Fraud News Weekly

Friday, April 9, 2021

This week the American Trucking Association, American Property Casualty Insurance Association and the Coalition announced a new partnership. From our Fraud, Insurance Fraud files: Gulam Mohammed Wahid said someone stole his James Bond-like Aston Martin DB7 from his driveway in Leicester, the UK. He sought £30,000. In fact, Wahid stashed his car in a storage yard near his family’s restaurant. It was dilapidated and in disrepair, and worth little money. The insurer investigated because Wahid provided a suspect vehicle inspection certificate. The car wasn’t inspected or insured for a year. An insurer investigator went to the garage that provided the fake certificate. Garage staff threatened the investigator with violence, so he left. The investigator returned with police officers. The garage owner finally admitted he stored the Aston Martin for years. Wahid received six months in prison, suspended for 18 months.

The groups pledged to leverage the power of their combined resources and influence to secure passage of needed legislation to tackle the scourge of towing fraud and staged vehicle accidents across the country. “Given that both insurers and commercial carriers are harmed by these types of scams, it seems only natural to pool resources and coordinate efforts to address these issues collectively,” said Jennifer Wieroniey, Executive Director of the American Trucking Association. The three organizations plan to work together on model legislation and other initiatives to address these anti-fraud issues.

A newly filed bill in Louisiana would increase oversight of licensed adjusters in the state. The goal is to ensure policyholders and claimants receive fair and equitable treatment in the adjusting process. Louisiana currently requires adjusters to be licensed. State law also spells out what claims activities are subject to the license requirement and which are exempted. Fraud investigators are generally exempt from licensing unless they are directly involved in claim adjusting, however the bill’s provisions do directly impact fraud investigations. Among the proposed new changes are:

  • Prohibiting adjusters from having a direct or indirect financial interest in claims. This includes making a referral for services to any person or entity in which the adjuster has a financial interest.
  • Claim investigations must be non-biased, based only on facts, and accurately reported.
  • Adjusters must avoid any suggestion calculated to induce a witness to suppress or deviate from the truth regarding claims.
  • Failure to comply with current or new adjuster standards would be grounds for administrative action by the DOI, and evidence of a violation of Louisiana’s unfair claims practices law.

Indiana lawmakers continue moving closer to abolishing the state’s weak anti-fraud criminal laws, to be replaced by a generalized criminal fraud lawThe Coalition and IASIU’s Indiana Chapter are striking back this week with a grassroots message campaign urging state House members to reject the misguided bill. We’re using our joint Engage platform. It’s the nation’s only grassroots legislative advocacy tool for insurance fraud issues. Time is growing short … and urgent. Indiana-based Coalition and IASIU members can speak out against this bill — write your House member in just a few short clicks via Engage. The measure already has passed the full Senate and a House committee. We will continue opposing the bill at every stop in the statehouse. The Coalition, NICB and IASIU Indiana are staunchly opposing the bill through other legislative channels as well.

Stifling illegal bureaucratic overreach that can impede the fraud fight –– that is what’s at stake in oral arguments  for a precedent-setting court case being argued before the Pennsylvania Supreme Court next week. You can view the proceedings live starting at 9:30 a.m. (EDT), April 13. The Coalition has weighed in with an amicus brief in Keystone RX, LLC v. Bureau of Workers CompensationThe issue: Should medical providers take part in a fee review hearing involving their potentially excessive prescribing of compound pharmaceuticals for workers comp in Pennsylvania? No — it’s illegal bureaucratic overreach, the Coalition contends. The Coalition’s amicus brief was drafted and filed by the Marshall Dennehey law firm — an active member of the Coalition’s Legal Affairs Committee. 

An insurer-backed bill passed the Florida Senate on Wednesday. It would allow insurers to include a roofing repair schedule to avoid paying full replacement cost on roofs over 10-years old. Supporters claim roofing contractors are committing fraud and driving up costs by soliciting roof replacement claims. The bill would also require written notification to insurers before a disputed claim lawsuit is filed … allow insurers to request an inspection within 30 days … and place restrictions on judges’ ability to award “fee multipliers.” The proposal now moves to the House, where a companion bill is already pending. Florida’s legislature adjourns on April 30.

What dark impulse literally drove Ali F. Elmezayen to drown his ASD afflicted children while they were strapped into the back seat of the family’s car as it sank in the Los Angeles harbor? Well, how does the lure of $3M of life insurance sound as a murder motive? Learn the inside story of Elmezayen’s years-long murderous plot and his 212-year jail sentence in the latest Fraud of the Month.

“Some 40 anti-fraud bills have already been filed or pre-filed in nearly half of the states – with more to follow quickly in the coming weeks. Legislators also appear willing to take on serious issues impacting both insurers and consumers. Let’s take a look at what is ahead,” writes Coalition’s Executive Director, Matthew Smith, who appears in the latest issue of SIU Today. If you haven’t already, be sure to check out Smith’s breakdown of anti-fraud legislation worth following in state legislatures across the country. Read more about the fraud-fighting efforts happening in your backyard here.

