Arrests for March 2009
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
The Nevele Hotel LLC was charged with failure to secure workers’ compensation coverage for its employees, a crime for which a violator could be fined up to $50,000. This violation involved an employee who sustained an injury on the job while no coverage was in place. The Nevele was sanctioned by the Workers’ Compensation Board on three prior occasions for the same violation. The corporation was represented in court by its attorney and was sentenced to pay restitution, costs, penalties and charges totaling $35,277 to the Workers’ Compensation Board, as well as an additional fine of $5,000. As a condition of the plea, the hotel could be resentenced and face a fine of up to $100,000, if it violates this law again. An investigation conducted jointly by the Frauds Bureau, the Workers’ Compensation Board’s Office of the Fraud Inspector General and Compliance Unit and the State Insurance Fund led to the arrest and prosecution.
Anthony Waiters of Kingston, NY, was sentenced to five years’ probation on 3/23/09 for his part in setting fire to a pickup truck so the truck’s owner could collect on a fraudulent insurance claim. He was also ordered to pay a $620 fine and complete ten days of community service. He pleaded guilty to insurance fraud and attempted arson in February. The owner of the vehicle, Mark Winkler of Hyde Park, NY, earlier pleaded guilty to insurance fraud. A third defendant, Anthony Latty of Poughkeepsie, pleaded guilty to insurance fraud and attempted arson. Winkler reported to Dutchess County sheriffs and Allstate Insurance Company that his 2007 GMC Sierra pickup had been stolen. However, the insurer considered the claim suspicious, prompting an investigation by the Frauds Bureau, the Ulster County Urgent Task Force and Dutchess County sheriffs. Investigators discovered that in September 2008, Winkler offered Latty $1,000 to get rid of his pickup and Latty recruited Waiters to help. They drove the pickup to a rural area where they poured gasoline into the vehicle and set it on fire. Winkler admitted in court that he was having financial problems. The burned vehicle was recovered by firefighters and police the next day at about the same time Winkler reported it stolen.
James and Marlene Kernan pleaded guilty on 3/20/09 to a violation of U.S. Code Title 18, Section 1033, a federal felony, for employing a convicted felon at their business. James Kernan was president of Oriska Insurance Company; Marlene Kernan was president of Monument Agency, which acted as the agent for Oriska. The couple admitted that from 2002 through 2005 they employed three-time convicted felon Robert J. “Skip” Anderson Sr. at their companies. Anderson, in his capacity as Director of Operations, developed and marketed workers’ compensation insurance programs sold through Oriska and Monument primarily to Professional Employer Organizations (PEOs). PEOs provide administrative services related to an employer’s responsibilities to its employees, e.g., human resources, payroll services and workers’ compensation insurance, among others. The investigation began in July 2006 when FBI agents raided Oriska’s headquarters and seized records and computers. The same day, agents raided the offices of Robert Anderson. On 7/14/08, Anderson pleaded guilty in federal court to conspiracy to commit mail and wire fraud, as well as being a convicted felon engaged in the business of insurance. He is awaiting sentencing. At the time of his arrest, he agreed to cooperate in the investigation of Oriska’s operations. Within days of the raid, the New York Insurance Department placed the company in receivership and ran the company until a New York Supreme Court justice declared it solvent and turned it back to James Kernan in 2007. Prosecutors charged that Kernan and Anderson sold millions of dollars of insurance through Oriska to PEOs in states where the insurer was not licensed to do business. A grand jury indicted them on 1/15/08 on 15 counts of conspiracy, wire fraud, frauds and swindles, and insurance crimes affecting interstate commerce. The indictment alleged that Kernan lied to New York regulators when he reported that Oriska had collected $14.2 million in workers’ compensation premiums in one annual report, with $11.5 million of that coming from PEOs. The grand jury charged Oriska’s premiums were “substantially less.” After the indictment, Kernan resigned as CEO and director of Oriska and Insurance Company of the Americas (ICA) in Florida. Oriska has been under new management since early in 2008. ICA was placed in rehabilitation in July 2008 by the Florida Chief Financial Officer. The Frauds Bureau, the FBI and the Oriskany Police Department conducted the investigation that led to the arrests.
