Fraud News Weekly

Friday, January 17, 2020


* Peer-to-peer car-sharing may be opening up new doors to fraud, and Maine is the first state to respond legislatively. Drivers increasingly are renting out their cars on commercial platforms as part of the burgeoning gig economy. An insurer’s duty to defend and indemnify under peer-to-peer car-sharing policies doesn’t apply if the shared-vehicle owner or driver engages in fraud or makes a material misrepresentation, says a just-introduced bill. The loss or injury, however, must result from the fraud or material misrepresentation. Otherwise, coverage still must be provided. Look for more states to consider similar measures. NCOIL has adopted a model law on peer-to-peer car-sharing insurance that could be a useful starting point.

* An ill-conceived bad-faith bill that would’ve undermined the fraud fight in New Jersey was withdrawn under pressure from fraud fighters and others. And none too soon. The bill addressed under- and uninsured motorist claims. It sought to expand the definition of bad faith, and increase penalties. Yet it didn’t define what “unreasonable” insurer acts would trigger bad-faith allegations. Many insurers thus would’ve abandoned investigations to avoid the high risk of litigation and punitive damages. “Insurance fraud thrives or dies on decisions by front-line adjusters who suspect fraud. They either will refer the claim for investigation or simply pay the claim,” the Coalition’s Matthew Smith said in testimony before a key state Assembly committee last week. The overturn effort was led by the New Jersey Insurance Council. “Don’t touch my insurance” was the tagline of the group’s effective 18-month campaign. Faced with steady pushback and the governor’s possible veto, the Assembly Speaker called it quits and withdrew the measure. That ends the saga, for now. A new legislature was sworn in the next day, however, so stay tuned.

* Legislators are considering creating an annual insurer surcharge to better fund cash-strapped anti-fraud efforts by the insurance department in Washington state. The money would help underwrite investigations and prosecutions. The insurance department “will use the funds to increase staffing because current staff are unable to keep up with the demand for investigations,” a state House bill report says. The annual surcharge would be mandatory for licensed insurers operating in Washington. Increased anti-fraud funding for the DOI is a Coalition priority, and the bill is expected to garner support. If passed, the new surcharge likely would begin in July.

* Shady sober home operators in California are the target of a bill before the Assembly Health Committee. Among the anti-fraud provisions, the bill would prohibit sober homes from bribing people to refer patients for addiction treatment. Bogus rehab claims soak insurers and trap desperate addicts in repeated cycles of inflated insurer-paid rehab and drug testing. The Coalition supports the bill, but is urging legislators to increase the penalties. Violations now would incur only a minimal fine. The Assembly adjourns in late summer, thus adding urgency to promptly move the bill forward. The bill’s last hearing was in April 2019.

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


* Convicting a prominent homeowner who made nearly $20 million of bogus insurance claims for fire damage to her mansion has earned the prosecuting team at the Pennsylvania AG’s office a national award from the Coalition. The award honors best courtroom practices in earning convictions for exceptionally large, complex fraud cases. Well-known socialite Claire Risoldi tried to collect nearly $20 million in false damage claims after fire swept through the family mansion. Risolidi misspelled vendors’ names on inflated and forged receipts. She falsely blamed fire fighters for stealing $10 million of largely phantom jewelry. It was one of the largest fire-damage insurance crimes in Pennsylvania history. Risoldi will spend up to 2 years in jail. Receiving the Coalition’s Award of Distinction were: Linda Montag (Senior Deputy AG) … David Augerbraun (Senior Deputy AG) … and Adrian Shchuka (Assistant Chief Deputy AG).

* Agent Kevin Donnellan stole the premiums of up to 650 clients. Investigators are sorting through a 70-page list. The St. Joseph, Mo. man’s scam surfaced when a client had a car collision. The other driver’s auto insurer and her own insurer sued her. She checked, and found that her auto policy was canceled earlier. Donnellan didn’t buy the policy after taking her auto premium. Read how Donnellan and other agents can betray their clients’ trust in the newest Fraud of the Month.

Visit to read articles citing the Coalition.


* A contractor lied that he had zero employees and thus needed no workers comp. Except Ricardo Ernesto Batres had a crew of 12. The Twin Cities, Minn.-area man forced an injured and uninsured worker to apply for charity medical help. Batres used undocumented workers for wooden wall framing and installing sheetrock. He employed a dozen men. Several were injured on the job. They stepped on nails, had prefab walls fall on them, or fell from various heights. Batres lied to state agencies that he had zero workers. He sent employees to a massage therapist, and stopped paying them during recovery. One man was seriously injured when the prefab wall fell on him. His coworkers drove him to the hospital. Batres caught up to them and translated for the man with the hospital docs. He lied that the injury occurred at Batres’ house. Medicaid thus was forced to pay $31,000, MinnesotaCare paid more than $10,000, and a charity helped with $4,200. Batres was handed 270 days in the county workhouse.

