Arrests for December 2003
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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SENTENCED
- Dawn M. Hogue, a former customer service representative with Excellus Blue Cross Blue Shield of Rochester, pled guilty to petit larceny in Monroe County Court on December 15, 2003. She was sentenced to three years’ probation and paid restitution of $4,296.89 to her former employer at the time of her sentencing. As a result of an on-the-job injury on September 9, 2002, Hogue filed for disability benefits. In an effort to take advantage of the higher level of benefits in a family policy, she stated in her application that she had a spouse and one dependent child. However, an investigation by the Frauds Bureau, the Rochester Police Department and the insurer uncovered evidence that not only was she not married, but she was working full time. As a result, from September 9, 2002 to January 2003, she collected benefits to which she was not entitled. The investigation led to her arrest on July 14, 2003.
- Dorothy Johnson and her daughter, Twila McKee, were each sentenced on December 12, 2003 to three years’ initial term of confinement and three years’ extended supervision. This mother-daughter team from Milwaukee, WI, were arrested in August 2003 and charged with insurance fraud and attempted theft by fraud. The two women claimed that the mother had died in the attack on the World Trade Center on September 11. The mother was the insured and the daughter was the beneficiary on two insurance policies totaling $135,000. An investigation by the Frauds Bureau and the Manhattan DA’s Office revealed that the mother was still alive and, in fact, her fingerprints were on the claim filed with Conseco Insurance Company for the death benefits from one of the insurance policies. In addition, the mother submitted an auto claim to a third insurer 12 days after her purported death. The matter was turned over to the Milwaukee County DA’s Office for prosecution because both women live in Milwaukee and filed the claims there. Under Wisconsin’s Truth in Sentencing Law, the sentences mean that they will actually serve every day of their three-year initial terms of confinement in prison. The three years’ extended supervision portion is equivalent to parole.
- Dr. Marvin Galler of Williamsville, NY, was sentenced on December 10, 2003 to one year of probation for adulteration of a drug. Galler had been under investigation since 2002 by the Western New York Medical Task Force, of which the Frauds Bureau is a member, on suspicion of fraudulent billing practices. In November 2002, members of the Task Force received information from several of Galler’s employees that he was diluting flu vaccine being given to elderly patients. Vials of the vaccine were confiscated and tests confirmed the allegations of the employees. Galler voluntarily surrendered his medical license.
- On December 10, 2003 in Monroe County Court, Robert Gonzalez pled guilty to offering a false instrument for filing in full satisfaction of all charges. He was sentenced to five years’ probation, 12 weekends in jail and restitution of $18,464. Gonzalez filed a claim with Progressive Insurance Company for no-fault lost-wage benefits following an auto accident in June 2001. He stated that before the accident, he had been employed since November 1998 as a roofer earning about $750 a week. An investigation by the Frauds Bureau produced a document signed by his employer stating that Gonzalez began employment in November 1999, not 1998, that he earned $10 an hour, and that he worked 60 hours a week at most. The employer stated that he continued to employ the defendant after his accident and paid him in cash. The investigation revealed that Gonzalez was also operating a jewelry business from a storefront, as well as on the Internet. From June 13, 2001 to May 2002, Gonzalez fraudulently collected $18,464 in lost-wage benefits.
- A former Binghamton businessman, Bruce H. Mason, was sentenced on December 5, 2003 to 15 years in federal prison in connection with his October 2002 conviction on 15 felony counts of fraud, arson, use of fire to commit a felony, mail and bank fraud, and use of a fictitious name in a mail-fraud scheme. A 1/22/99 fire destroyed a manufacturing business that he owned and operated. One witness at the trial, an admitted arsonist, testified that he set the fire but was never paid the $10,000 he and Mason agreed on. Mason also inflated the balance in his bank accounts in a check-kiting scheme that cost BSB Bank and Trust more than $40,000; that he changed the name of his business in 1997 to defraud its creditors; and that he defrauded creditors by securing business using phony credit references. The Frauds Bureau worked closely with the Broome County Bureau of Fire Investigation, the Bureau of Alcohol, Tobacco and Firearms, the FBI and the Broome County Sheriff’s Office on the investigation that led to his arrest and conviction.
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TWO-FER
Arrested on 12/23/03
Charged with insurance fraud in the 3 rd degree and falsely reporting an incident
On March 14, 2003, a defendant in this case purchased auto insurance from Progressive Insurance Company for her 2002 Ford Taurus. On March 17, she reported that her car had been stolen from her driveway in Niagara Falls and filed a claim with the insurer. The car was recovered on March 19 in Buffalo with $4,400 worth of collision damage that the suspect claimed was caused by the thief. However, an investigation by the Frauds Bureau, the Niagara Falls Police Department and Progressive uncovered evidence that the damage existed before the effective date of the insurance policy. At the time the damage actually occurred, no insurance coverage was in place. She was arrested on December 23 and a week later, a second defendant was arrested for aiding and abetting her in the commission of these crimes.
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DIAMONDS ARE FOREVER
Arrested on 12/18/03
Charged with insurance fraud in the 3rd degree, grand larceny in the 3rd degree and falsifying business records in the 5th degree
An investigation by the Frauds Bureau, the Watertown Police Department and the State Police resulted in the arrest of a couple from Cicero, NY. The man reported to the Onondaga County Sheriff’s Department in November 2002 that two diamond rings valued at nearly $11,200 were either lost or stolen from their home. He filed a claim with State Farm Insurance Company and was reimbursed for the loss. The investigation was initiated when, in August 2003, the woman reported the same jewelry stolen to the Watertown Police Department and filed a second claim with Chubb Insurance Company. The investigation revealed that the couple was still in possession of the jewelry and both claims were fraudulent. The jewelry was subsequently turned over to a Frauds Bureau investigator.