Jeffrey C. Seifts, a former insurance agent from Poughkeepsie, NY, was sentenced on 3/19/09 to a year in federal prison and ordered to make $133,000 in restitution to retirees, small business owners and others in the upstate area. He was accused of running a phony insurance scheme that victimized 240 people in Dutchess, Ulster and Columbia Counties. His arrest stemmed from an investigation initiated in 2003 when the Insurance Department was contacted by a Dutchess County woman who incurred $50,000 in medical expenses resulting from complications during a pregnancy. She told the Department’s Consumer Services Bureau she was unable to have the expenses paid through the insurance she purchased from Seifts and was subsequently forced to file for bankruptcy. At the same time, MVP Health Care, a health maintenance organization in Schenectady, reported suspected irregularities in numerous applications it had received from Seifts. Investigators from the Frauds Bureau and the U. S. Postal Inspection Service found that applications from four different people contained the same handwriting and that suspicious alterations appeared to have been made on several applications. In addition, a large number of applicants were identified as “management” employees for the same organization, Professional Employees Management Corporation (PEMC), a company later determined to be fictitious. The suspect solicited business from customers on the basis that they could obtain less costly insurance through the small group plan he purportedly operated. However, a review of the suspect’s records revealed that his customers were actually paying more than they would have paid through other insurance plans and that they were overcharged by a total of $76,747. In addition, Seifts was charging customers a $12 monthly union fee. These customers were not members of a union nor was the money turned over to any union. While some people who purchased insurance did receive coverage for their medical expenses, Seifts failed to forward $60,645 in premiums to MVP Health Care. Moreover, he collected $13,232 in unauthorized fees. Seifts was arrested in July 2007 and in October 2008 pleaded guilty to theft from a health benefit plan. His corporation, JC Seifts & Company, Inc., pleaded guilty to mail fraud. The Department revoked his license to sell insurance in 2005.
- THREE’S A CROWD
Arrested on 3/27/09
Charged with insurance fraud in the 3rd degree, criminal facilitation in the 4th degree and conspiracy in the 5th degree
A Brooklyn woman – defendant #1 in this case – was charged with contracting with another person – defendant #2 – to dispose of her 2004 Ford Explorer SUV. After having been read her Miranda rights, she voluntarily admitted that she left a set of keys in the glove compartment so that defendant #2 could dispose of the vehicle. However, an investigation by the Frauds Bureau and the FDNY’s Bureau of Fire Investigations revealed that defendant #2 allegedly solicited a third party – defendant #3 – to actually carry out the job. Defendant #3, post-Miranda, voluntarily stated that he picked up the vehicle in question and drove it to a gas station where he met defendant #2. Defendant #2 allegedly poured gasoline into the rear of the vehicle. Then defendant #3 drove it to another location, following a white van being driven by defendant #2. They met up at the new location where defendant #3 set fire to the SUV. Defendant #1 stated that she did not know defendant #3, had no knowledge that he was going to burn her vehicle and gave him no compensation for getting rid of it.
- SKYDIVER WITH A BAD BACK
Arrested on 3/27/09
Charged with insurance fraud, grand larceny, falsifying business records and violation of the Workers’ Compensation Law
After sustaining a back injury on the job, the defendant began collecting lost-wage and medical benefits from First Cardinal and Sun Life Insurance Company. However, video surveillance showed him hiking and skydiving. In addition, evidence indicated that he owned and operated a construction company, served as a volunteer firefighter and was a member of a hot-air balloon team. As a result of the fraud, he collected $83,000 in benefits to which he was not entitled. An investigation by the Frauds Bureau led to his arrest.
- OUT OF BUSINESS
Arrested on 3/25/09
Charged with insurance fraud in the 3rd degree and grand larceny in the 3rd degree
In support of a homeowners claim, the defendant in this case submitted four receipts totaling $4,391 as proof of purchase of a number of items that purportedly sustained smoke damage in a fire at his home. However, an investigation by the Frauds Bureau and the Niagara Falls Police Department revealed that the company from which he allegedly bought the items in December 2008 had gone out of business in September 2008.
