Insurance Claims Investigation News

Couple plead guilty in disability case as man used wife\’s Social Security number to hide income

Friday, May 27, 2005
Mobile Register
By BRENDAN KIRBY
Staff Reporter

Stricken with throat cancer, Herman Joe Smith could not even speak as he entered his guilty plea Thursday on federal fraud charges, nodding his head in response to questions from U.S. District Judge William Steele.

It is Smith\’s illness that got him federal disability payments beginning in 1994.

But according to his own admission Thursday, the Jackson man was well enough to work, returning in 1999 to the tree service company that previously employed him.
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That automatically made Smith, 59, ineligible for disability pay from the Social Security Administration. Instead of giving up those payments, though, he used his wife\’s Social Security number to receive his paychecks, he acknowledged.

An anonymous tipster reported Smith to the Birmingham office of the inspector general, which sent an investigator to question him in 2003. Assistant U.S. Attorney Michael Anderson said Thursday that Smith denied in writing in October of that year that he had returned to work at A-1 Tree Service. His wife, Gennie West Smith, also told the investigator that she was not working.

Herman Smith pleaded guilty to conspiracy, concealment, false representation of Social Security number, theft and providing false statements to the Social Security Administration. Gennie Smith, 52, pleaded guilty to the first four of those counts.

\”He couldn\’t live off of what disability was paying him, so he went back to work,\” said Herman Smith\’s lawyer, Assistant Federal Defender Lyn Hillman. \”They couldn\’t support themselves.\”

Anderson said Smith earned a total of $156,410 during the years 1999 through 2004. Over that period, he also pocketed $59,147 in disability benefits, Anderson said.

May 27, 2005, 12:15 PM EDT

TRENTON, N.J. — The state\’s award-winning office created to root out insurance fraud is under scrutiny itself, with the state auditor probing allegations the insurance industry was billed about $4 million for employees who never worked on fraud cases.

The probe stems from a letter to a ranking state senator by a retired investigator from the state Division of Criminal Justice who said 43 employees had their salaries paid with insurance industry money but did little or no work on fraud cases.

\”We investigate doctors for submitting false bills to insurance companies, and we put doctors in jail for that. What\’s the difference here?\” Edward Buttimore, the retired investigator, told The Star-Ledger of Newark for Friday\’s newspapers.

Criminal Justice Director Vaughn McKoy, whose agency oversees the New Jersey Office of Insurance Fraud Prosecutor, denied the office misspent money.

He said Buttimore had filed a notice this week that he may pursue legal action against the division, alleging he was mistreated and discriminated and retaliated against. Such a notice is generally a preliminary step to filing a lawsuit.

Buttimore said his letter earlier this month to Senate Judiciary Committee Chairman John Adler had nothing to do with the notice of a possible lawsuit.

State Auditor Richard Fair began investigating the insurance fraud prosecutor\’s office in January at the behest of McKoy and the state attorney general after an anonymous letter that made claims similar to Buttimore\’s was sent last fall to various government offices. Adler requested the auditor\’s intervention after receiving Buttimore\’s letter.

In his letter to Adler, Buttimore included the names of the 43 employees, a list he said he compiled by cross-checking a criminal justice division roster with a list of names submitted to the insurance industry as working on fraud cases.

Criminal Justice spokesman John Hagerty said those employees could be providing services to the fraud prosecutor\’s office that Buttimore is unaware of.

Fair\’s office is examining payroll records for the insurance fraud unit and those of the Division of Criminal Justice to determine each employee\’s duties. Auditors are also examining other expenses for office equipment, cell phones and vehicles that were billed to insurance companies, checking to verify they are related to fraud investigations.

A report from Fair\’s office is expected in about a month, but the criminal justice division may be given an opportunity to respond before the report\’s release.

The fraud prosecutor\’s office was created in 1998 to track down fraud schemes that officials say drive up the cost of auto and other insurance coverage. The fraud office is funded entirely through annual assessments on the insurance industry.

Last year, it recovered $16.2 million in criminal and civil restitution for insurance companies and tallied a 100 percent conviction rate for prosecuting scams. It was also named the best fraud bureau in the nation by an insurance industry group.

