
Arrested on 12/11/02
Charged with insurance fraud
A neurologist at a Queens clinic, a state-licensed internist and a business associate posing as a neurologist were arrested in a sting operation and charged with falsely claiming to have treated accident victims who were actually undercover police officers. The accident "victims" visited the clinic with complaints of neck and back injuries but were never examined. Still the businessman, in his role of a neurologist, allegedly said he conducted brain mapping and nerve tests on the police officers. The suspects were accused of submitting fraudulent medical reports and bills for $10,000 in reimbursement from GEICO Insurance Company. The arrests followed an investigation by the Frauds Bureau, the NYPD’s Fraudulent Accident Investigation Squad, and the Queens District Attorney’s Office.
- PERSONAL CARE
Arrested on 12/9/02
Charged
An investigation by the Frauds Bureau and the State Insurance Fund led to the arrest of an Elmira woman accused of defrauding her insurer by submitting sworn statements to the State Insurance Fund in support of her claim for lost wages, stating she could no longer work. She also provided materially false sworn testimony at her Workers’ Compensation Board hearing to support the false statements. Evidence uncovered during the investigation showed that the defendant was actively employed as a Personal Care Technician at an adult home in Pennsylvania.
- WOULD YOU BUY A USED CAR FROM
THIS GUY?
Arrested on 12/5/02
Charged with forgery in the 2nd degree, falsifying business records in the 1st degree and insurance fraud in the 4th degree
A used car dealer from Central Square, NY, sold a car and shortly after the limited 30-day/1,000-mile warranty expired, the new owner returned to the dealership complaining about engine trouble. In an effort to conceal the fact that he might have sold the car with a faulty engine, the dealer told the owner the problem could be repaired for $180 when he knew it would cost far more. Without the owner’s knowledge, the dealer then used the money to purchase an extended warranty for the car, forging the owner’s name and backdating the warranty in an attempt to cover the cost of the engine repair. The Frauds Bureau and the New York State Police joined forces on this investigation.
- WINTER SPORTS
Arrested on 12/4/02
Charged with insurance fraud in the 4th degree and grand larceny in the 4th degree
The defendants in this case were charged with trying to defraud State Farm Insurance Company for repairs to a snowmobile. The owner of the snowmobile lent the vehicle to the son of a friend who damaged it in an accident that occurred in the winter of 2001. However, there was no insurance that covered the young driver. So the two friends allegedly agreed that the owner would submit a claim for the $2,700 repair bill stating that the friend had run over the snowmobile with a truck in the summer of 2002. The arrests came as a result of an investigation conducted jointly by the Frauds Bureau, the New York State Police and the Niagara County DA’s Office.
- A COUPLE OF CHEATERS
Arrested on 12/4/02
Charged with forgery in the 2nd degree, falsifying business records in the 1st degree and insurance fraud in the 5th degree
A joint investigation by the Frauds Bureau and the Syracuse Police Department led to the arrest of a Syracuse couple on charges that they filed a fraudulent workers’ compensation claim. The couple allegedly submitted medical forms containing false information and bearing the forged signature of a local physician to CNA Insurance Company.
- FALSE CLAIM
Arrested on 12/3/02
Charged with insurance fraud in the 3rd degree and attempted grand larceny in the 3rd degree
The suspect in this case allegedly submitted a fraudulent claim in the amount of $9,546 to Safeco Insurance Company following a fire that damaged his garage and its contents. An investigation by the Frauds Bureau, the Monroe County DA’s Office Fire Investigation Unit and Safeco’s SIU brought about his arrest.
PRIOR SUPPLEMENTS
November 2002
- OVER THE LONG TERM
Arrested on 11/25/02
Charged with mail fraud
The defendant in this case, an attorney with more than 25 years’ experience in the insurance industry, was accused of defrauding two insurance companies of $133,571. At various times during a ten-year period that began in 1992, she allegedly collected long-term disability benefits –
- while she was working;
- while she was also collecting short-term disability benefits; and
- from two insurers simultaneously.
In the latter case, she collected long-term disability benefits from both UNUM and Aetna Insurance Companies from October 1995 to September 1996. Neither insurer was aware of the benefits being provided by the other insurer. As a result, she was paid the maximum rate by each company, and thus collected approximately 120% of her usual salary over the year-long period. An investigation by the Frauds Bureau, the FBI and the U.S. Attorney’s Office led to her arrest.
- SIGN HERE
Arrested on 11/20/02
Charged with forgery in the 2nd degree
An investigation by the Frauds Bureau resulted in the arrest of a New Rochelle man accused of filing an application for a life insurance policy with Bankers Insurance Company on which he forged the signature of his estranged wife and named himself beneficiary.
May 2002
- NO-FAULT FRAUD
Arrested on 5/14/02
Charged with conspiracy and falsifying business records
Three Brooklyn men were charged with filing a fraudulent auto accident report and insurance claim with Travelers Insurance Company for no-fault benefits. The arrests were the result of an investigation by the Frauds Bureau.