- CONSTRUCTION WORKER CAUGHT
Arrested on 3/25/09
Charged with grand larceny in the 3rd degree, falsifying business records in the 1st degree and committing a fraudulent practice under Section 114 of the Workers’ Compensation Law
An investigation by the Frauds Bureau, with the assistance of the Painted Post Police Department, resulted in the arrest of an upstate laborer charged with scamming the workers’ compensation system. Following a work-related injury, the defendant began collecting benefits. During the period from 1/15/08 to 2/18/09, he made materially false statements both to his evaluating physicians and to the Workers’ Compensation Board regarding the extent of his disability. He claimed that the injury caused him severe pain and greatly restricted his range of motion which he maintained had a significant effect on his ability to perform the activities of daily living. However, during the investigation he was observed performing construction work without any apparent limitations. As a result of the fraud, he collected $14,680 in benefits to which he was not entitled. The investigation was initiated based on a report of suspected fraud submitted by the State Insurance Fund.
- OWNER GIVE UP
Arrested on 3/24/09
Charged with insurance fraud in the 3rd degree, grand larceny in the 4th degree, falsely reporting an incident in the 3rd degree and false written statement
The NYPD became suspicious when a 2003 Chevrolet Venture van was parked on a street in Queens for an extended period of time. From 2/18/09 through 3/1/09, detectives monitored the activity of the car. Database inquiries disclosed that the vehicle was not stolen. In addition, a physical inspection showed no evidence that the car was stolen. The vehicle’s tires were marked in place to determine if the vehicle was being moved when it was not being observed. But no evidence was found to indicate that this was the case. On 3/2/09 at 2:52 a.m., the FDNY responded to a vehicle fire and found the Chevy Venture engulfed in flames. On 3/2/09 at 10:50 a.m., the owner of the vehicle reported to the NYPD that the van had been stolen. He stated that he had last seen his van on 2/26/09 at 2:00 p.m. at a location in Queens different from the location where it had been discovered in flames. He claimed to have found the van missing on 3/2/09 at 9:30 a.m. An investigation by the Frauds Bureau, the FDNY’s Bureau of Fire Investigations and the NYPD’s Auto Larceny Unit led to his arrest.
Arrested on 3/20/09
Charged with criminal possession of stolen property and grand larceny in the 4th degree
Two individuals were arrested on 10/10/08 for their part in an owner give-up scam. One of the defendants allegedly enlisted the other to get rid of his car so he could collect an insurance payout from Allstate Insurance Company. This case is pending in Niagara Falls City Court. However, it was later learned that the car had not been destroyed but retagged and sold to an unsuspecting victim. With the help of an informant, investigators from the Frauds Bureau and the Niagara Falls Police Department were led to the car which displayed conflicting Vehicle Identification Numbers. As a result, the person who was supposed to have disposed of the car was arrested on 3/20/09 and charged with criminal possession of stolen property. This same suspect was also charged on 3/20/09 with grand larceny in a separate incident in which he collected $1,323 for a three-year, 36,000 mile warranty service contract. But when the person who paid for the contract attempted to have her car serviced, she learned that no contract existed.
Arrested on 3/20/09
Charged with mail fraud
An investigation by the Frauds Bureau and the U.S. Postal Inspection Service resulted in the arrest of the owner of an insurance brokerage on Staten Island. The investigation was initiated based on a complaint from a broker and former employee alleging that the defendant had misappropriated premiums. The defendant was an agent for Navigators Insurance Company which provided cargo insurance for companies that shipped merchandise overseas. She was responsible for collecting the premiums for each shipment, issuing a certificate of insurance to the insureds, and remitting the premiums to Navigators. However, investigators discovered that when one insured filed a claim with Navigators no coverage existed. Further investigation revealed that the defendant misappropriated a total of $407,000 in premiums collected from 16 insureds.