Information from: The Star-Ledger, http://www.nj.com/starledger

Thursday May 19, 6:47 pm ET

BAKERSFIELD, Calif., May 19 /PRNewswire/ — As part of its commitment to fight workers\’ compensation insurance fraud, State Fund held a seminar May 18 at the Valley Plaza\’s Pacific Theatre where more than 200 Kern County employers heard State Fund and law enforcement officials outline a problem that robs California\’s economy of millions of dollars each year.

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The seminar included presentations from Kern County District Attorney Ed Jaggels, Deputy District Attorney David Wolf, State Fund Fraud Investigation Program Manager Donna Gallagher and fraud investigator Brad Burks from State Fund\’s Bakersfield District Office.

\”We are very appreciative for the high level of interest among Kern County employers in helping us and law enforcement officials fight fraud which drives up costs in California\’s workers\’ compensation insurance system,\” said State Fund Vice President George Vignolo who spoke at the seminar. \”It is truly gratifying to see the response and commitment from the Bakersfield community.\”

According to Gallagher, \”Insurance fraud is the number two \’white collar\’ crime in the nation.\” She added, \”David Wolf is responsible for developing and inspiring a team that has made the Kern County District Attorney\’s Workers\’ Comp Fraud Unit into a force to be reckoned with.\”

Deputy District Attorney Wolf highlighted a number of fraud convictions in Kern County and called State Fund \”the most aggressive insurer with which I work.\”

State Fund\’s District Offices schedule free fraud seminars for system stakeholders — including employers and brokers — throughout the year. Kern County employers can call 661-664-4003. State Fund is sponsoring a fraud seminar on Friday May 20 from 8:30 a.m. to 12:30 p.m. at the Hilton Hotel, 285 Hospitality Lane in San Bernardino. Featured speakers include San Bernardino County Lead Deputy District Attorney Workers\’ Compensation Fund Unit, Tracy Bartell, Donna Gallagher and State Fund Government Relations Officer Pat Quintana. For more information, please call 909-499-6925.

State Fund\’s Fraud Investigation Program (FIP) addresses all aspects of workers\’ compensation insurance fraud, including employee, employer, medical, legal and internal. In the last decade, State Fund\’s FIP has produced hundreds of arrests and convictions in a wide range of workers\’ compensation cases, including some considered milestones in California\’s fight against fraud.

EDITOR\’S NOTE: Established by the California Legislature in 1914, State Compensation Insurance Fund is a self-supporting, nonprofit, fairly competitive public enterprise that provides workers\’ compensation insurance coverage at cost to California employers. State Fund is headquartered in San Francisco. For more information about State Fund, please visit www.scif.com.

Jim Zelinski (For State Fund) Vicente Hernandez – 415/565-1683

415/882-7787 or 415/420-6050

Source: State Compensation Insurance Fund

The private law client of a Glens Falls city court judge, already on probation for felony filing a false written instrument in connection with his employment application to be a police chief, has been charged with four more felonies.

Jacob W. Sabo, 57, of Whitehall, was represented by Glens Falls City Court Judge Gary C. Hobbs, when he was found guilty following jury trial of lying on his employment application to the town of Fleischmanns in Delaware County.

Sabo, a former police officer for Lake George in Warren County and Whitehall in Washington County has now been charged with counts of grand larceny, insurance fraud, falsifying business records and falsely making an application for worker compensation benefits.

According to the complaint, Sabo failed to disclose to the state Workers Compensation Board that he had been employed as the police chief for Fleischmanns in 2003, receiving a salary of $48,000, the same job that he was convicted of lying on his application to get.

He had been receiving workers compensation benefits for a wrist injury he had incurred while working at Niagara Mohawk Power Corporation.

According to authorities, Sabo received $8,200 to which he wasn’t entitled. He was arrested in Salina in Onondaga County where the insurance company paying the benefits is based.

Sabo was sentenced to five years of probation and order to perform 250 hours of community service. He was convicted in Dec. 15, 2003 following a jury trial.

If convicted of the newest charges, it is likely Sabo would then be charged with violating the terms of his probation.

He had originally been charged on a three-count indictment of filing a false instrument, defrauding the government and second degree menacing.

