Why is This Topic Important to Wealth Managers? Today We Continue with our Casual Friday Series with a Blogticle on Noteworthy Convictions and Arrests Regarding Recent Insurance Fraud and Scams in New York. Don’t let your name appear next.
Kelly Woods, an upstate New York woman who had relocated to Utah, was sentenced in June to 1-to-3 years in prison and ordered to pay $42,000 in restitution to the New York State Insurance Fund. She was extradited and arrested in March or faking a work injury in order to collect workers’ compensation benefits. She pleaded guilty to insurance fraud in April. On numerous occasions between July 2008 and November 2010, 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. She also signed a Workers’ Compensation Agreement waiving future claims to benefits, thereby freeing up nearly $600,000 in reserves that the State Insurance Fund had put aside for her fraudulent claim.
A Syracuse carpenter, Paul J. Keyes, who was originally charged with insurance fraud, violation of the Workers’ Compensation Law and offering a false instrument for filing at his arrest on 12/21/10, pleaded guilty to a lesser charge of disorderly conduct in June of this year in satisfaction of all charges. An investigation revealed that from 2006 to 2010 he underreported the number of employees on his payroll as well as his income in order to reduce his workers’ comp premiums. As a result, he underpaid the State Insurance Fund by $31,744. He was sentenced to one year conditional discharge and was ordered to pay the State Fund the full $31,744 in restitution.
Sixteen individuals were arrested in connection with a systematic scheme to steal hundreds of thousands of dollars from five insurance companies: Allstate, GEICO, GMAC, Liberty Mutual and Progressive. Additional arrests are expected in this continuing investigation. Evidence was uncovered indicating that the defendants submitted more than 100 fraudulent claims for vehicles allegedly involved in phantom accidents, costing the insurance companies almost $300,000 in payments for property damage claims in the Bronx. The ringleader of the scheme allegedly recruited most of the other defendants to file fraudulent claims, cash the checks issued by the insurers and turn over most of the proceeds to the ringleader, who pocketed more than $100,000. He allegedly allowed them to keep between $50 and $400 for each claim. It is alleged that in each case, an individual would pose as an actual customer of one of the insurance companies and ask to have an additional vehicle added to an existing policy. Once coverage was extended to the additional vehicle, a defendant would call the insurance carrier and report that the vehicle had been involved in an accident causing damage to another car. A defendant, purporting to be the owner of the allegedly damaged car, would then place a call to the insurance carrier and arrange to have the damage inspected, appraised and photographed by an insurance adjuster. Once the adjuster completed the inspection and appraisal, the insurance company would issue a check payable to the individual filing the claim. All of the defendants have been charged with grand larceny. Some also face charges of money laundering and scheme to defraud.
An investigation by the Frauds Bureau resulted in the arrest of a former New York State-licensed insurance agent. He formed three allegedly bogus business groups and then submitted 35 applications for supplemental hospital insurance policies for 19 applicants through Aflac Insurance Company. However, the investigation found evidence that the policies were written for persons who were either fictitious or were unaware that the policies existed. His actions allowed him to fraudulently collect $4,768 in advanced commissions from Aflac.
Next week’s Blogticles will start to discuss issues regarding year end planning.
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