Arrests for March 2011
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
Debra Chickerell of the Town of Otego pleaded guilty to falsifying business records on 3/7/11 and was sentenced to pay a fine of $500. On 5/20/10, she added insurance to her auto policy that would cover a vehicle-deer accident. About 30 minutes after the coverage was in place, she reported to Progressive Insurance Company that her son had just struck a deer while driving the car. However, an investigation by the Frauds Bureau, the State Police and Progressive’s SIU revealed that the accident had actually occurred on 5/19/10 when no deer-related coverage existed.
On 3/3/11, upstate resident James Parr was sentenced to three years’ probation and ordered to pay $33,000 in restitution. Following an auto accident, he received prescriptions for medications through his no-fault insurance coverage. He submitted the receipts to Selective Insurance Company for reimbursement with an altered bill indicating that he had paid the entire cost of the medications. However, an investigation by the Frauds Bureau uncovered evidence that Medicaid had paid for the prescriptions, with the exception of Parr’s co-payments that ranged from $.50 to $6. The co-pays were the only out-of-pocket expenses Parr incurred.
Sherry Fleming was convicted on 3/23/11 in Chemung County Court of three counts of arson and one count of attempted arson. The three arson convictions involved setting fire to her car, setting fire to a neighbor’s garage and setting fire to another neighbor’s house. The attempted arson conviction involved setting fire to a neighbor’s recycle bin. At the time of the car fire, she filed a claim with Security Mutual Insurance Company stating her car had caught fire and burned. She was arrested on 6/11/10 and during an interview, she admitted that she had deliberately set fire to her car, as well as setting several other fires near her home.
- GUILTY PLEAS
Oleg Chukhanenko of Buffalo, NY, was arrested on 3/17/11 and pleaded guilty to insurance fraud in the 3rd degree and attempted arson in the 3rd degree. In October 2010, he reported that his car had been stolen from his place of employment and he filed a $22,000 claim with Liberty Mutual Insurance Company for the loss. However, his car was recovered destroyed by fire shortly after he filed the claim. When he was confronted by Buffalo Fire Marshals, he admitted to setting the car on fire in an attempt to collect the insurance proceeds. The Frauds Bureau and the Fire Marshals conducted the investigation that led to his arrest.
Donald R. Kropp, the owner of a home heavily damaged in a 7/23/09 fire, pleaded guilty to insurance fraud and attempted arson on 3/15/11. The home was insured for more than $500,000 through New York Central Mutual Insurance Company and, though the owner filed a claim, it was never paid. The owner lived in the two-story structure with his wife and three children. However, no one was at home when the fire was discovered by a neighbor who called the fire department. About 75 firefighters from Oneonta and surrounding departments fought the blaze, two of whom were injured at the scene. The Oneonta Police and Fire Departments and the Frauds Bureau, with the assistance of a private investigator from New York Central Mutual, conducted the investigation that determined the fire was deliberately set.
Ghulum Mustafa, an Orleans County pediatrician, pleaded guilty to grand larceny on 3/14/11 for defrauding Medicaid and Excellus Health Plan. He received free vaccines that were supposed to be dispensed to Medicaid patients. However, he used the vaccines for non-Medicaid patients and billed their private insurer, Excellus. He will make restitution of $179,000, which is the amount of the larceny ($13,200 to Excellus and $121,800 to Medicaid) plus interest. The investigation was conducted by the Western New York Health Care Task Force of which the Frauds Bureau is a member.
- MAKING PIZZA
Arrested on 3/30/11
Charged with insurance fraud in the 3rd degree and violation of Section 114 of the Workers’ Compensation Law
The defendant in this case reported a slip-and-fall accident that occurred while he was hosing out his cement delivery truck on 3/10/10 and began collecting workers’ compensation benefits. During the benefit period, he submitted several Work Activity Reports to the State Insurance Fund stating that he was not working. However, an investigation by the Frauds Bureau and the State Fund uncovered evidence that, between 11/4/10 and 2/8/11, he was working at a local pizzeria making pizza and performing counter help. His employment status was documented by video surveillance and work records provided by his employer. As a result of the fraud, he collected $4,760 in benefits to which he was not entitled. When interviewed, the defendant made a full confession.
