Arrests for May 2012
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 1-888-372-8369
CAUGHT!
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- SENTENCED
Michael J. McMahon and Dawn C. Velapoldi were sentenced on 5/4/12 for participation in a scheme involving falsely reporting motor vehicle accidents. McMahon was sentenced to 51 months in federal prison; Velapoldi was sentenced to 21 months in federal prison. In addition, the court ordered them to pay $84,868 in restitution. From 2006 through May 2011, they filed claims reporting fictitious motor vehicle accidents in order to obtain compensation for damage to vehicles they claimed was caused by commercial trucks. The claims were all essentially the same – a commercial truck sideswiped an SUV, causing damage to the driver’s side of the vehicle. The scheme included setting up numerous mail boxes and phone numbers, creating phony invoices from nonexistent auto repair shops and submitting at least 83 claims totaling $168,531 – including photos of damage to the same two SUVs – to at least 22 different trucking companies. Thirty-five of the claims totaling $84,868 were paid. The claim checks were mailed to at least 34 commercial mail boxes set up in 15 states. Five of the mail boxes were opened in the Northern District of New York. McMahon and Velapoldi collected the checks and cashed them at various upstate locations. An investigation by the Insurance Frauds Bureau, the U.S. Postal Inspection Service and the National Insurance Crime Bureau led to their arrest on 6/1/11; they had pleaded guilty to conspiracy to commit mail fraud on 11/28/11.
- DRUG DIVERSION 1
Arrested on 5/29-30/12
Charged with criminal possession of a controlled substance
An investigation by the Upstate Office of the Drug Enforcement Tactical Diversion Task Force, of which the Insurance Frauds Bureau is a member, resulted in the arrest of three suspects, each of whom was charged with criminal possession of a controlled substance. The Task Force investigates organized drug diversion schemes, “doctor shopping” and forgery of controlled substance prescriptions.
- NO-FAULT FRAUD
Arrested on 5/25/12
Charged with insurance fraud in the 3rd degree and grand larceny in the 3rd degree
Following an auto accident, an upstate man began receiving lost-wage benefits from New York Central Mutual Insurance Company under the no-fault portion of his auto insurance. However, he was arrested when an investigation by the Insurance Frauds Bureau revealed that he had fabricated his employment and annual salary information on the no-fault application. As a result, he was paid $40,000 in benefits to which he was not entitled.
- HUNDREDS OF FALSE CLAIMS
Arrested on 5/24/12
Charged with insurance fraud in the 2nd, 3rd and 5th degrees, grand larceny in the 2nd and 3rd degrees, attempted grand larceny in the 2nd and 3rd degrees and falsifying business records in the 1st degree
An investigation by the Insurance Frauds Bureau and the Manhattan DA’s Office resulted in the arrest of three suspects for allegedly submitting hundreds of fraudulent claims for mental health treatments they never received. Two of the defendants were policyholders of a mental health insurer – OptumHealth Behavioral Solutions (OHBS) – that requires claimants who receive treatment from out-of-network providers to pay for those treatments and then file claims with OHBS for reimbursement. From June 2009 to September 2011, Defendant #1 in this case, a practicing psychiatrist, filed 206 claims for treatments she never received. In addition, she filed 19 legitimate claims for treatments but inflated the amounts she paid to her doctors. She was reimbursed a total of $32,428 based on the fraudulent and inflated claims. Defendant #2 was accused of submitting more than 1,000 claims to OHBS from July 2010 to November 2011 seeking reimbursement for $257,000 in mental health services purportedly provided to her and her family by a doctor in Brooklyn. Investigators learned that this defendant allegedly fabricated both the services and the doctor. From 2006 to 2011, Defendant #3 filed more than 1,700 claims with her employer for mental health treatments she never received and 38 legitimate claims in which she inflated the amounts paid to her doctor. She was paid $353,958 on the false and inflated claims. Moreover, she tried to steal another $33,000 by submitting several claims multiple times. Her employer fully funds its own employee health plan and was, therefore, liable for the financial loss.
- DRUG DIVERSION 2
Arrested on 5/22/12
Charged with conspiracy to violate the narcotics laws of the United States and distribution and possession with intent to distribute oxycodone and oxymorphone.
An investigation by the Drug Enforcement Administration Tactical Diversion Task Force led to the arrest of 14 defendants charged with participating in the distribution of illegally diverted prescription drugs oxycodone and oxymorphone. From April 2011 through at least May 2012, they worked together to sell tens of thousands of pills on the streets of Upper Manhattan. During the execution of search warrants at five locations in the Bronx and Upper Manhattan, approximately 9,000 of the prescription pills, $24,000 in cash and hundreds of bottles of HIV medications were recovered. Of the 14 defendants, 13 are currently in custody and one remains at large. This ongoing investigation was conducted by the Downstate Office of the Task Force and is being handled jointly by Task Force members including the DEA, the U.S. Attorney for the Southern District, the NYPD and the Insurance Frauds Bureau.
