Fraud News Weekly

Friday, June 14, 2019


Stormchasing contractors are squarely in the crosshairs of the New York Senate, which passed a Coalition-backed reform bill on Wednesday. The measure cracks down on contractors who bilk storm-damaged homeowners typically by stealing their downpayment and disappearing after doing shoddy or no repairs. It targets contractors who defraud with schemes involving roofing, siding, downspout and other needed repairs. The bill requires: written contracts … disclosure of the contractor’s insurance info to consumers … 3-day right of contract rescission … forbidding offering to cover or rebate deductibles as an inducement for consumers to sign contracts. An identical bill awaits Assembly action. New Yorkers are urged to contact their Assembly members and urge them to support AB 7531.

* Make staging crashes a specific crime in New York, the Coalition urges Gov. Andrew Cuomo in a letter this week. “In recent years we have seen an unfortunate surge in these types of fraud scams which cause injury, death and increased insurance costs for all New Yorkers,” the Coalition’s Matthew Smith writes in a letter to Cuomo. AB 3895 is known as “Alice’s Law.” It would make staging a car crash a specific crime in the Empire State. The bill has cleared the Senate and Assembly. It’s named after Alice Ross. She was a grandmother in Queens who was killed in a botched staged accident intending to ram her vehicle for false no-fault injury claims in 2003. “The bill now only awaits your signature before becoming law,” Smith writes Cuomo. “Please Governor, sign this bill so other New York citizens are not injured or killed as a victim of these insidious acts, and those who commit these crimes are prosecuted to the full extent of the law.”

* Patient brokering sits in the crosshairs of Pennsylvania lawmakers. A Senate bill makes brokering patients with bribes, kickbacks and other incentives illegal. The measure references healthcare providers, health facilities, drug and alcohol treatment facilities, sober homes and assisted living homes. Penalties are stiff. Violators would face anywhere from a 3rd- to 1st-degree felony. The proposal tracks a bill filed earlier in the state House.

* Add Louisiana to the states cracking down on public adjusters. Unlicensed public adjusting is a specific crime under a bill signed by Gov. John Bel Edwards. Violators face up to 2 years of “hard labor” in prison, and fines of up to $5,000 per infraction. Unlicensed adjusters also must repay victim insurers or others for insurance money paid out for fraudulent claims. Victims also can recover costs of evaluating and defending the fraudulent claim. This includes investigative, attorney and court fees.

Note: Texts of anti-fraud bills are available on the Coalition’s website here.


* A guy thinks he got away with an easy auto scam. Until he gets a call from his insurer. … People make dumb choices to defraud. What about you? … Weasy the fraud weasel can’t get his auto cons right — he’s a screwup.  Looking for great consumer videos for International Fraud Awareness Week? Post on your website? Community presentations? Check out 15 consumer videos the Coalition offers free of charge as an exclusive member benefit. Adopt them with your own name, logo and URL. Or use the Coalition version. Either way, we’ll help you make it happen. Just contact Kendra Smith.

* The insurance department in South Dakota adroitly seized on a news story about allegedly fake auto claims to send a loud anti-fraud warning to residents. Scott Goebel is charged with 19 car-damage claims in about 2 months around Fargo, N.D. The Valley News jumped on the story. A reporter interviewed commissioner Jon Godfread. “Each claim filed, Godfread says, takes more money out of all our pockets. So aside from the obvious risk of causing an accident — and increased insurance to the parties involved —everyone else’s premiums also increase, to help pay out the claims,” the reporter writes. Godfread adds in the article: “… then we all have to make up because he wanted to make a quick buck.”

Visit to read articles citing the Coalition.


* A guy wearing a Michael Myers Halloween mask and carrying a plastic pumpkin beat up Thomas Lucey, the Boston trolley driver said. The guy pulled Lucey from the trolley and punched him repeatedly as he laid on the ground before fleeing the area, Lucey claimed. The seeming mugging happened 2 days before Halloween 2016. Lucey was taken the hospital. Transit Police released surveillance video of the suspect in an effort to identify him. “This was a cowardly act and assaults on MBTA employees will not be tolerated,” the department said. Lucey sought workers comp, and received longterm disability after claiming post-traumatic stress from the claimed attack. Except Transit Police collected the plastic pumpkin the so-called attacker left behind. Fingerprints from the pumpkin led to a crony of Lucey. He paid the crony $2,000 for the assault. Bank and phone records corroborated. Lucey was handed 3 years in prison plus 3 years of probation.