- FRAUDULENT AUTO CLAIM
Arrested on 3/25/11
Charged with insurance fraud in the 3rd degree
An investigation by the Frauds Bureau resulted in the arrest of an upstate man charged with filing a fraudulent auto damage claim with GEICO Insurance Company. The claim included a receipt indicating that he had paid for glass repair on his car. However, the investigation revealed that the receipt was forged. Moreover, he changed the amount charged for the purported repairs from $500 to more than $3,000. When GEICO requested an insurance inspection report to ensure the repairs had been completed before paying the claim, the defendant faxed what investigators maintain is a forged CARCO report.
- WHAT’S HER ANGLE?
Arrested on 3/23/11
Charged with insurance fraud in the 2nd degree, grand larceny in the 3rd degree and workers’ compensation fraud
An investigation by the Frauds Bureau, the State Insurance Fund and the Workers’ Compensation Board resulted in the arrest of an Albany woman who had relocated to Utah. She was extradited and arrested for allegedly faking a work injury in order to collect workers’ compensation benefits. On numerous occasions between 7/08 and 11/10, she reported that she suffered from permanent fixed torticollis, a condition that kept her head at a 90-degree angle at all times. However, she was observed on video moving her head and neck freely. As a result of the fraud, she collected $42,000 in benefits to which she was not entitled.
- OPERATION EYE IN THE SKY
Arrested on 3/22/11
Charged with insurance fraud, grand larceny and falsifying business records
Three drivers and five passengers were arrested for staging an accident in the Bronx in June 2010. They subsequently filed no-fault claims for nonexistent injuries. A video surveillance camera caught them circling the block and then setting up the three-car collision. After assessing the damage, the drivers returned to their cars and repeated the “accident” to cause more damage. They were treated for their alleged injuries at local Bronx medical clinics that billed insurers up to $39,000. The three men told investigators that one of them stopped short, leaving no time for the other two to avoid hitting the stopped car. Evidence gathered during an investigation by the Frauds Bureau and the NYPD’s Fraudulent Accident Investigation Squad indicated that the eight defendants were friends prior to the accident.
- PRESCRIBED FOR HERSELF
Arrested on 3/21/11
Charged with violation of Title 18 and Title 21 of the U.S. Code
A Rochester pharmacist was accused of prescribing medications for herself by calling prescriptions in to local pharmacies using the Drug Enforcement Administration numbers of two doctors, one of whom was her former husband. The prescriptions were then submitted electronically to Excellus Health Plan which paid out $1,200 in reimbursements for the illegally prescribed drugs. The Rochester Office of the FBI requested the assistance of the Frauds Bureau in this investigation.
- CARPENTER AT WORK
Arrested on 3/19/11
Charged with insurance fraud in the 3rd degree and grand larceny in the 3rd degree
Following a job-related injury, a Chautauqua County man began collecting workers’ compensation benefits. During the benefit period, he submitted several Work Activity Reports stating that he was not working. However, an investigation by the Frauds Bureau and the Westfield Police Department found evidence that he was in fact gainfully employed as a carpenter.
- FRAUDULENT CERTIFICATE
Arrested on 3/15/11
Charged with violation of Section 114.1 of the Workers’ Compensation Law
The defendant in this case was hired as a sub-contractor by a Long Island carpentry company to perform roofing work and presented a Certificate of Insurance as proof that he had workers’ compensation coverage as required by New York State law. However, an investigation by the Frauds Bureau and the State Insurance Fund revealed that the Certificate was fraudulent. When interviewed, the defendant gave a statement admitting the fraud.
