Fraud News Weekly

Friday, February 14, 2020


* Police crash reports will be harder to buy and use to recruit crash victims for bogus injury scams if either of 2 bills becomes law in New Jersey. A Senate bill is more-restrictive. Crash reports wouldn’t be publicly released until 90 days after the accident. Reports would be available only to these persons within 24 hours after the cash:

  • Insurer investigators and claim reps.
  • Vehicle owners, operators, or passengers listed in the accident report.
  • Authorized reps of those persons.
  • Government fraud investigators and prosecutors.
  • Crash victims or their authorized rep.

An Assembly bill is nearly identical, though makes reports public after only 80 days. Both measures appear to have support. The new restrictions would take effect immediately under both bills.

* Two important anti-fraud bills are moving forward in West Virginia. A comprehensive bill to revamp the state’s fraud law has passed the House. Among the provisions: Increase criminal fraud penalties … Create a fund for insurance-fraud forfeiture recoveries … Require insurers to provide information and documents on suspected fraud to the commissioner … expand the fraud bureau’s powers and duties … Ban convicted insurance fraudsters from securing future insurance licenses. Insurers also must have anti-fraud initiatives in place. The measure cleared the House and is before the Senate Banking & Insurance Committee. … The second bill requires licensing of all adjusters — insurer, independent and public. Exemptions are for attorneys or fraud investigators — provided they don’t adjust the loss, determine coverage or authorize claim payments. The Senate committee is reviewing this bill.

* Florida’s no-fault insurance system may dodge the bullet for another year due to 2 small words: Bad faith. The state’s no-fault system would be replaced by mandatory liability and medical payments under bills in the House and Senate. Florida insurers assert that no-fault is riddled with fraud, and many plaintiff attorneys also want no-fault gone. The holdup is that insurers want watered-down bad faith included in the Senate version. Senate hearings have ground to a halt, causing more delays in the already-tight 60-day session. Where the overhaul and bad-faith provisions are headed is anybody’s guess, and at least 1 Senator is calling for a special legislative session on insurance.

* We often focus on major fraud bills, but smaller ones also can have a big impact. Bills in the Tennessee House and Senate would impose a fine of $1,000 per violation on anyone who prepares or issues a property-casualty insurance certificate with false or misleading info. Prosecuting small insurance crimes often is difficult. Granting the commissioner the power to fine offenders provides an easy deterrent. … In Georgia, a bill would change quarterly insurer assessments to a single annual assessment for the state’s insurance fund. This would mean less time paying assessments and more time fighting fraud.

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


* Assigning of policy benefits to shady contractors for home repairs is costing consumers and insurers serious losses in bogus repair claims in Florida and other states. “Unchecked AOB deceit thus has every potential to impose a cost drain on policyholders and insurers in many states around the nation. Florida’s fight for AOB justice is a blueprint that, in many ways, other states can study and adapt to their own unique AOB challenges,” attorneys Fred E. Karlinsky, Richard J. Fidei and Christian Brito contend in the latest JIFA article. “Insurers and policyholders disagree on a fair share of issues. Yet thwarting AOB deception by pursuing balanced and meaningful reforms is a positive goal they can — and should — unite squarely behind. All are victims.”

Visit to read articles citing the Coalition.


* Good deeds shortened the jail term of Demitrios “Jimmy” Stavrakis for torching his floundering military-weapons firm for $15 million in Baltimore. Adcor Industries struggled after losing a big contract. Stavrakis defaulted on loans and rang up millions in losses. A fire mysteriously broke out, wrecking an office and damaging the ceiling. Security footage shows that Stavrakis put tape over a security latch on the front door the night before. Whoever set the fire — which remains unknown — also punched in a code to disable the security system. Stavrakis used around half of the $15 million of insurance money to rehab the building and buy new equipment. He also spent hundreds of thousands on vehicles, watches and jewelry. That included a $98,499 Mercedes-Benz GL 550 and a $25,500 Harley. Stavrakis also transferred $600,000 of insurance money into his wife’s bank account and paid her $6,000 monthly. Stavrakis sought mercy. He recounted how he got a bullied boy into private school … wrote checks for improvements to his church … covered funeral costs for down-on-their-luck church members … paid for an employee’s drug rehab. His sales pitch worked. The judge handed Stavrakis 15 years in federal prison; prosecutors wanted 22 years.

* An Army medic had his mistress stab his wife for $400,000 of life insurance in Honolulu. Michael Walker was having an affair with Alisa Jackson. He convinced her to stab Catherine while he worked in the ER at a military hospital in Honolulu as an alibi. Jackson stabbed Catherine Walker multiple times with a kitchen knife, and then waited half an hour to ensure she was dead. They met in a military base’s gym parking lot, where Jackson said she would kill Catherine that night. They came up with a text messaging code to let Jackson know if she should enter the home through a window, or use a key near the back door. If Michael texted “good,” that meant use the window and “bad” meant use the key. Walker texted “bad.” Even as Jackson stabbed her, she asked Catherine if she forgave her. Catherine replied yes. Walker was handed 35 years in federal prison and Jackson 30 years.