He was acquitted of the latter two charges.

He was found guilty of failing to disclose on his application for police chief that he had been previously convicted of a crime and also falsely stated that he had not been terminated from prior employment.

Reported by the Empire Journal

By California Department of Insurance
May 23, 2005, 06:41

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Owner’s son (a co-owner) sentenced to felony probation and $300,000 restitution

ALAMEDA COUNTY – Investigators announced yesterday that Jay Neal Wright, 52, a former Bay Area businessman and owner of Highland Framers of Northern California, Inc., was formally sentenced in Alameda County Superior Court to three years in state prison and ordered to pay $3.1 million in restitution following his conviction on two felony counts of premium fraud and one felony count of employment tax evasion. His son, Jay Neal Wright, II, 31, was sentenced to five years felony probation and ordered to pay $300,000 in restitution for conviction on two counts of Grand Theft. These sentences follow “No Contest” pleas entered by the two men on March 7, 2005.

On June 16, 2003, Wright and Wright II, were indicted by the Alameda County Criminal Grand Jury on multiple felony counts of workers’ compensation insurance premium fraud and employment tax evasion following a lengthy investigation led by the California Department of Insurance (CDI) Fraud Division and the Alameda County District Attorney’s Office, which prosecuted the case. The investigation was assisted by the California Employment Development Department (EDD), the California Franchise Tax Board (FTB), and the Arizona Department of Insurance. Others assisting the investigation were personnel from the State Compensation Insurance Fund (SCIF) and the Golden Eagle Insurance Company.

“This was a carefully choreographed multi-agency investigation that resulted in multiple felony convictions,” said Insurance Commissioner John Garamendi. “This father and son team found out the hard way that if you commit workers’ comp fraud, you may end up in state prison — and in the poor house.”

Early in the investigation, during 2001, investigators indicated that an attorney who had worked for Highland Framers of Northern California, Inc., Timothy Miller, 46, of Riverside, California, pleaded guilty to one felony count of premium fraud and was sentenced to serve five years probation, pay $50,000 in restitution to carriers, and relinquish his license to practice law. He further agreed to testify for the State in the case against Wright, Sr. and Wright, II.
According to investigators, the case was first brought to light by SCIF, which submitted a suspected fraud referral to the CDI Fraud Division. The referral alleged that several policies SCIF had underwritten and subsequently suffered large losses on during the early to mid-1990’s all seemed to be closely related to the Wrights and to Highland Framers of Northern California, Inc., even though the policies had been applied for under apparently unrelated company names and ownership.

The subsequent investigation by CDI revealed that Jay Neal Wright and his son, Wright, II, headed a large residential framing company, Highland Framers of Northern California, Inc., with a multi-million dollar payroll doing business primarily in and around Alameda and Contra Costa Counties throughout much of the 1990’s. In late 1993, the Wrights represented to insurers and State employment tax authorities that they had divested themselves of their carpentry labor force, and instead were using outside sub-contractors for their labor. However, a close examination of the alleged sub-contractor companies used after 1993 revealed that at least two, including Valley Framing of California, Inc. and Highland Valley Framers, Inc., were merely shell corporations that operated under the direct control, both financially and operationally, of Highland Framers of Northern California, Inc., and the Wrights. It is believed by investigators that the shell corporations, which were created with the assistance of former attorney Timothy Miller, were intentionally made to appear unrelated to Highland Framers of Northern California, Inc. in order to evade their liabilities for workers’ compensation insurance premiums and State employment taxes.

Total restitution ordered to be paid between the two men is broken down as $1,183,000 to SCIF, $917,000 to Golden Eagle Insurance Company, and $1,000,000 to the EDD.

Community Dispatch

SALINA ALI
Detroit Free Press via the Associated Press

Outside a suspected vehicle chop shop in the 10600 block of Stratman on Detroit\’s east side, law enforcement officials prepared Thursday to search the dwelling.

\”I saw a blind move in the window upstairs,\” said Jo Ann Rottenbucher, a probation supervisor from the Michigan Department of Corrections Macomb bureau.

For nearly 20 minutes, they knocked on the front and side doors.