- ACCOUNTANT CAUGHT
Arrested on 3/14/11
Charged with perjury in the 1st degree, offering a false instrument for filing and workers’ compensation fraud
An accountant was accused of falsifying the payroll records of a Syracuse cab driver who was killed in a robbery in January 2009. The suspect performed payroll services for the owner of two taxi companies, only one of which had workers’ compensation insurance coverage. At the time of the robbery, the driver was working for the company without coverage. A forensic examination of the accountant’s computer showed that he added the driver as an employee of the company with proper coverage after his death. Workers’ compensation benefits are used to pay death benefits to the beneficiaries of employees killed in work-related incidents. The Frauds Bureau pooled resources with the State Insurance Fund and the Workers’ Compensation Board’s Office of the Fraud Inspector General in this investigation.
- SWEEP NETS 13
Arrested on 3/3-11/11
Charged with grand larceny, offering a false instrument for filing, violation of the Workers’ Compensation Law and related crimes
A workers’ compensation fraud sweep that began in early February 2011 nabbed its 13th and final suspect on 3/11/10. The operation ranged across eight upstate counties following investigations by the Frauds Bureau, the Workers’ Compensation Board’s Office of the Fraud Inspector General, the State Insurance Fund, insurance company SIUs and local law enforcement agencies. Four of the suspects were arrested in February. The remaining nine were caught between 3/3/11 and 3/11/11. The majority of the suspects were charged with cheating the workers’ compensation system by working side jobs while collecting benefits for injuries they pretended left them physically unable to work. One such suspect was accused of fraudulently collecting $10,000 while operating a ceramic supply store. She admitted she owned the business after being shown surveillance videos which contradicted her previous statements that she was not working. In another case, a woman falsely claimed that she received home health care from two co-defendants, one of whom was her son. However, an investigation found that the care could never have been provided because her son was in jail and the other defendant was working at a nursing home when the care was purportedly given. Referrals leading to the investigations came from the State Fund and Ace, Travelers, First Cardinal and Hanaford Insurance Companies.
- FORGED PRESCRIPTIONS
Arrested on 3/10/11
Charged with insurance fraud in the 3rd degree
While employed as an RN in Nassau County, the defendant in this case had 17 prescriptions for controlled substances filled at various local pharmacies under her health insurance plan. Records from three of the pharmacies showed that the defendant had in fact picked up the prescriptions. The prescriptions were purportedly written by numerous physicians. However, Frauds Bureau investigators contacted the physicians in question and they reported that the prescriptions were forged. As a result of the fraud, the defendant’s insurance plan paid the pharmacies $10,679 for the forged prescriptions.
- DAMAGE NOT COVERED
Arrested on 3/8/11
Charged with forgery and grand larceny
In a case involving a fraudulent Certificate of Insurance, a complainant reported that he had hired the defendant’s company to perform tree work. While the work was in progress, damage was caused to an adjacent property. The complainant requested and was shown the defendant’s Certificate of Insurance as proof that he had the proper workers’ compensation and general liability insurance. However, an investigation found evidence that the Certificate was forged and no insurance coverage was in place. The total amount of the fraud was $1,566.
- THEFT OF PREMIUMS
Arrested on 3/7/11
Charged with grand larceny in the 3rd degree and scheme to defraud
A Long Island resident reported that he gave his broker a check for $3,428 for a homeowners insurance policy through Lloyd’s of London. However, investigators discovered that the broker issued an insurance binder but did not remit the premiums to Lloyd’s. The complainant’s policy was subsequently cancelled for nonpayment of premium and the broker was arrested. The Frauds Bureau opened an investigation in response to complaints received by the Suffolk County DA’s Office and the Department’s Property Bureau.