- 69 AND COUNTING
Arrested on 3/18/09
Charged with grand larceny in the 3rd degree, insurance fraud in the 3rd degree, falsifying business records in the 1st degree and conspiracy in the 5th degree
A major undercover operation conducted by the NYPD’s Auto Crime Division resulted in the arrest in January 2008 of 61 suspects and the seizure of 70 vehicles worth $1.7 million. Eight additional suspects have since been arrested, including this most recent defendant on 3/18/09. Moreover, 15 additional vehicles have been recovered. The scheme involved auto give-ups and buy-backs by owners who subsequently reported their cars stolen and filed fraudulent claims for the insurance payout. This defendant fled the New York area for California before the investigation was completed. However, he was arrested by the NYPD when he returned to New York in March. The investigation was conducted by the Frauds Bureau, the NYPD’s Auto Crime Division and the Queens DA’s Office.
- FRAUDULENT CLAIMS
Arrested on 3/17/09
Charged with insurance fraud in the 3rd degree, forgery in the 2nd degree, identity theft in the 1st degree and falsifying business records in the 1st degree
An Orange County man was accused of filing false statements with AFLAC Insurance Company and forging his boss’s signature on claim forms in order to continue to collect disability payments after recovering from a foot injury and returning to work. As a result of the fraud, he collected $11,360 in benefits to which he was not entitled. An investigation by the Frauds Bureau led to his arrest.
- CAUSED ACCIDENT
Arrested on 3/12/09
Charged with insurance fraud, falsifying business records and false written statement
A joint investigation by the Frauds Bureau and the NYPD’s Auto Crime Division led to the arrest of two New York City residents for their participation in an auto fraud scam. One of the defendants caused an accident, after which two others not involved in the accident entered the car and claimed on the Police Accident Report that they were accident victims. Two of the three suspects were arrested. The third is being sought.
- 70 PHONY CLAIMS
Arrested on 3/12/09
Charged with identity theft, insurance fraud, falsifying business records and possession of a forged instrument
Two office workers employed by a doctor in Yonkers, NY, allegedly devised a scheme in which they filed claims for medical treatments – typically $75 office visits – that were never rendered. They filled out 70 phony claim forms in their own names and the names of family members. They then submitted the claims to Combined Life Insurance Company for payment. As a result, they fraudulently collected payments totaling $8,700. An investigation by the Frauds Bureau revealed that the insurer had made written inquiries to the doctor about the purported treatments. The inquiries were intercepted by the defendants who then submitted forged documents in the doctor’s name to the insurer. The investigation was begun when a claims adjuster noticed the same handwriting on claims submitted for different people. Investigators discovered that fraudulent claims were filed over a two-year period from 2006 to 2008. The doctor fired the two employees after the scheme was uncovered in September 2008.
- FLED THE SCENE
Arrested on 3/11/09
Charged with insurance fraud in the 4th degree and attempted grand larceny
An investigation by the Frauds Bureau led to the arrest of a Watervliet, NY, man who was accused of filing a fraudulent insurance claim with GEICO Insurance Company for purported damage to his car. He informed the insurer that his 2004 Jaguar was hit while it was parked and unoccupied near his home. However, the investigation revealed, and the defendant subsequently confessed, that he had hit two unoccupied vehicles and fled the scene of the accident. He falsely reported the incident and GEICO issued a check for $3,000 for repair of the damages.
- WORKING WHILE COLLECTING
Arrested on 3/10/09
Charged with offering a false instrument for filing in the 1st degree and committing a fraudulent practice under the Workers’ Compensation Law
The defendant sustained a back injury on 8/13/96 while working as a nurse aide in Ithaca, NY, and began collecting workers’ compensation benefits. During the benefit period, she submitted 13 Work Activity Reports stating that she was unable to work as a result of her injury. However, an investigation by the Frauds Bureau, the State Insurance Fund’s Division of Confidential Investigations and the State Police revealed that from 1/17/06 to the time of her arrest, she fraudulently collected $8,858 while earning wages for cleaning homes and doing gardening work.