Finally, after no answer, Wayne County Sheriff Cpl. Lewis Yokom positioned himself in a sturdy stance.

Armed with a Haligan — a device used by firefighters to forcefully open steel doors — the group of officers became tense as Yokom prepared to knock out the door\’s lock.

With their guns drawn, someone shouted, \”Ready!\”

Yokom nodded.

\”Boom!\” Yokom rammed the Haligan into the steel door lock. The lock buckled slightly.

\”Boom!\” Yokom rammed it again and the lock started to separate from the door frame.

By the fourth hit, the lock gave way. Officers kicked the door in and rushed into the house.

Some officers ran upstairs while others scurried to secure the basement, shouting \”Police! Police! Identify yourself.\”

A 28-year-old male was found in the house, dressed in blue jeans, a T-shirt and no shoes.

\”I didn\’t hear you! I didn\’t hear anyone knocking. Man, I\’m all the way upstairs,\” the man said.

The man sat down and held his head with his hands as Wayne County Sheriff Investigator E.T. Smith Jr. poured on the questions. \”You know we found a stolen 2003 Marauder in your driveway last night,\” said Smith.

\”I don\’t know nothing about that,\” replied the man. \”I\’m a stand-up guy. I don\’t have any warrants out.\”

This week, 31 law enforcement agencies from Wayne, Macomb, Washtenaw and Oakland counties joined forces in a crackdown on chop shops and auto theft rings, and to track down parole and probation violators charged with auto theft-related crimes.

The four-day project called ACTION — Arresting Car Thieves in Our Neighborhood — also involved 30 other government agencies, such as the U.S. Departments of Housing and Urban Development (HUD) and Homeland Security, and two insurance companies.

As of Thursday night 113 arrests had been made, 30 vehicles recovered and 254 spot checks on parolees and those on probation conducted.

At the house on Stratman, Investigator Smith tells the man police have a warrant for his arrest from 2000 for receiving and concealing stolen auto parts.

\”Oh that! No, no that\’s a misunderstanding,\” the man said. \”I already went to court on that. There\’s a lawsuit pending on that right now. That\’s a dead issue.\”

The officers disagreed. They arrested the man and took him to the 11th (Davison) Precinct for processing before taking him to the Wayne County Jail.

The Wayne County Sheriff\’s Office had Larry LaFond of the National Insurance Crime Bureau identify alleged stolen parts in the home\’s garage.

\”We assist law enforcement ID stolen vehicles and recoveries. I\’m identifying parts and components to confirm the identification of the vehicles,\” said LaFond.

In the basement of the house, more car parts were found. A rear car seat, interior panels, odds and ends of car speakers and car moldings. The items were photographed and logged as evidence.

Meanwhile, the interrogation continued upstairs. \”I have papers for all of my stuff. Let me go upstairs and get it,\” the man pleaded. HUD Special Agent Michael Catinella gave a Detroit officer some papers and another set of car keys. \”I found this stuff downstairs,\” Catinella said, handing over the keys. \”I\’m sure the car is long gone by now.\”

According to the Auto Theft Prevention Authority of Michigan, car thefts were up in 2004 by 31% in Macomb, 23% in Oakland and 10% in Wayne. Nationwide, a vehicle is stolen approximately every 20 seconds, according to data provided by the Wayne County Sheriff\’s Office.

Wayne County Sheriff Warren Evans initiated ACTION.

\”We don\’t want everyone being territorial and fighting this problem in their own backyards. Everyone\’s seen this as being a regional effort, and that\’s why it\’s been working so well,\” Evans said Friday.

The goal of the effort is to cut auto theft by 30% in the region, said Evans. The idea is that all the arrest information retrieved will lead to further investigations and future arrests.

\”We need to go after the places that are paying for those stolen parts and retagging them and changing the VIN numbers. Car thieves are a dime a dozen,\” said Evans.

The ACTION program targeted 600 people wanted for auto-related crimes who have warrants for arrest, who failed to appear in court or who violated probation or terms of parole.

\”It\’s going to benefit the citizens all throughout the region. It\’s going to help with the insurance rates,\” Lawrence Meyers, chief of field operations for the Wayne County Sheriff\’s Department, said Thursday.