- SPACE HEATER CAUSES FIRE
Arrested on 3/5/11
Charged with arson in the 3rd degree
An investigation by the Frauds Bureau and the Rochester Fire Department led to the arrest of a suspect charged with arson, following a fire at an apartment building in which he lived. Arson investigators determined that a space heater in a basement apartment in the building started the fire. Laboratory testing determined that the space heater had been altered to cause the fire. One witness interviewed during the investigation reported that he saw the defendant leave the building while flames appeared in the basement windows. The loss is estimated at $100,000.
- REVEALING SURVEILLANCE TAPES
Arrested on 3/3/11
Charged with insurance fraud in the 3rd degree, attempted grand larceny in the 3rd degree and falsely reporting an incident
An upstate man reported to the Cheektowaga Police Department at 9:27 a.m. on 1/13/11 that his 2007 Cobalt had been stolen from a Home Depot lot where he had left it parked at 7:00 p.m. on 1/12/11. However, the PD’s stolen vehicle coordinator reviewed surveillance tapes from Home Depot and concluded that the defendant’s car had never been in the parking lot. The defendant’s car was recovered on fire in the City of Lackawanna at 7:30 p.m. on 1/12/11. On 2/18/11, he filed a claim with Allstate Insurance Company for the loss. When he was arrested, he confessed that he falsely reported his car stolen because he was over the mileage allowance on his rental agreement. His arrest was the result of an investigation by the Cheektowaga PD, the Frauds Bureau and Allstate.
- DEFENDANT #47
Arrested on 3/2/11
Charged with grand larceny in the 3rd degree, insurance fraud in the 3rd degree, falsifying business records in 2nd degree and offering a false instrument for filing in the 2nd degree
A Brooklyn man became the 47th defendant to be arrested in this long-term no-fault investigation being conducted by the Frauds Bureau and the NYPD’s Fraudulent Accident Investigation Squad. This defendant, with others previously arrested, falsely reported being involved in an auto accident, causing erroneous information to be entered into a Police Accident Report. As a result, All Car Rental Insurance Company was billed more than $5,000 for treatment of his alleged injuries. (A 46th defendant was arrested on 2/7/11. See the “Prior Supplements” section at the end of this report.)
- UNDERCOVER OPERATION
Arrested on 3/1/11
Charged with ten counts of possession of a forged instrument
An investigation by the Frauds Bureau, the Queens DA’s Office and the NYPD’s Computer Crimes Squad led to the arrest of a New York-licensed broker. At the same time, a search warrant was executed at his office and electronic and paper records were seized. The investigation began when the Frauds Bureau received information that a subcontractor had submitted a fraudulent Certificate of Insurance to the State Insurance Fund as proof of workers’ compensation coverage that did not exist. The subcontractor was interviewed on 2/8/11 and admitted filing the fraudulent Certificate. He told investigators that he had an agreement with a New York-licensed broker in Brooklyn to pay a flat amount each year in return for a fraudulent Certificate of Insurance. He agreed to cooperate in the investigation. Subsequently, three undercover meetings took place at which the subcontractor put up money and each time received a fraudulent Certificate from the broker. Undercover investigators electronically recorded the meetings.
- CAR FIRE
Arrested on 3/1/11
Charged with insurance fraud in the 3rd degree, grand larceny in the 3rd degree, falsifying business records in the 1st degree and offering a false instrument for filing in the 1st degree
A Brooklyn man purchased an auto insurance policy for his 2001 Lexus with GEICO Insurance Company on 12/27/10. On 12/28/10, he added comprehensive and rental-car coverage. On 1/1/11, he reported to GEICO that his car caught fire on 12/30/10 when he was attempting to drive out of a snow bank. He stated that the fire started in the front right tire area and spread to the interior, totaling the car. However, investigators discovered that the fire actually occurred on 12/26/10. The FDNY responded to the scene and an officer documented that the car was left with the defendant after the fire was extinguished. Photos of the car showed interior damage only. The investigation was conducted jointly by the Frauds Bureau, the NYPD’s Organized Crime Control Bureau and the FDNY Fire Marshals.
