Saturday, November 27, 2010

Small Business – Saturday Workers Compensation Claims

Small business Saturday reflections should include a detailed review of workers compensation costs as well as claims.  For a small businesses, a large number of workers compensation claims could place the business in jeopardy.

Employers do not need to do a detailed or involved surveillance program to limit the number of workers compensation claims.  Small business Saturday and weekend reviews of safety methods and equipment should be done on a weekly basis.

Also small business Saturday review should include an assessment of how easy it may be to perpetuate fraud in the workplace.  Look for opportunities that could be taken advantage of through the week and limit your exposure now.

Friday, November 26, 2010

Not Fraud

But a safety issue nonetheless.

Please do not drink and drive. Drunk driving killed 37,261 people in 2008 according to the National Highway Traffic Safety Administration.   

This is equivalent to over 100 people every day.

Thursday, November 25, 2010

A&O Entities $100 Million Life Insurance Fraud Scam

Russell Mackert, a 51 year old attorney from Spring Texas admitted in U.S. District Court in Richmond, VA that he helped to facilitate a huge life insurance fraud scheme that stole over $100 million from innocent insurance policyholders and investors.

Mackert plead guilty to conspiracy charges stemming from his work as an attorney for A&O Entities, which is a group that collectively dealt in over $100 million of fake investments marketed to over 800 investors in the U.S. and Canada.  Many of those victims were elderly retirees.

The plea involved the admission by Mackert to making material misrepresentations and omissions to investors about the money they were investing.  He also failed to inform investors that the vast majority of the money invested was being used for purposes wholly unrelated to the purchase and maintenance of fund portfolios as had been promised to investors.

Mackert faces 25 years in prison on combined charges, as well as $500,000 in fines.

Tuesday, November 23, 2010

Mustang Collision Did Not Injure Her Back

Linda Ann Rose of King County, Washington was ordered to pay $300,000 in restitution after it was determined that she faked an injury from a minor fender bender in Issaquah, Washington near Seattle.

The accident involved a minor collision between an SUV and Rose’s car, a rented Ford Mustang.  She claimed severe back injuries and sued the driver of the SUV.  A demand of over $650,000 was made against the SUV driver’s insurance company.

It was later found out that Rose had prior back injuries and altered medical reports that were provided to her own attorney.

The $300,000 restitution involved a repayment of $250,000 to Progressive Insurance, $25,000 to MetLife and she had to forfeit $25,000 of a structured settlement that had not yet been paid to her.

Monday, November 22, 2010

Rate Evasion Constitutes Insurance Fraud

Criminal charges have been filed against Philadelphia insurance agent Paul Franck Baptiste along with Daniel Charles, also of Philadelphia and Bernard Pierre of Brooklyn, NY arising out of an elaborate scheme to defraud insurance companies according to a report by

The scheme involved rate evasion whereby 22 residents of New York filed false applications for insurance claiming they were residents of Pennsylvania because auto insurance rates are lower there.  In many cases, applicants not only falsified their address but they also provided false information to the Pennsylvania Department of Transportation in order to obtain Pennsylvania State Driver’s licenses.

Baptiste actually provided a fake address for many of the applicants.  They used one of his own properties in Philadelphia.  Some used an address in Clarion, PA on a street that does not even exist, and others used addresses in Philadelphia, Allentown and State College.  The investigation revealed that non of the fraudsters lived at any of these addresses, but instead most came from Brooklyn, NY and surrounding areas.

The charges for insurance fraud alone could mean up to 7 years in prison and $15,000 in fines.  Baptiste and others also face charges for corruption, criminal conspiracy, filing false title application, and unsworn falsifications to authorities, which adds thousands in fines and several years in prison.

Sunday, November 21, 2010

East Orange, NJ Cop Committed Insurance Fraud

In March 2010 East Orange police officer Kareen Spence was arrested on three counts including aggravated arson, insurance fraud and attempted theft by deception.  The arrest resulted from an investigation into a fire that destroyed his 2002 Cadillac Coup DeVille.  
Spence had been a police officer for about six years and he plead guilty to intentionally burning his Cadillac.  His reason for doing so was that it was continually overheating.  The car had 122,000 miles and owed $8,000 on the car.  He had taken the car to Irvington and lit it on fire in order to make an insurance claim and collect the cash.

As part of the deal, Spence pled guilty to insurance fraud and the arson and theft by deception charges were dropped.

Spence will face 3 to 5 years in prison when sentenced on February 4, 2011.

Saturday, November 20, 2010

10 Million Ipods

Every year, the insurance industry as a whole spends $30 billion on fraud according to a study in May 2009 conducted by the Insurance Information Institute.  That is about 10 percent of their losses and loss adjustment expenses.  The cost of 10 million Ipods?  Just over 2 billion.

What does this mean for you?  That means that if you have had a claim recently, some crook took your insurance company for at least 10 percent of whatever your settlement was.  It also means that the insurance company has to recoup those losses somehow, and to do this they need to increase their premium or cut valuable services. 

Let’s examine what $30 billion actually means:

A = The amount of fraud in the U.S. every year
B = The cost of 100,000 Cadillac STS's
C = The total NY Lottery prize payout in 2009
D = The cost of 10 million Ipods

There are different types of fraud, sometimes referred to as "hard" or "soft" fraud.  Hard fraud occurs when someone deliberately plans to commit a fraud and sets out a plan to do just that.   Examples are staged collisions, arson, faking injuries for benefits, or doctors who charge fees for treatments or medications that were never given. Soft fraud is sometimes referred to as "opportunistic fraud" and this occurs when someone who has a legitimate claim exaggerates the damages to profit from the loss.

Think about these numbers next time you are someone you know has an insurance claim.

Friday, November 19, 2010

Flood Fraud in Rhode Island

A couple of high profile individuals were arrested recently in Providence, Rhode Island for an alleged scheme to defraud and insurance company.  Lori Sergiacomi aka Tanya Cruise is a radio show host on Lite Rock 105 owned by the Citadel Broadcasting Corp.  Her and former North Providence councilman John Zambarano were arrested with two others.  The Boston Globe reported that in March Sergiacomi had sustained damage to her home by storms and floods.  Since the flood damage was not covered by her insurance company, they allegedly arranged to have to have two men go to the house and stage a break in and cause vandalism damage for the home.  Invoices were then fabricated to the tune of $50,000 for the damage.

Sunday, November 14, 2010

Fraud Signals

How can you tell if someone is being dishonest?  Perhaps you could test them by asking the right questions to "catch" them or perhaps you could look for visual cues that the person is experiencing some anxiety about lying.  As an investigator the first step in determining if someone is being dishonest is to find out how that dishonesty may benefit them.  In the case of insurance fraud, that is usually pretty simple as there is some monetary gain to be had.  Creative perpetrators however will create something that I like to refer to as a "dishonesty sandwich".  This is the creation of a story that has layers and layers of truth and lies mixed together.  Sometimes a collection of small lies is stuffed in between some large and undeniable truths.  This method of "stacking" issues together can work to pad claims or to embellish injuries, adding value to the final claim payment. 

Very often we see injury claims that have volumes of medical reports attached, making the injury appear to be severe.  Often however, we find that the legitimate injury that really did get medical attention (the large undeniable truth) was resolved very early on and the lion's share of all the paperwork in the file is follow up and re-hashing old reports.  Are these reports lies?  Not really.  This dishonesty occurs when those reports are collected and submitted as evidence of a "severe" injury.

When the clamp starts to close and the dishonesty becomes evident, perpetrators will often attempt to change the focus to the back to the undeniable true components of their story to garnish sympathy from those unfamiliar with the full facts of the case.

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