Not all of the arrests made during the four-day sweep were auto-related.

In a senior residents complex in the 1300 block of East Canfield, a 63-year-old woman who has a 1999 arrest warrant for drug-related charges was picked up. A tip from an earlier auto-related arrest led to the woman\’s arrest. Another resident was wanted for not paying child support.

\”We\’re here. We might as well pick him up since were here,\” said Yokom.

Meanwhile, a call came to Yokom that a stolen 2004 Chevy Silverado has been found on East 8 Mile.

After arriving, Yokom and the other officers noted the car\’s interior had been completely gutted and exterior accessories were missing. \”The Insurance Auto Theft database will track a similar style car. We\’ll check to see if another was recently wrecked. More than likely its was stolen for specific parts,\” said Yokom as he looked over the truck.

Michigan State Police Detective Sgt. Julie Busch detailed how the car was probably stolen since the steering column was left undamaged. \”They get the VIN number and tell a buddy who works at a dealership to get a copy of the key. Either that or they got a tow truck to take the car.\”

BALTIMORE, May 20 /PRNewswire/ — The National Council of Investigation
and Security Services (NCISS), the nation\’s largest association for
investigation and security services companies, is working with Congress to
prevent any unintended damage to the court system and commerce caused by
overly broad regulatory language meant to protect personal identification
information.
\”We support the protection of personal identification information and
welcome every opportunity to work with Congressional leaders to address this
important issue,\” said Brian McGuinness, NCISS president and president of
McGuinness & Associates, Inc., of Miami.
NCISS and other private security organizations support these measures to
protect personal data:

* Data brokers should conduct thorough credentialing of new accounts and
those where a review indicates that a new check is in order.

* Congress should ban Internet sales of personal identification
information to the general public.

* Penalties, such as fines and jail sentences, for the misuse of personal
information should be increased.

* Data providers should be required by federal law to notify consumers
when their information has been accessed illegally.

* Congress should prohibit the use of Social Security Numbers on
identification documents such as healthcare insurance cards, drivers\’
licenses and state permits.

* Investigators and other licensed professionals who can demonstrate a
need for information and have submitted to a background investigation
should have continued access to personal data.

Recent security breaches at data brokers and financial institutions have
led to calls for immediate regulatory and legislative action; private security
and investigators are fearful that in the current atmosphere public officials
may be pressured to create overly broad legislation.
Key contributions of private security and investigators in support of
federal and state judiciary systems, law enforcement, corporations and private
citizens already are in jeopardy. Unjustified data-broker restrictions now in
place make it nearly impossible for security professionals to continue to

* Locate witnesses
* Prevent and investigate fraud, theft and embezzlement
* Investigate identity theft and assist in credit recovery
* Locate missing persons, heirs and \”deadbeat parents\”
* Implement access control and perimeter security measures
* Protect consumers against fraud and identity theft
* Locate debtors and pension beneficiaries

The National Council of Investigation and Security Services (NCISS) is the
nation\’s largest association for investigation and security services
companies, with more than 900 member firms representing nearly 15,000
investigators and security services professionals. NCISS encourages the
exchange of information and best practices to improve performance and raise
ethical standards. Founded in 1975, NCISS works closely with state
investigation associations and other security organizations to advocate and
sustain the activities of investigators and security service professionals.
For more information, please visit http://www.nciss.org.

SOURCE National Council of Investigation and Security Services
Web Site: http://www.nciss.org

KANSAS CITY, Mo. Roger Newman, of Springfield MO, the once director of the Newman Funeral Home in Unionville MO was sentenced to 33 months in prison for collecting funeral insurance on fifty nine people who were found to still be alive. He was further ordered to over 410000 dollars in restitution to three insurance companies.

ST. PAUL, Minn., May 17 /PRNewswire/ — Through aggressive health care
fraud investigations and coordination among other states\’ Blue Cross plans,
the Blue Cross Special Investigations Unit (SIU) stopped payment on more than
$3 million of suspect claims last year, reducing the impact of fraud on
premiums in Minnesota.