* The premiums didn’t add up for agent Nicholas J. Palladino. The Media Courthouse, Pa. man couldn’t account for $8,533 in premium collections when interviewed by Farmers Insurance. Palladino repaid the money, though provided false documents when asked for bank statements to validate the premiums going into his personal checking account. Farmers terminated Palladino, and he kept on stealing. Some 27 insureds then provided proof of premium payments totaling $19,327 made to Palladino and handled improperly. For 13 payments totaling $9,731, he applied the checks to client policies, but deposited the funds into his own personal checking account instead of the insurer account. Palladino receipted 6 premium checks for less than the payments given to him, so the insureds didn’t receive full policy credits. Palladino was given credit for time served, including a DUI.

* Three more fraudsters pled guilty after investigations by the Washington insurance department. Their sorry stories: Abdikarin A. Mohamed filed a false renter claim for $9,500 of electronics and jewelry he lied were stolen from his vehicle. Mohamed claimed a Movado watch and Canon camera he didn’t own. He’ll spend 15 days on a work crew. … Tristan Stone reported a burglary at his apartment. He first said 11 items worth $15,000 were lifted. Stone then amended the claim to 76 items worth $27,259. The photos he submitted were taken after the reported theft. Stone was handed 6 days. … Tara Tillett’s son caused a 2-car collision while he drove her 2005 Chevy Trailblazer. The vehicle didn’t have collision coverage. She added the coverage 8 minutes after the crash, and filed a $5,368 damage claim with PEMCO the next day. Tillett entered into a diversion agreement.


* Paul Hicks wore a wig and rubber mask to look like his girlfriend so his home security cameras would make it seem she burned down his house for an insurance payday, prosecutors charge in Clermont County, Ohio. Prosecutor say this happened: Two masked intruders entered his house and stole things. Then they poured gasoline throughout the place and set the home on fire. One person looked strikingly like his girlfriend. In fact Hicks had a rubber mask custom-made to look like her. He ordered it from a company called That’s My Face. He then tried to convince investigators that she did the fiery deed. Hicks also kept his home surveillance cam locked in a fireproof safe inside the home to preserve the footage during the fire. And he maneuvered 2 years of his girlfriend’s phone calls to him, making it appear she had a motive to start the fire. Hicks made a personal-property claim of more than $180,000 with Allstate. Yet the insurer’s forensic accountant said that given his income, he had only $11,000-$33,000 of property. Investigators believe his girlfriend is innocent, and are trying to find the other person in the home security video. The case was profiled at the Coalition’s recent mid-year member meeting in Orlando.

* A patient of dentist April Rose Ambrosio suffered biologically impossible pain. The San Diego woman allegedly billed an insurer for 28 root canals for that 1 patient. The insurance department says: Ambrosio billed insurers more than $600,000 for fake procedures overall — including more than 600 root canals. At one point, Ambriosio billed for at least 100 root canals over a 3-month period for a family of 4. She defrauded 8 insurers over 3 years and received around $300,000. Ambrosio faces 75 insurance-fraud counts.

* A former Rhode Island state senator is heading to federal prison for passing nearly $500,000 of bad checks. But James E. Doyle II’s legal problems keep mounting. The Democrat also owns firms that provide in-home oxygen and sleep-apnea machines to Medicare patients. The feds contend: Doyle allegedly filed 156 Medicare claims for portable oxygen systems, nebulizers, and compressors. The Medicare patients either didn’t receive the equipment or services, or no longer needed them at the time of the claims. Doyle also made 158 similar Medicaid claims that were false. The feds seek $46,000. Doyle blamed booze for his check kiting. No word on potential sentence if he’s convicted of the Medicare charges.