* An arthritis doc falsely diagnosed patients with life-long degenerative diseases to keep treating them with invasive and often-painful treatments for a $235-million health scheme in McAllen, Tex. Jorge Zamora-Quezada stuck seniors, kids and others with unneeded injections for knees and other supposedly damaged body parts. He lied to patients that they had degenerative diseases such as rheumatoid arthritis. Zamora-Quezada gave them batteries of injections, chemo and hours-long intravenous infusions they didn’t need. He kicked patients out of his office if they questioned his treatments, and hid their records from other docs the patients next saw. Zamora-Quezada also laundered the insurance money. And he bought a private jet, owned luxury properties in Aspen and other jet-set locales, and bought a fleet of luxury cars. Two members of his defense team quit when he called them “imbeciles.” Zomora-Quezada was convicted, and will be federally sentenced March 27.

* Teaming with a corrupt union boss, insurance broker Lawrence Ackerman saw a way to make millions in off-the-books income. The Old Tappan, N.J. man set up 2 fake brokerages, Atlantic Business Associates and Atlantic Medical Associates. He teamed with a local UAW boss Sergio Acosta to market health plans nationally via his shells to persons he knew were ineligible for coverage through UAW Local 2326. The 700-800 enrollees obtained health insurance at inflated premiums. And once enrolled, they filed inflated benefit claims. Acosta stole the premiums instead of forwarding the money to Horizon Blue Cross Blue Shield of New Jersey. Acosta and Ackerman also diverted $5.6 million in claim payments from the insurer to the plan’s straw participants, with Ackerman and Acosta taking their cut. Eventually, Horizon rescinded the coverage. Ackerman received 6 months in federal prison. Acosta earlier received 3 years of supervised release.

* A pharmacist dispensed expensive and unneeded pain creams to postal workers who faked disability claims in a $3.5-million insurance plot. Estela Blaustein was the lead pharmacist at The Fair Lawn Pharmacy in the Bergen, N.J. area. She was convicted. As the wider charges play out: Dr. Mark A. Filippone treated hundreds of postal workers for claimed job injuries. He submitted forms and med reports for healthy workers to federal disability insurance programs. Filippone steered scripts for topical pain creams to the pharmacy. The pharma owners bought Filippone’s medical office and let him continue using the space rent-free. He kept sending scripts to the pharmacy, and Blaustein kept filling them. Charges are pending against Filippone and the pharma owners. Blaustein faces up to 10 years in prison sentenced April 22.

*The hotel made him do it. Psychologist Paul L. Smith wanted to open a hotel that he’d call Swan Resort. The Armada Township, Mich. man was short on money so he fleeced Blue Cross Blue Shield out of $3.16 million. Smith made about 1,700 false claims for neuropsych testing and 140 for psych testing. He used hundreds of thousands of dollars to buy the property, liquor licenses and furniture. The stolen money also went toward a failed effort to expand an art museum. Smith lost everything once convicted. He gave up all his properties and must return the money. Smith also will have 51 months in federal prison to rethink his real estate plans.


* Zaharia Bakier borrowed a blue pickup from a friend. He allegedly rammed it into his own vehicle in the San Diego area then returned the truck to his friend. Officials contend: Bakier told his insurer that a hit-and-run driver damaged his vehicle. It was a total loss, and he received $27,000. Then a tipster told the state insurance department that Bakier had set up the collision for insurance money. Sensing he was in big trouble, Bakier quit his job, bought a 1-way plane ticket and fled to his native Turkey. More than a year later, investigators learned Bakier was creeping back into the U.S. via Los Angeles International Airport. He was intercepted and arrested for insurance fraud.

* Brian K. Rutter filed a claim with Geico last March 4, saying the right front window on his auto was vandalized while parked on March 2 in Erie, Pa. Here’s what allegedly happened: Rutter’s car actually was vandalized on Feb. 7, with that incident investigated by Erie Police Department. Rutter didn’t have comprehensive/collision coverage at the time, and added the coverage on Feb. 15. Rutter then filed the Geico claim for the purported March 2 vandalism. The insurer confronted Rutter. He said his car was vandalized twice — each with exactly the same damage. Rutter told Geico he didn’t report the 2nd incident to police, and couldn’t produce evidence of that vandalism had occurred. Rutter’s charged with insurance fraud and attempted theft by deception.