By comparison, Blue Cross stopped $8.7 million in claims in 2003, most of
which was due to the rent-a-patient scams now being investigated and
prosecuted in Southern California. \”We saved millions of dollars of our members\’ premium dollars, because we
were able to identify the scam early and stop payment on fraudulent claims,\”
said Dave Bohnenstingel, SIU manager. \”In fact, Blue Cross and Blue Shield of
Minnesota was integral in bringing the scam to light and the perpetrators to
justice,\” he added. Bohnenstingel credited the drop in suspect claims in 2004 to the fact that
the rent-a-patient scam is now essentially defunct. In the spring of 2004,
the FBI raided several suspected clinics as part of its investigation of
150 clinics, eventually bringing federal charges against several of the
individuals involved.

In this scam, marketers recruited low income or minority patients, paying
them several hundred dollars and often transporting them to clinics solely for
unnecessary diagnostic tests or surgery. The clinics then billed the
insurance company an inflated amount for the procedures. The investigations
continue, but the fraudulent activity seems to have subsided. \”Our experience has been that the overwhelming majority of providers and consumers act ethically and responsibly in submitting their health care bills;
however, there are exceptions who are trying to make money illegally at the
expense of payers,\” Bohnenstingel said. \”Unfortunately, those fraud losses
must be borne by our customers in the form of higher premiums.\” Using sophisticated computer software, communication with Blues plans throughout the country, analysis of large claims, and tips to their fraud hot
line, Blue Cross\’ SIU looks for irrgularities or other \”red flags\” in claims submitted by providers or members.
Blue Cross and Blue Shield of Minnesota has more than two decades of experience in detection and prevention of health care fraud. As one of the pioneers of developing an anti-fraud program, Blue Cross formalized an
aggressive anti-fraud program more than 10 years ago.

Blue Cross works with purchasers, the National Health Care Anti Fraud Association and several law enforcement agencies to combat fraud. As the state\’s largest health plan, Blue Cross also spearheaded the creation of a
workgroup with other Twin Cities\’ health plans to share information regarding local scams.
The national Blue Cross and Blue Shield Association estimates that between 3 and 5 percent of the dollars spent on health care in the United States in a year is lost to fraud.

If a consumer or employer suspects fraud, they can call the Fraud Hot Line at 651-662-8363 or 1-800-382-2000, extension 28363.

Blue Cross and Blue Shield of Minnesota, with headquarters in the St. Paul suburb of Eagan, was chartered in 1933 as Minnesota\’s first health plan and continues to carry out its charter mission today: to promote a wider, more
economical and timely availability of health services for the people of Minnesota. A not-for-profit, taxable organization, Blue Cross is the largest health plan based in Minnesota, covering 2.6 million members in Minnesota and nationally through its health plans or plans administered by its affiliated companies. Blue Cross and Blue Shield of Minnesota is an independent licensee of the Blue Cross and Blue Shield Association, headquartered in Chicago.

Sidebar: What you can do to prevent health insurance fraud:

— Report suspected fraud to the Blue Cross fraud and abuse hotline
(1-800-382-2000, ext. 28363) or your health plan.
— Consumers should be cautious of free medical exams, co-payment
waivers, or advertisements stating \”covered by insurance.\”
— Think of health care member ID cards as being as valuable as a credit
card. If lost or stolen, they could be used to gain access to drugs
and services that may appear on your medical history.
— Closely examine \”Explanation of Benefits\” or EOBs from your health
insurer to ensure you received the service and the service billed was
the service you received. Call your health plan if there is a
discrepancy.
— Blue Cross offers educational materials and onsite training for
employers to share with employees about fraud.

SOURCE Blue Cross and Blue Shield of Minnesota

Four Virginia residents recently discovered that it pays to have a sharp eye for suspected insurance fraud.

According to a spokesman for the Insurance Fraud Program of the Virginia State Police, the first rewards for reporting suspected insurance fraud were paid during April. The Sharp Eye Reward Fund pays up to $25,000 for information leading to the arrest of people who commit insurance fraud in Virginia. The amounts of the rewards ranged from $500 to $5,000. The types of insurance fraud reported to state police included arson, workers\’ compensation, a slip-and-fall scheme and the filing of a false accident claim. To protect the anonymity of the tipsters, further information about the cases is being withheld. \”Virginians are ultimately the winners because these citizens were willing to come forward and report what they thought were fraudulent insurance claims,\” said Lt. W. Roger Rector, coordinator for the Insurance Fraud Program said.