- PRIOR SUPPLEMENT
- PATIENT INFORMATION SOLD
Arrested on 2/28/11
Charged with computer trespass
As a result of an undercover operation conducted by the Frauds Bureau and the Suffolk County DA’s Office Insurance Crime Bureau, an employee at a hospital in Bayshore, Long Island, was arrested. She was accused of accessing patient files and selling the information to a known “runner.”
- NO COLLISION COVERAGE
Arrested on 2/21/11
Charged with leaving the scene of an accident
During an investigation by the Frauds Bureau and the NYPD’s Auto Crime Division, evidence was uncovered indicating that the defendant and a friend were out together socially and he borrowed the friend’s car to drive home. However, he was involved in an accident and allegedly fled the scene. The car was not covered for collision damage and he informed the friend that he was financially unable to pay for the damages. The friend reported the car stolen so that State Farm Insurance Company would pay for the repairs. The friend is expected to be arrested shortly.
- ALLEGED FRAUD SCHEME
Arrested on 2/17/11
Charged with wire fraud, conspiracy to commit wire fraud and conspiracy to launder money
The owner of an insurance brokerage in Houston and five other defendants were charged by a Houston grand jury with conspiring to sell fake and fraudulent liability policies to nursing homes, apartment complexes, bars, restaurants and other business and, eventually, to Shoreline Cruises Inc. Shoreline operated a tour boat called the Ethan Allen on Lake George, NY. The boat sank on 10/2/05, claiming the lives of 20 elderly tourists. The indictment alleged that the broker backdated documents after the accident to make it appear that Shoreline had not purchased coverage while the boat was operating on Lake George when, in fact, Shoreline had purchased exactly that kind of policy. The six defendants also allegedly conspired to launder proceeds of the fraud through bank accounts in the Bahamas, Canada, Hong Kong and other countries. The broker was arrested on 2/17/11 and two others in the weeks just prior to that date. Three of the defendants remain at large. The Frauds Bureau and other federal and state law enforcement agencies conducted the four-year investigation that led to the arrests.
- CAUSED OR PHANTOM ACCIDENTS
Arrested on 2/9/11
Charged with mail fraud under Section 1341 of Title 18 of the U.S. Code
Three downstate defendants were arrested in identical but separate incidents. In each case, the defendants reported to their insurers that while driving their cars, they swerved to avoid hitting a pedestrian. In doing so, they hit a parked car which happened to be an expensive, high-end vehicle. Since no personal injuries occurred, no Police Accident Report was necessary. They informed their insurers that they had exchanged insurance information with the owners of the parked cars and each received a sizable reimbursement check to cover the damages. An investigation was conducted by the Frauds Bureau and the U.S. Postal Inspection Service. Investigators suspect that either no such accidents actually occurred, or the defendants colluded with the owners of the parked cars.
- DEFENDANT #46
Arrested on 2/7/11
Charged with grand larceny in the 3rd degree, insurance fraud in the 3rd degree, falsifying business records in the 2nd degree and offering a false instrument for filing in the 2nd degree
A Brooklyn man became the 46th defendant to be arrested in this long-term no-fault investigation. This defendant, along with others previously arrested, was charged with intentionally crashing their car. He then sought and received medical treatments for nonexistent injuries, for which Praetorian Insurance Company was billed more than $10,000.
Arrested on 1/28/1
Charged with falsifying business records in the 1st degree, offering a false instrument for filing in the 1st degree and insurance fraud in the 4th degree
The suspect in this case submitted an application for no-fault benefits and included a Police Accident Report that listed him as a passenger in a car when it was involved in an accident. However, an investigation by the Frauds Bureau and the NYPD’s Fraudulent Accident Investigation Squad uncovered evidence that the suspect was not a passenger in the car. His name was allegedly added to the original Report, causing GEICO Insurance Company to be fraudulently billed for $2,715.
It should be noted that arrests and indictments are merely accusations and that a defendant is presumed innocent until proven guilty.