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CALL THE PLUMBER
Arrested on 12/17/03
Charged with insurance fraud in the 3rd degree
This suspect began collecting workers’ compensation benefits in January 1994 following a work-related injury. On numerous occasions after that date, he filed statements with the State Insurance Fund in support of his workers’ compensation claim stating that he had not returned to any employment. However, an investigation by the Frauds Bureau and the Fund turned up evidence that he was gainfully employed as a plumber while collecting benefits to which he was not entitled.
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ARSON
Arrested on 12/5/03
Charged with use of fire to commit a felony and conspiracy to commit arson
As a result of an investigation by the Frauds Bureau, the FBI and the Delaware County Sheriff’s Office, the owner/operator of an upstate realty business was arrested for conspiring with others to burn properties he was unable to sell in order to defraud insurers. The defendant was indicted by a federal grand jury in connection with several fires and planned fires in Chenango, Delaware and Otsego Counties from the mid-1990s through 2002. Over the course of the investigation, the Frauds Bureau conducted numerous interviews, gathered insurance documents, reviewed insurance claims, conducted surveillance and interrogated all suspects. This case is ongoing and more arrests are anticipated.
- WORKERS’ COMP FRAUD
Arrested on 12/11/03
Charged with falsifying business records in the 1st degree
An upstate contractor was charged with providing materially false information on an application for workers’ compensation and employees liability insurance in an attempt to secure coverage for her contracting company at a rate lower than adequate for the type of work done and the number of employees on her payroll. The Frauds Bureau, the State Insurance Fund and the State Police pooled resources in this investigation.
- WORKERS’ COMP FRAUD 2
Arrested on 12/5/03
Charged with insurance fraud in the 4th degree and offering a false instrument for filing in the 1st degree
The owner of a home improvement business in Staten Island provided materially false information on an application for workers’ compensation insurance for his company. As a result, he secured coverage at a rate lower than he would have paid had he been truthful about the nature of his business and the number of workers he employed. The investigation that led to his arrest was conducted jointly by the Frauds Bureau and the Staten Island DA’s Office.
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INDICTED!
Arrested during the week of 12/1/03
Charged with conspiracy, grand larceny, attempted grand larceny, petit larceny, attempted petit larceny, insurance fraud and falsifying business records
A 263-count indictment was filed against four psychotherapists for their involvement in a no-fault fraud ring. A licensed psychologist and three psychotherapists in his employ at medical clinics throughout New York City and Long Island were charged with fraudulently billing for counseling services they claimed were provided to hundreds of auto accident victims. At the clinics, patients were directed by clinic staff to meet with a psychotherapist without regard to medical necessity. Many patients had suffered only minor injuries as a result of accidents in which the autos sustained little or no damage. According to the indictment, during the period from April 2000 to September 2003, the defendants engaged in a conspiracy to submit falsified no-fault claims totaling about $88,000. The investigation was conducted jointly by the Frauds Bureau, the NYPD and the Attorney General’s Auto Insurance Fraud Unit.
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PHONY BILLING
Arrested during week of 12/1/03
Charged with scheme to defraud, insurance fraud, forgery, larceny and attempted larceny
Following an investigation by the Frauds Bureau and the Attorney General’s Auto Insurance Fraud Unit, four owners of ambulette companies were arrested for participating in a no-fault billing scam. The defendants submitted bills for patient transportation services that were never rendered. They also transported accident victims using livery cars or private cars and claimed that ambulettes, which are billed at a higher rate, were used. Two of the defendants were charged with submitting more than 40 phony bills to ten insurers beginning in 2000. The two others were accused of submitting $125,000 in fraudulent bills.
PRIOR SUPPLEMENTS
NOVEMBER 2003
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STAGED ACCIDENT
Arrested on 11/20/03
Charged with grand larceny, insurance fraud and falsifying business records
Four defendants were arrested and charged with staging an accident and receiving unnecessary medical treatment in excess of $3,000 each under no-fault insurance coverage. Their arrests were the result of an investigation by the Frauds Bureau, and the Attorney General’s Auto Insurance Fraud Unit.
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WHAT A TEAM!
Arrested over a three-week period in November
Charged with various violations of the Workers’ Compensation Law
The Frauds Bureau teamed up with the Albany County DA’s Office, the State Insurance Fund, the Workers’ Compensation Inspector General’s Office, the State Police, and the Albany and Colonie Police Departments in a roundup of nine individuals suspected of cheating the State’s workers’ compensation system. Two of those arrested, brothers and co-owners of a carpentry business, were accused of concealing hazardous roofing work in applying for insurance for their business. As a result, the company escaped paying the State Insurance Fund more than $49,000 in premiums. In another case, the defendant acknowledged working at the same time she was collecting $28,844 in disability payments. The nine suspects, arrested as the result of Frauds Bureau investigations, were part of a larger sweep of 15 fraud arrests in cases representing more than $1.1 million. The sweep was conducted over a three-week period in November and was the culmination of a six-month undercover operation.
An unemployed Elmira man was accused of collecting no-fault benefits to which he was not entitled. The charges against him allege that he submitted a written statement to Progressive Insurance Company that concealed information concerning a change in the nature of his no-fault disability claim. Evidence turned up in an investigation by the Frauds Bureau; the Elmira Police Department; and Progressive’s Special Investigations Unit indicated that no disability existed. At a later date, during an Independent Medical Exam requested by Progressive, he allegedly behaved in a way that led the doctor to report that he suffered from a rather severe disability. However, further evidence showed no physical disability.