\”Insurance fraud costs all of the citizens of Virginia. Not only do Virginians pay higher premiums, but they also pay more for their everyday purchases and services when businesses have to pass along their increased costs to their customers.\” When anyone tries to make money from insurance transactions by deception, that is insurance fraud, and according to the Coalition Against Insurance Fraud, it\’s the second most costly white collar crime, behind tax evasion. It\’s been estimated that insurance fraud costs the U.S. nearly $85 billion a year. In Virginia, it\’s projected that fraud adds an additional $200 a year to insurance premiums and costs Virginians more than $1,000 a year in increased costs of goods and services.

To report suspected insurance fraud, residents can call the Insurance Fraud Hot Line at (877) 623-7283) or visit http://www.stampoutfraud.com . To be eligible for a reward, callers should mention the reward fund. Tipsters can remain anonymous. Ineligible for the reward are insurance professionals, the perpetrator or co-perpetrator of the crime, the crime victim, and Virginia sworn law enforcement officers, jailers, corrections officers and members of their immediate family.

Only property and casualty lines of insurance will be considered.

source

By Bill Harless, bharless@nashvillecitypaper.com
May 06, 2005

Taking a two-sided approach to preventing auto thefts, the Metro Police Department is using bait cars to trap would-be thieves and occasionally issuing tickets to drivers who leave their cars unattended with keys in the ignition.

Describing one of the bait cars, which is left sitting empty with keys inside, Detective Billy Brewer said, “We can lock the doors, we can lock the windows, we can shut the engine down — you’re not going to get out.” Brewer has worked in the department’s Auto Theft Unit for nearly 19 years.

The police hear every word said in the car, and usually it is shut off 15 seconds after a person starts driving.

Insurance companies including MetLife, Allstate and GEICO have donated some of the vehicles.

“You cannot name an insurance company that does not try to help us in some kind of way,” Brewer said. Their incentive is the fact that comprehensive automobile insurance reimburses drivers for stolen vehicles.

“We do whatever we have to do to make this thing work, and if the insurance companies have grabbed hands with us and they’re working strong with us, now what we’re asking is [for] the public to grab the other hand. And let’s work together and do what we’ve got to do to combat this thing.”

Full Article Here

May 4, 2005

Insurance broker Robert Stephen Rice, 56, was arrested on seven felony counts of grand theft at his home in Thousand Oaks, Calif., by the California Department of Insurance (CDI) Fraud Division.

The arrest is the result of an investigation by CDI\’s Investigation Division. The Van Nuys District Attorney\’s Office filed a felony complaint and arrest warrant against suspect Rice on April 11, 2005. Rice was booked at the Ventura County Sheriff\’s Department and bail has been set at $245,500.

\”This broker put his unsuspecting clients in an immensely risky situation,\” said Insurance Commissioner John Garamendi. \”By collecting premiums and then providing phony documents as proof of insurance, his clients were vulnerable to huge potential losses.\”

According to investigators, CDI received several complaints from Rice\’s insurance clients alleging that they had paid Rice thousands of dollars in insurance premium, but had not received policies or refunds. The investigation revealed during a period of November 2001 through February 2004, Rice accepted more than $262,666 in insurance premium monies from seven victims for general liability/construction wrap policies and commercial apartment building policies. Construction wrap policies cover general contractors, subcontractors, architects, etc., under one policy for a period of ten years after a project is completed for any construction defect problems that may arise.

Rice did not send the premium monies he accepted from the victims to the insurance carriers. Instead Rice created bogus documents and forged signatures of insurance company executives and presented the bogus documents to the victims as evidence of insurance. However, the policies did not exist, which put the victims at risk.

From the Insurance Journal

By JONATHAN D. EPSTEIN
News Business Reporter
The Buffalo News

5/2/2005

The state\’s largest auto insurer, Allstate Corp., has agreed to cut rates in New York state this year by at least 3 percent, saving customers $50 million, state regulators will announce today. With the agreement, Northbrook, Ill.-based Allstate becomes the ninth insurer to agree to a rate cut since state regulators began a campaign to lower auto insurance premiums in New York in November.