With telemedicine an increasingly popular choice for consumers and providers, the DOJ is likely to increase enforcement of scams while deemphasizing violent crimes, three attorneys predict in a blog. “These early cases involving telehealth share common attributes to other earlier versions of healthcare fraud. They are often fairly egregious and not nuanced; they exploit a new technology, compliance gap, or billing issue; and they capture headlines due to high losses or startling details,” wrote attorneys Ty E. Howard, Scarlett S. Nokes, Gene R. Besen and Jason P. Mehta. “But over the longer term, the real issues in telehealth enforcement are not likely to involve such clear criminality. While there will always be scams — just as there always are egregious ‘upcoding’ or ‘phantom patient’ cases — the next wave of telehealth enforcement is likely to involve more gray area and more sophisticated theories.”

Deepfake images and videos may be one of the next big things in healthcare fraud, experts warn. Software is growing far more adept. Tech-savvy health scammers likely will try to manipulate claims with phony photos — potentially causing new headaches for fraud fighters. “Deepfakes paired with synthetic identities, in which a fraudster creates a new ‘identity’ by combining real data with fake data, could provide an avenue for criminals to pose as someone who qualifies for benefits, such as Medicare. …” says an article in Modern Healthcare. “Synthetic identities are already being used by criminals today to commit fraud, often by stealing and using the Social Security numbers of children and combining it with fabricated demographic information. Deepfakes could add a new layer of ‘evidence,’ with supposed photo and video proof to reinforce the fabricated identity.”

Peter Tang made more than $100K of false crash claims for a 2011 Maserati Gran Turismo, 2015 Maserati and 2012 Rolls Royce that he rented out to customers, the California insurance department says. The Chino man rented out the luxury cars to customers. He wasn’t licensed to rent the cars, and his auto policy excluded the rentals — so Tang falsified the facts after the crashes to ensure damage payouts. Tang’s 2015 Maserati was destroyed when the driver collided with a raised center median. Tang filed a claim, stating his friend drove the car during the collision. The Maserati was a total loss and Tang’s insurer paid $53,787 to the lienholder. His 2011 Maserati was ruined when the driver who rented the car collided with two vehicles stopped at a red light. Tang then claimed he damaged his 2012 Rolls Royce in a single-vehicle collision, but a witness refuted the story. Tang also made questionable statements about who drove the vehicles and how the collisions occurred for each crash. Detectives showed that Tang rented out his vehicles as well. Social media posts with photos of the vehicles further damaged his stories.

Several businesses made insurance claims after suffering significant damage — only to discover their agent stole their premiums and left them uninsured, a civil suit against the agent alleges in the Pensacola, Fla. area. The suspected schemes: A manufacturing client paid independent agent John Thomas $600K for general liability, business auto, product liability and other coverage. The CEO heard through the grapevine that Thomas was forced to pay a hotel client out of pocket for fire damage because he’d left the hotel with no coverage. The manufacturer checked, and learned its own coverage was fake — Thomas used a movie theater’s altered policy. Hurricane Sally damaged two properties of a client real estate rental firm. Thomas didn’t respond to their $1M of claims, and the owners found they didn’t have coverage despite paying Thomas $100K in premiums. Thomas also suspiciously “self-adjusted” a claim for a commercial warehouse after Hurricane Sally. No coverage. A commercial real estate firm also had a fire. Thomas had to pay $481K himself for part of the damage, then his second check for $409K bounced.

Seeking a $100K life-insurance score, Ashley Marks killed her six-year old son by feeding him a deadly brew of meth, cocaine, cough syrup and allergy medicine, prosecutors charge in Houston. Murder charges allege this plot: Little Jason and his younger sister were staying with their grandfather at his townhouse for two months. They became ill with tuberculosis and Marks visited the home some evenings. She gave the toxic meds to Jason and also tried to poison her daughter, but she refused to take the lethal doses. Jason became violently ill with vomiting, hallucinations and insomnia. The concerned grandfather called Marks as Jason’s condition worsened. Yet neither Marks nor the grandfather called medics. Jason died at the townhouse about two days later. He’d just graduated from first grade and dreamt of becoming a rodeo rider. Marks is a life insurance agent. She bought two policies just a month before Jason died — all of which aroused the suspicion of investigators. “I just want to wake up and say it all was a dream,” Jason’s father Mario Sanchez told News4SanAntonio.