* Kellerman Jason Zheng defrauded insurers out of millions by taking out life policies on his dead brother. The Boston man bought at least 24 policies, which carried more than $11.5 million of total coverage limits. Zheng and his parents were the named beneficiaries. But Zheng’s brother had died in China in April 2015. Zheng made it seem his brother was alive. He opened and used bank accounts in his brother’s name, and renewed his brother’s driver license. Zheng also obtained a false Chinese death certificate saying his brother died in August 2018. He used that to lodge more than $5 million in life insurance claims. Sentencing is scheduled for June 18.

* Dashcams are a cop’s best friend. Or this cop’s worst enemy. Mohammed Yasin Mulla was an officer in West Yorkshire (UK). A heavy object fell off a van in front of him. It cracked his windshield and damaged his roof, Mulla lied. He also claimed injuries to his neck and shoulders after swerving and braking suddenly. Mulla sought £10,000 from his auto insurer. But his own dashcam footage showed it was just a piece of polystyrene packaging that sailed right past his car. He was convicted and is appealing.


* Police received a report of a Mini Cooper stolen while parked on the street where owner Sumit Dhoopar lived near San Francisco. His insurer paid about $8,200 for the car’s full value. Dhoopar owned a tech-security firm. He faced a large repair bill he didn’t want to pay, prosecutors allege. Dhoopar stopped returning his mechanic’s calls. Security footage showed the Mini being driven to another claimed theft locale. The video revealed the driver was his mechanic. Dhoopar’s charged with insurance fraud, false police report and theft.

* Merit Drywall is facing fraud demerits, prosecutors charge in Silver Creek, Minn. The allegations: Owners Leroy and Joyce Mehr cheated their workers-comp insurer out of $310,000 of premiums by lying about the number of workers they employed. The couple submitted a workers-comp application to Federated Insurance. The insurer audited their books 4 months later. Joyce provided Federated with records that falsely claimed Merit had 11 employees and dozens of independent subcontractors. The Commerce Fraud Bureau started investigating. An informant said he didn’t need to provide ID or personal info before starting work with Merit, and always was paid in cash. Another informant said Joyce set him up with a company email address, and registered a sham independent-contractor firm in his name. Joyce set up 3 sham firms all told. The fraud bureau raided Merit, and couldn’t find contracts between the firm and many of the purported independent contractors. They were fulltime employees paid hourly or on a piece-work basis.

* A contractor illegally evaded paying nearly $200,000 of workers-comp premiums, Florida’s CFO charges. Santos Y. Cardona owns YYCS Enterprises in the Fort Myers area. As alleged: He cashed more than $1 million of payroll checks at a local check-cashing store to hide workers on his payroll. Cardona later reported payroll of just $59,000. The underreporting enabled Cardona to avoid paying $199,515 of comp premiums. He’s charged with workers-comp fraud and scheme to defraud.


* A large PBM overcharged Ohio’s workers-comp system on 57% of the prescriptions it handled over a 4-year period, the state AG says in a lawsuit. OptumRx was supposed to bill only the federal upper limit set by Medicare, yet allegedly charged more than that in 1.3 million of 2.3 million generic claims. In one example, Optum charged the state Bureau of Workers Compensation $101 for a seizure med when the upper limit was $55.51. The firm overcharged BWC so it could offer other clients lower prices, the suit alleges. Ohio wants $5,000 in fines for every day that improper prices allegedly were charged.

* An agent used a deceptive mailer advertising “FREE government benefits” to drum up life-insurance clients in Iowa. John A. McAfee tried to make people think the ads came from a government agency. McAfee is general manager of Old American Insurance. He sent mailers to at least 61,750 Iowans. The front had an illustration of the U.S. Capitol. Below it said “Official Business” and “Important information about your government benefit.” “Receive your FREE Government Benefits Information Brochure” with “Free Government Benefits” appeared in larger type. Inside, the mailer offered a “Senior Final Expense Program” that would “pay 100% of all funeral expenses not paid by Social Security, up to $15,000 for each senior covered. To see if you qualify, mail this postage paid card today.” Seniors were asked to provide name, address, phone, age, and spouse’s age and name. McAfee agreed to a $10,000 fine and is prohibited from doing any more direct mail.


A weapons maker torches his building for $15 million in Baltimore. … An Army medic has his mistress stab his wife for life insurance in Honolulu. … A Boston man takes out $11.5 million of life policies in the name of his dead brother. Click the pins 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.