Last month, New York Central Mutual agreed to cut rates by a statewide average of 5.1 percent, to save consumers an estimated $15 million for 2005.

The state also achieved rate cuts from Amica Mutual Insurance Co., GEICO Corp., MetLife, Nationwide Mutual Insurance Co., Progressive Corp., State Farm Mutual Automobile Insurance Co., and St. Paul Travelers Companies.

In all, regulators claim, consumers will save more than $300 million from the rate cuts.

\”This extraordinarily positive trend is the direct result of Governor Pataki\’s successful efforts to crack down on insurance fraud and streamline the way in which claims are processed,\” Acting Insurance Superintendent Howard Mills said in a statement about Allstate.

Insurance Department spokesman Mike Barry said regulators are negotiating with another major insurer, Liberty Mutual Group, and expect to have an agreement on rate cuts from the Boston-based company shortly.

\”There are other insurers indicating they may also cut their prices in order to stay competitive,\” Mills said in the statement announcing the New York Central agreement on April 19.

A local defense attorney says there has been so much publicity surrounding auto insurance fraud cases that his clients are unable to get fair trials here. Their cases, he says, should be moved out of Essex County.

Rubbish. Those charged with fraud should be tried right here, their cases heard by juries of their peers — those law-abiding citizens who in many cases must pay exorbitant rates to subsidize the greed of those who think they\’re only stealing from big, faceless insurance companies.

Haverhill defense attorney Glenn Herlihy says he\’s shocked by the number of news stories and editorials there have been on this subject locally. He shouldn\’t be. The Eagle-Tribune newspapers have worked diligently to expose auto insurance fraud for the serious crime that it is.

We understand Herlihy\’s only duty is to serve his clients. But we\’re struck by the cynicism of a memo he sent to his fellow attorneys urging that they join him in seeking changes in venue for all of their auto fraud cases.

\”The threat of having to move these to another county might well resolve some of these cases. … Often there\’s strength in numbers!\” he wrote.

Individual fraud cases are often small, amounting to only a few thousand dollars each. But collectively, it adds up to a multimillion-dollar criminal enterprise that has helped make Massachusetts auto insurance rates among the highest in the nation.

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BAYTOWN, Texas A Houston-area pastor has been charged with arson and insurance fraud over a blaze that destroyed part of his church.
Another man also has been charged over the April 19th fire that damaged Blessed Again Ministries and its thrift store.

Authorities say 54-year-old Pastor Roger Marcus of Baytown earlier took out an insurance policy on the place.

Twenty-seven-year-old Quinton Fontenette also is charged with arson.

By Jill Stewart
SFGate.com

Friday, April 29, 2005

JOURNALIST FRIEND of mine recently attended a banquet for hundreds of private-detective agencies, and was fascinated to hear them, one-by-one, introduce themselves. The fascinating part: roughly one-quarter specialized in investigating Californians who claim to be injured on the job.

The fact that California\’s private-dick industry spends so much time probing claims of back strains, pain and other injuries is testament to the troubles afflicting the most milked, most disastrous workers\’ compensation system in the United States.

Last year, Gov. Arnold Schwarzenegger signed sweeping reform, Senate Bill 899 by Republican State Sen. Charles Poochigian of Fresno, to cleanse a mess that, by all accounts, was prompting layoffs and ruining companies that could no longer afford their own workers.

SB899 is a big success. Rates are plunging, insurance companies who fled corrupt California are back and severely injured workers receive more money while the barely injured get less. How incredibly sensible. The biggest winners, besides truly injured workers, are small businesses who drive the California economy. As we heard in legislative testimony, employers saw rates skyrocket 250 percent to 1,000 percent — even if they had no injured workers. That\’s what happens when tens of thousands of cheaters, greedy doctors and greedy lawyers bleed the system dry.

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To aggressively and successfully fight fraud, insurers need the proper balance of trained professionals and technology. And they need organizational commitment to fight the good fight.

By Frank Cerne, Editor – Insurance Networking News