How much harm can an allegedly crooked agent cause by stealing a client’s auto premiums? A Canadian’s harrowing experience shows what could just as easily happen on U.S. soil. Yasmine Sharaf was laid off from her job as a business analyst in Toronto. Her husband’s salary was cut by 20%, and they’re raising three kids. Yasmine thought she got a solid deal on coverage for two family autos from Aaxel Insurance Brokerage. She paid $6K (Canadian) to cover the year’s premiums — using her entire severance pay plus funds from a line of credit. The criminal charges: Yasmine discovered her auto policy was canceled for nonpayment. The agent Daniel Conrado allegedly pocketed part of her premiums. So Yasmine has had no drivable vehicle for a month without insurance. The premium nonpayment also has damaged her credit. And she has scoliosis, with a deep scar running the length of her spine. Yasmine thus can’t walk far without pain. “We are stuck home, my husband can’t drive to work, I can’t get groceries — I have had 10 spinal surgeries so I can’t carry stuff,” she told reporters. And the auto premium quotes now are $10K-12K. The insurance agency has apologized, saying it’s working to return Yasmine’s money and help restore her credit.

An insurer shouldn’t have to pay suspect claims by a Detroit meat grocery that lied about 13 tons of meat stolen during a break-in, says the U.S. Court of Appeals for the Sixth Circuit. Meat Town filed claims with Sentinel Insurance for a break-in, robbery and vandalism where roughly 13 tons of meat were allegedly stolen. The grocer never reopened, and was being evicted when the purported arsonist burned the building. Meat Town claimed over $485,000 for the burglary and nearly $475,000 for the fire. Sentinel denied the claims for fraud. The owners were convicted criminally, and sued by Sentinel in civil court. Meat Town didn’t produce credible evidence the meat was ever delivered, ruled the U.S. Court of Appeals for the Sixth Circuit

Pay up, an appeals court ruled in disallowing a California Highway Patrol (CHP) officer’s appeal of his court-ordered payment of $71,509 of investigative costs after he pled no-contest to faking injuries. Daniel Cory Clapp collected $111,863 of injury and disability benefits.A tip started a probe of his claim. CHP logged 1,761 hours investigating the claim. The state comp fund logged another 59 hours. Surveillance showed Clapp traveling, going to doctor visits, shopping, camping, boating and chopping wood. He pled no contest, yet insisted that as public agencies, they weren’t entitled to recoup their investigative costs. The appeals court retorted: “… denying the agencies restitution here would result in a rule encouraging public entities to incur out-of-pocket expenses for outside investigators rather than try to investigate the matter in-house,” the court ruled in The People v. Daniel Cory Clapp (Court of Appeal, 3rd Appellate District)

Life is tough for workers comp scammers in Ohio. They must contend with the formidable Special Investigations Department of the Ohio Bureau of Workers’ Compensation (BWC). The anti-fraud unit is among the Coalition’s newest members, by director Jim Wernecke. BWC itself is one of just four state workers comp agencies in the nation — and one of the world’s largest monoline insurers with $27.4B of invested assets. Employee injury scams comprise the unit’s largest fraud caseload volume, though businesses also continue misclassifying workers and med providers launch healthcare schemes. The agency brings considerable throw-weight to bear against scammers. BWC investigations identified $77.8M in savings in FY 2020 — generating a $5.79 ROI for every investigative dollar spent. The average closed case saved BWC $51,323 last year. It’s the largest average savings in BWC’s history. All told, BWC referred 150 cases for prosecution last FY, with 101 indictments and 88 convictions. Behind the numbers are the cases. A Zanesville deputy sheriff said he was injured and collected more than $211K of BWC benefits. BWC discovered he was a process server and investigator for a law firm, and a truck driver and laborer. An employee of an Akron construction firm fell to his death. The owner didn’t have comp coverage. He also lied he had no employees, yet BWC found six workers tearing shingles from a roof — without safety equipment — and $286K of hidden payroll.

Click the map to read about these and other fraud cases around the U.S.

IASIU is fighting insurance fraud around the globe. We’re also proud to support our chapters, which carry out IASIU’s mission locally. With the Antifraud Public Outreach grant program, IASIU directly supports local chapters for exceptional antifraud public outreach efforts. These chapters develop greater consumer awareness of the insurance fraud problem, and visibly support legislation that helps deter this crime. For instance, IASIU partners with the Coalition to address legislation that supports our fraud-fighting efforts. In fact, our Indiana chapter is teaming with the Coalition and NICB to try and defeat a bill that would weaken the fraud fight in that state. The involvement and commitment of our members locally, nationally and internationally is critical in our fight against insurance fraud. If you’re interested in getting involved in public awareness or legislative campaigns please reach out to us at We’ll promptly connect you with the IASIU chapter nearest you. And as a reminder, if your chapter is involved in public outreach efforts to stimulate community action; develop greater public awareness of the insurance fraud problem; or want to get involved in state legislation, we invite your chapter to apply for the Antifraud Public Outreach Grant. Simply, complete the application and email it to IASIU at Thank you for your interest and commitment to combating fraud through your chapters!