Arrests for October 2005
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
A former insurance agent and broker from Brockport, Lon T. Horton, was sentenced on 10/19/05 to six months in Monroe County jail followed by five years’ probation. Horton was also ordered to pay $199,100 in restitution to his victims. At his sentencing, he surrendered $99,100 toward the restitution. He had previously had his insurance licenses revoked by the Insurance Department. Horton pled guilty on 6/24/05 following his January 2004 arrest for issuing fraudulent certificates of workers’ compensation insurance to self-employed persons to be used as proof of coverage for potential employers. As a result, businesses employing these individuals were improperly charged workers’ compensation rates based on fraudulent information contained in the certificates. In other cases, Horton collected workers’ compensation premiums from prospective insureds but never placed the coverage. An investigation by the Frauds Bureau, the State Insurance Fund, the Workers’ Compensation Fraud Inspector General’s Office and the Monroe County DA’s Office resulted in his arrest.
- UNPAID SERVICES
Arrested on 10/27/05
Charged with criminal possession of a forged instrument in the 2nd degree, falsifying business records in the 1st degree and insurance fraud in the 4th degree
A joint investigation conducted by the Frauds Bureau and the Syracuse Police Department resulted in the arrest of a nurse who filed a no-fault insurance claim following an auto accident in December 2004. In support of the claim, she submitted documents stating that she paid weekly wages to a helper who was providing her with housekeeping services and general care, as well as the helper’s transportation costs. As a result, from January 3, 2005 to June 15, 2005, Safeco Insurance Company paid the defendant $2,136. However, the investigation uncovered evidence that the documents she submitted were fraudulent and no money was ever paid to the person providing the care.
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MORE THAN MECHANICAL PROBLEMS
Arrested on 10/26/05
Charged with insurance fraud in the 3rd degree
The defendant in this case reported to the Rochester Police Department and State Farm Insurance Company on 3/13/05 that his car had been stolen from his driveway and he submitted various documents in support of the claim. However, acting on a tip, the Frauds Bureau found the car in a garage in Rochester where it had been hidden and impounded it. During the course of the investigation conducted jointly by the Frauds Bureau, the Rochester Police Department and the State Police, the defendant admitted that his car had severe mechanical problems and that he had paid someone $200 to make the car disappear. He then filed a fraudulent claim in an attempt to obtain $4,000 in an insurance settlement. This investigation is ongoing.
- NO COVERAGE
Arrested on 10/24/05
Charged with criminal possession of a forged instrument in the 2nd degree
An investigation by the Frauds Bureau and the State Police led to the arrest of a Rochester man who was accused of submitting fraudulent Certificates of Insurance. On 7/20/05, this suspect contacted an equipment supply company to inquire about the rental of an 80-foot boom lift. The company requested a copy of his Certificate of Insurance as proof of general commercial liability coverage. The suspect faxed the document to the supply company which contacted the agent who allegedly prepared the Certificate, only to learn that no such coverage existed.
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NO-FAULT FRAUD
Arrested on 10/20/05
Charged with insurance fraud and conspiracy
This suspect was charged with causing an accident for the purpose of collecting insurance benefits under the no fault portion of his auto insurance coverage. The Frauds Bureau and the NYPD’s Fraudulent Accident Investigation Squad pooled resources in the investigation that led to his arrest. Another suspect in this case was arrested on 9/26/05.
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WHAT’S ONE MORE
Arrested on 10/19/05
Charged with insurance fraud in the 3rd degree and falsifying business records in the 1st degree
On 9/8/01, an unemployed upstate woman witnessed a three-car pile up and stopped to assist the injured parties until emergency personnel arrived. After leaving the scene, she filed a claim with GEICO Insurance Company stating that hers was a fourth car involved in this accident. As a result of the claim, GEICO paid out more than $22,000 in no-fault benefits for medical treatments the defendant received for an injury that existed prior to the date of the accident. Her arrest was the result of an investigation by the Frauds Bureau and the State Police.
- HIS FATHER’S CAR
Arrested on 10/19/05
Charged with insurance fraud in the 3rd degree
A joint investigation conducted by the Frauds Bureau, the Rochester Police Department’s Auto Theft Unit and OneBeacon Insurance Company’s Special Investigations Unit resulted in the arrest of a Rochester man charged with insurance fraud. On 6/25/05, the suspect reported to the Rochester Police and OneBeacon that he had parked his father’s car on a local street and returned later to find it missing. The car was later recovered with extensive front-end damage. The defendant submitted statements that allegedly contained misrepresentations of facts material to his father’s stolen car claim and the insurer paid more than $3,000 for the damages. The suspect subsequently admitted to investigators that the car had not been stolen, but instead he had lent it to an unnamed person to satisfy a drug debt.