- INSTALLING DRY WALL
Arrested on 3/6/09
Charged with insurance fraud in the 4th degree and violation of the Workers’ Compensation Law
Following a work-related injury, the defendant in this case began collecting workers’ compensation benefits. However, an investigation by the Frauds Bureau and the State Insurance Fund found evidence that from 7/3/08 through 11/15/08, he was employed installing dry wall. In addition, during the benefit period he submitted two Work Activity Reports to the Fund claiming that his injury prevented him from working. As a result of the fraud, the defendant collected $2,450 in benefits to which he was not entitled.
- SUV ABANDONED
Arrested on 3/5/09
Charged with insurance fraud in the 3rd degree
The defendant reported to GEICO Insurance Company that his 2000 Lincoln Navigator had been stolen from a street near his home in Brooklyn. He submitted a written statement to the insurer saying that he had parked the SUV on the local street between 12:30 p.m. and 1:00 p.m. on 11/11/09. However, an investigation by the Frauds Bureau revealed that the vehicle had been picked up by the New York City Sanitation Department stripped and abandoned at 2:40 p.m. on 11/10/09.
- OH, WAITRESS
Arrested on 3/4/09
Charged with violation of the Workers’ Compensation Law
Following an injury related to her job as a veterinary assistant, the defendant began collecting workers’ compensation benefits. However, an investigation by the Frauds Bureau and the State Insurance Fund revealed that during the benefit period, she was working as a waitress in an East Hampton restaurant, while submitting a number of documents to the State Insurance Fund claiming that she was not employed. As a result of the fraud, she collected $15,850 to which she was not entitled.
- FALSE REPORTING
Arrested on 3/4/09
Charged with insurance fraud in the 3rd degree, falsely reporting an incident in the 3rd degree and false written statement
The defendant was charged with falsely reporting to the State Police on 12/2/08 that two dirt bikes were stolen from the back of his pickup truck while it was parked at a residence in the Town of Covington, NY. He subsequently filed a claim with Progressive Insurance Company for the loss. However, witnesses informed investigators that the defendant did not have the dirt bikes in his possession at the time of the alleged theft. The defendant subsequently admitted that he falsely reported the theft in an effort to collect the insurance payout. The State Police, assisted by the Frauds Bureau and Progressive’s SIU, conducted the investigation that led to the arrest.
- NO REPAIRS DONE
Arrested on 3/3/09
Charged with insurance fraud in the 3rd, 4th and 5th degrees, falsifying business records in the 1st degree, false written statement and attempted grand larceny in the 3rd and 4th degrees
On 4/26/08, the defendant reported to AIG Insurance Company that he had parked his 2002 GMC Yukon on a street in the Bronx, and when he returned the next day, the car was missing. He further reported that he had major engine and transmission work done prior to the theft. In support of his claim, he submitted receipts for the repair work totaling $7,234. However, investigators from the Frauds Bureau and the NYPD’s Auto Crime Division recovered the car and an examination revealed that no engine or transmission work had been done.
- ALTERED DATE
Arrested on 2/17/09
Charged with insurance fraud, criminal possession of a forged instrument and falsifying business records
An investigation by the Frauds Bureau led to the arrest of a Utica man accused of fraudulently collecting $2,620 in lost-wage benefits following an auto accident. He falsely claimed that he was employed so he could obtain the benefits under his no-fault auto insurance coverage. He also allegedly changed the date on the doctor’s prescription that allowed him to be absent from work for an additional month so he could continue to receive benefits.
- STAGED ACCIDENT RING
Arrested on 2/3/09
Charged with falsifying business records
An investigation into the activities of a staged-accident ring resulted in the arrest of the 64th defendant in this case. Sixty-one defendants were indicted on 10/29/08. Three others, including this most recent defendant, were subsequently arrested. The ring targeted unsuspecting drivers who, while backing out of a driveway or a parking lot, were deliberately hit by a car full of passengers, all of whom were participants in the fraud. Occupants of the cars involved were then sent to the same Upper Manhattan medical clinic whose operators were knowing participants in the scheme. These operators allegedly paid “runners” up to $2,500 for each person referred to the clinic. The “patients” were also paid. The scheme defrauded insurers of $1.6 million. During an interview conducted by the NYPD’s Fraudulent Accident Investigation Squad, this defendant admitted that he filed false medical documents in support of a no-fault claim.