* New York dealt a heavy blow to the fraudulent practice of installing doctors as sham clinic owners to make false injury claims against auto insurers. Insurers can stop payments to illegal medical clinics in New York when they reasonably suspect fraud or when clear violations of state laws such as professional licensing requirements are present, the state’s highest court ruled this week in the nationally significant case of Carothers vs. Progressive Insurance. The decision from America’s 4th-largest court jurisdiction also could influence courts in other states to uphold similar laws in their states. It also provides strong support for passing laws banning the illicit practice of corporate medicine in other states. Fraud rings are covertly installing doctors as sham owners of no-fault clinics secretly run by laymen in the Empire State. This subterfuge lets dishonest clinics illegally operate and steal hundreds of millions of dollars a year in false injury claims. The Coalition wrote an amicus brief urging the court to support the fight against illegal corporate medicine in New York.


* Two Tampa-based healthcare companies defrauded customers out of millions by lying their limited health plans were full-benefit policies, a federal class-action lawsuit alleges. The complaint names Health Insurance Innovations Inc. and another firm. They allegedly fooled customers into believing their limited-benefit indemnity and medical discount plans were robust health coverage. The plaintiffs discovered they weren’t covered when hospitals told them how much money they owed for medical procedures. The class comprises consumers around the U.S. They bought Health Insurance Innovations coverage through a group called Simple Health, which the FTC is suing. About 500,000 customers spent $180 million on the junk coverage.

* Washington state has issued a cease-and-desist against a scam faith-based healthcare plan. Trinity Healthcare operates outside state insurance oversight. Monthly payments often are lower than the premiums of plans on public health exchanges. But such firms aren’t legally required to cover any medical costs. Trinity asks members to make monthly “shares” into a pooled escrow account, or match up members directly to pay for each other’s approved medical costs. Trinity also misleads agents working with consumers, the insurance department says. More than 2 dozen consumer complaints went to the Washington insurance department. At least 27,000 residents have bought memberships. Other states are trying to shut down Trinity. Its practices amount to selling insurance with intent of avoiding consumer safeguards, the Texas insurance department says. The department also seeks a cease-and-desist.

* Geico has filed a federal civil RICO suit in Florida alleging an auto-glass repair shop made bogus glass repair claims. GEICO seeks damages for fraud. The insurer alleges customer signatures were forged on invoices submitted for repairs by Shazam Auto Glass. Geico also alleges Shazam falsified claims info, billed for unneeded repairs, and for repairs that were never performed. Geico says it plans to file future glass lawsuits in Florida and around the U.S. Geico filed Government Employees Insurance Company, et al. v. Shazam Auto Glass, LLC, et. al. in the federal Middle District of Florida. The insurer also seeks a declaration that pending claims aren’t owed. The insurer also has filed multiple suits against glass-repair shops in Arizona, another hotspot for shady glass claims.


* Hailstones the size of golfballs knocked chunks out of homes in Musselshell County, Mont. last year — and many homeowners are worried their repairs will never get finished. Up to 50 residents have complained about shoddy, incomplete or no-show repair work. Seems storm chasers descended into the area trying to scarf more work than they could finish. So many homeowners have complained that state officials are holding a townhall meeting to find out how bad the problem is, and start plotting a wide investigation. A contractor estimated up to 75 other contractors were trolling the hardhit town of Roundup after the storm. The feeding frenzy was “very cutthroat,” he said. “These storm chasers come in and basically try to gobble up all the contracts they can,” County Attorney Kevin Peterson told reporters. “To me, they have to kind of know they can’t get all that work done.”

Boston trolley driver lies he was mugged by a guy in a Michael Myers mask for a disability con. … A Pennsylvania agent steals client premiums. … A Washington man says someone stole jewelry he didn’t even own from his vehicle. Click the pins on the map to read about these and other cases around the U.S.

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Fraud News Weekly is published each Friday except for Thanksgiving week and the week between Christmas and New Years. Copies of previous issues are available in the members-only section of Employees of member organizations may share this newsletter freely internally. Sharing by non-members strictly prohibited.