- ARSON
Arrested on 5/21/12
Charged with insurance fraud in the 2nd degree, forgery in the 2nd degree and arson in the 3rd degree
The suspect in this case reported to Mid-State Mutual Insurance Company on 12/25/11 that she had received a call from the fire department stating that her home had been destroyed by fire on 12/24/11. The suspect reported that she was at her daughter’s home in Hornell, NY, at the time of the fire. She subsequently filed a $136,000 claim for the loss and included documents purportedly signed by an acquaintance stating that she had paid him a rental fee to stay at his house following the fire. On 2/29/12, the State Police requested the assistance of the Insurance Frauds Bureau in their investigation into the cause of the fire. Investigators subsequently interviewed several witnesses, including the suspect, at which time she stated that she did not know how the fire started but did admit to forging the name of the acquaintance on the documents submitted to her insurer, a fact confirmed by the acquaintance. On 5/21/12, the suspect voluntarily surrendered herself at State Police Barracks-Bath and admitted that she had deliberately set the fire at her house after removing some personal items.
- MEDICAID FRAUD
Arrested on 5/17/12
Charged with grand larceny in the 4th degree
A Monroe County resident received checks from Medicaid to cover his personal expenses for travel to and from his medical appointments between 1/1/10 and 3/11/11. However, investigators learned that he was transported to and from his treatments by Apple Transport which contracts with Medicaid to transport Medicaid recipients and then submits an invoice to Medicaid for its fees. Apple Transport was subsequently reimbursed for the dates of service for which the defendant claimed he had paid for his own transportation. He was charged with grand larceny for fraudulently receiving and cashing checks totaling $1,575 from Medicaid. When interviewed, the defendant admitted that he had used Apple Transport and had not incurred any out-of-pocket expenses. This case was referred to the Insurance Frauds Bureau by the Office of the Medicaid Inspector General for investigation.
- CHECK-CASHING/COUNTERFEITING SCHEME
Arrested on 5/16/12
Charged with criminal possession of a forged instrument in the 2nd degree
Nine additional suspects were arrested in an ongoing investigation into a check-cashing, counterfeiting scheme at a Schenectady location of a super market chain operating in upstate New York, bringing the total to 31 arrests so far in this case. This investigation is being conducted by the Schenectady Police Department and the U.S. Secret Service with the assistance of the Insurance Frauds Bureau.
- DRUG DIVERSION 3
Arrested on 5/9-10/12
Charged with criminal possession of a controlled substance in the 4th degree, criminal sale of a controlled substance in the 5th degree and criminal possession of a forged instrument in the 2nd degree
An investigation by the Upstate Office of the Drug Enforcement Administration Tactical Diversion Task Force, of which the Insurance Frauds Bureau is a member, resulted in the arrest of four suspects. Three were arrested on 5/9/12 and charged with criminal possession of a controlled substance and criminal sale of a controlled substance. The fourth suspect was arrested on 5/10/12 on a charge of criminal possession of a forged instrument.
- WORKERS’ COMP FRAUD
Arrested on 5/8/12
Charged with grand larceny and offering a false instrument for filing
Following an injury on the job, a Niagara Falls man began collecting workers’ compensation benefits. During the benefit period from 9/1/11 through 10/18/11, he submitted a Work Activity Report to the State Insurance Fund stating that he was unable to work. However, an investigation by the Insurance Frauds Bureau and the Niagara Falls Police Department revealed that he was employed at a local Rite Aid Pharmacy. As a result of the fraud, he collected $1,180 in benefits to which he was not entitled.
- FRAUDULENT CERTIFICATE
Arrested on 5/8/12
Charged with insurance fraud in the 4th degree, offering a false instrument for filing in the 1st degree and violation of Section 114.3 of the Workers’ Compensation Law
An investigation by the Insurance Frauds Bureau and the State Insurance Fund resulted in the arrest of the owner/operator of an upstate modular home company who submitted a Certificate of Insurance to a second company for which she was doing work. The Certificate was meant as proof that the defendant’s employees had workers’ compensation insurance coverage for the period of 8/16/11 to 8/16/12. The State Fund discovered in an audit of the second company, which it insured, that the defendant did not have workers’ compensation coverage as she had claimed and the Certificate was fraudulent. As a result of the fraud, the State Fund lost $1,172 in premiums owed.
- FINANCIAL FRAUD
Arrested on 5/3/12
Charged with grand larceny in the 2nd degree
On 4/2/12, the Insurance Frauds Bureau received information from the Monroe County Sheriff’s Office indicating that an employee of the Monroe County Board of Cooperative Educational Services (BOCES) was embezzling money from her employer through bank transactions. IFB and Sheriff’s Office investigators subsequently reviewed bank records and a copy of an audit report that listed numerous discrepancies in the accounts being used by the defendant. She was an authorized account user and allegedly made numerous withdrawals totaling $436,000 from the account and used the money for personal expenses.
- DRUG DIVERSION 4
Arrested on 5/1-10/12
Charged with criminal possession of a controlled substance in the 4th degree, criminal sale of a controlled substance in the 5th degree and criminal possession of a forged instrument in the 2nd degree
Several investigations by the Upstate Office of the Drug Enforcement Administration Tactical Diversion Task Force, of which the Insurance Frauds Bureau is a member, resulted in the arrests of 14 suspects. The suspects were arrested during the period from 5/1/12 to 5/10/12. The charges in these cases included criminal possession of a controlled substance, criminal sale of a controlled substance and criminal possession of a forged instrument. The Task Force investigates organized drug diversion schemes, “doctor shopping” and forgery of controlled substance prescriptions.