* Desperately trying to keep his failing physical-therapy clinic afloat, Anthony Todt ripped off insurers with dodgy therapy claims and murdered his family, the feds charge in Colchester, Conn. Todt billed private insurers and Medicaid for sessions on Saturdays, when his office was closed. Todt also billed for treating 16 kids in a 24-hour period — that’s 36 hours total. Medicaid paid for 163 dates of therapy for a child with no record of having appointments. Another child was billed for 202 sessions, though only 36 were scheduled. Todt also billed for dates he visited his family in Florida. He’d taken out loans or advances from more than 20 lenders to keep his business going. His family moved to Florida during this time, and Todt visited them on weekends. His PT business was collapsing, and he allegedly murdered his wife Megan, plus Alek (age 13), Tyler (11,) and Zoe (4) and the family dog. Todt is confronting a long list of federal crimes.

* Deputies pulled over a car in the parking lot of the Family Dollar store in Farmington, W.Va. The driver gave them a name and was arrested. She told deputies she had serious medical conditions and needed to get checked out at the hospital. She signed the citation and was allowed to leave for the hospital. Another woman called 2 days later. The real name of the person they’d arrested was Nicole Mccaulley, she said. Mccaulley gave police the victim’s name because Mccauley had a revoked drivers license and warrant for her arrest. Deputies IDd Mccaulley from a social-media photo. The victim also contacted the hospital, saying the other woman was falsely using her ID for treatment. Mccauley had generated medical bills in the victim’s name. She also forged the victim’s signature on medical forms and a financial consent agreement. Mccaulley is charged with ID theft and other crimes.


* Property-casualty insurers looking to enhance their anti-fraud operations can see how they compare in the latest SIU Benchmarking study being conducted by the Coalition Against Insurance Fraud and Ward Group. The study will help close a large information gap by statistically profiling industry-wide trends in key SIU practices. Fraud measurement, budgeting, quality assurance, performance management, training and legal issues are among the numerous practices the study will profile. All property-casualty insurers are encouraged to participate. They’ll receive a confidential, customized report comparing their operations with other insurers of similar sizes and lines of business. To get started, download the survey forms at

* The Coalition welcomes these organizations to our membership, bringing membership to more than 200 organizations. Auto-Owners Insurance … Central Insurance … Colorado Medicaid Fraud Control Unit … Ethos Risk Services … Manning & Kass, Ellrod, Ramirez, Trester, LLP … KPM Law … Missouri Department of Commerce and Insurance … State Compensation Insurance Fund (Calif.) … TransUnion.

* Delaware’s insurance chief Trinidad Navarro has been appointed chair of the NAIC’s Antifraud Task Force. Navarro previously was vice chair. He served in law enforcement for much of his career before being elected Insurance Commissioner in 2016. The task force takes an inclusive consumer-protection approach. It works to identify and reduce scams by — and against — consumers. The task force works with insurance regulators across the U.S., plus local, state, federal and international law enforcement, and antifraud organizations such as the Coalition. Collection, use and misuse of data is a key issue for the insurance community and consumers. Insurer data breaches affected more than 100,000 Delaware residents in 2019. Navarro and the General Assembly helped pass the NAIC’s Insurance Data Security Act — making Delaware among of the first states to do so.

* Palm Beach County, Fla. has long been among the nation’s epicenters of sleazy sober homes and drug rehab — all exploiting addicts to feast on insurance money. The county DA has pursued more than 100 criminal cases, and OD cases have dropped since 2016. Yet watch for more and much bigger busts in the next 30-45 days, says the county’s top prosecutor, Dave Aronberg. A “real surprise” and “kind of shocking,” law-enforcement officials predict. Aronberg is moving beyond busting corrupt rehab firms and sober homes. Investigators are chasing bigger and more-sophisticated violators — drug-testing labs, pharmacies and physicians. Aronberg won the Coalition’s Apollo Award in 2018 for his nationally recognized efforts to clean up dirty rehab scams that have stolen hundreds of millions of insurance dollars.


California builder lies he had no workers comp coverage, leaving injured workers uncovered. … An arthritis doc inflicts painful treatments on patients after falsely diagnosing them with generative diseases in Texas. … A pharmacist dispenses unneeded pain creams to postal workers who faked disabilities in New Jersey. Click the pins to read about these and other fraud 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.