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MAJOR MEDICAL MILL TAKEDOWN
Arrested on 10/19/05
Charged with enterprise corruption, insurance fraud in the 1st and 2nd degrees, money laundering in the 1st degree and grand larceny in the 2nd degree
Following a three-year investigation by the Frauds Bureau, the State Police, the New Jersey Attorney General’s Office, the NYPD, the Yonkers and Westchester County Police Departments, the National Insurance Crime Bureau and numerous insurers, 6 corporations and 28 people, including four doctors and a dentist, were arrested or indicted. The doctors were charged with routinely prescribing unnecessary medical treatments and excessive diagnostic tests for patients who had not even been involved in any auto accidents. Among those charged were an emergency room employee and a paramedic who forwarded confidential patient information to one of the other defendants who posed as a doctor or a hospital patient care coordinator to refer these patients for unnecessary follow-up treatment. Runners were paid to steer claimants to medical facilities who participated in the scam and a NYPD Aide allegedly forged accident reports. As a result of this multi-agency effort, a major medical mill in Westchester County that allegedly defrauded insurance companies of more than $12 million was shut down.
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UNDERCOVER
Arrested on 10/18/05
Charged with attempted grand larceny in the 3rd degree, insurance fraud in the 3rd and 5th degrees, falsifying business records in the 1st degree, conspiracy in the 5th degree
A chiropractor and a psychologist were arrested and accused of falsely billing insurers under New York’s no-fault law for unnecessary treatments or services never provided. The criminal complaint charges that on 4/28/05, an undercover agent posing as a patient visited the chiropractor at which time he allegedly agreed to pay the investigator to stage accidents and steer the "victims" to him for treatment. The defendant would then bill insurers for the medical services. During May and June, the investigator received numerous treatments for which the defendant billed Nationwide Insurance Company for more than $3,000 in reimbursement. In addition, an undercover investigator met with the psychologist charged in this case on 4/13/04, stating that he had been involved in an auto accident but felt alright. However, shortly thereafter State Farm Insurance Company received a claim from the defendant for counseling services provided to the investigator that included progress notes stating the patient was in emotional turmoil. The investigator met the defendant twice more during May, each visit lasting less than five minutes for which State Farm was billed for sessions lasting 45-50 minutes. The arrest of these two medical professionals was the result of the combined efforts of the Frauds Bureau, the NYPD, the Queens DA’s Office, the National Insurance Crime Bureau and numerous insurance companies. The matters were referred to the New York State Department of Education’s Office of the Professions for review of the defendants’ licenses.
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NO ENTITLEMENT
Arrested on 10/17/05
Charged with falsifying business records in the 1st degree and insurance fraud in the 4th degree
Following an auto accident, the defendant in this case began collecting disability benefits. However, an investigation by the Frauds Bureau revealed that she submitted two allegedly forged documents to Erie Insurance Group in support of her claim. As a result she received $3,780 to which she was not entitled.
- SIX SWEPT UP
Arrested on 10/12/05
Charged with insurance fraud, grand larceny, falsifying business records, offering a false instrument for filing and various violations of the Workers’ Compensation Law
An investigation by the Frauds Bureau, the Orange County Sheriff’s Department and the Workers’ Compensation Board led to the arrest of six Orange County suspects charged with workers’ compensation fraud. All but one of the six involved defendants who were working while collecting benefits for job-related injuries. As a result, these five defendants received a total of $32,900 in benefits to which they were not entitled. The sixth case involved a subcontractor who submitted a fraudulent Certificate of Insurance as proof of workers’ compensation insurance coverage. But in fact no such coverage was in place. Moreover, her previous policy had been cancelled by the State Insurance Fund for nonpayment of premium.
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SHODDY WORK
Arrested on 10/4/04
Charged with criminal possession of a forged instrument in the 2nd degree
The complainant in this case hired a subcontractor to perform some roofing work at her home. The subcontractor provided the complainant with a Certificate of Insurance indicating that he had the required liability coverage. However, he never completed the work and the work he did perform was sub-standard. Based on information provided by the complainant, the Frauds Bureau initiated an investigation that revealed that the defendant had no insurance coverage and in fact, a previous policy was cancelled in 2002.
PRIOR SUPPLEMENT
JULY 2005
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SENTENCED
David Lippa, a self-employed insurance/investment advisor, was sentenced to 41 months in prison and must pay $845,000 in restitution to 11 victims of his fraud scam. Lippa was arrested and pled guilty on 6/6/05 to two violations of Title 18 of the U.S. Code: money laundering and committing a securities violation. Based on a notice of suspected investment fraud received by the Frauds Bureau from New York State Senator James Seward (R-Milford), an investigation was initiated. Evidence revealed that Lippa defrauded investors of nearly $1 million by taking sums in the amount of $10,000, $20,000 and sometimes as much as $200,000 from clients. He produced a certificate for one share of LFG Financial Group, a company he owned, for each $10,000 and told his clients that the money would be invested. In order to maintain the confidence of the investors, he sent letters to "valued customers" telling them that the Group’s business was expanding and the company was doing well. However, as the investigation would uncover, he spent the money for personal items, such as a house, cars and a houseboat, all of which have since been repossessed.
