ISSUED: 1/24/2002
FOR IMMEDIATE RELEASE

SERIO, SPITZER ANNOUNCES 20 ARRESTED IN AUTO INSURANCE FRAUD SWEEP BY NEW UNIT
Governor Designated AG Special Prosecutor in May, Unit Up and Running to Combat No-Fault Insurance Fraud

Insurance Superintendent Gregory V. Serio and Attorney General Elliot Spitzer today announced that 20 people have been arrested in an auto insurance fraud sweep throughout the New York City area.

A two-month investigation by Spitzers Auto Insurance Fraud Unit and the Insurance Department, found that the defendants staged accidents, filed fake accident reports, and submitted phony medical bills.

Following an executive order by Governor George E. Pataki designating the Attorney General as the special prosecutor for auto insurance fraud, the Unit began operating in November. The Special Prosecutor is coordinating the investigatory and prosecutorial efforts at the State level relating to any indictable offense involving motor vehicle insurance claims.

No-fault Fraud and abuse has become the number one rate driver in New York States auto insurance marketplace. It is estimated that auto insurance fraud in the state totals over $1 billion a year and costs the typical New York driver $300 to $400 a year in higher insurance premiums.

"In the past 12-18 months we have seen an alarming increase in no-fault automobile insurance fraud in New York State," said Serio. "The Governors designation of the Attorney General as special prosecutor and the expeditious efforts on the part of the Attorney General to set-up investigatory and prosecutory staff, has added a very valuable tool to the fight against no-fault insurance fraud.

Fraud rings, medical mills, staged accidents, and bogus claims take hard-earned money out of the pockets of each and every New York driver. We must continue to be vigilant in rooting out crooks who defraud the system and protect New Yorks consumers from paying the price."

"With these arrests, were serving notice that were putting the brakes on insurance fraud," said Spitzer. "For far too long, scam artists have been ripping off the system and forcing drivers across the state to spend hundreds of dollars a year in higher premiums. Each time a false claim in paid, innocent drivers are footing the bill and its a bill that now totals over $1 billion a year. These arrests are only the beginning of whats to come."

All told, there are 11 cases against 20 defendants. The most serious charges against the defendants include Grand Larceny in the Second Degree and Insurance Fraud in the Second Degree, which carry penalties of 5-15 years in prison. Among the cases being charged:

• Two defendants, Manuel Rivera and Oscar Torres, submitted no-fault claims using a phony accident report. The defendants were diagnosed by their medical provider as suffering from "Post-concussion Syndrome" stemming from the "accident" and over $2,500 in reimbursement was paid out under no-fault. They have been charged with Insurance Fraud in the Third Degree (D felony) and Grand Larceny in the Third Degree (D felony) and related crimes,
• One defendant was observed slamming his vehicle into a concrete abutment several times in order to increases damage to his car after it had been minimally damaged in a prior accident. He received close to $3,000 for his claim. He has been charged with Insurance Fraud in the Fourth Degree (E felony) and Falsifying Business Records in the First Degree (E felony) and related crimes.
• Two employees of the Bay Ridge Physical Medicine and Rehabilitation Center in Brooklyn, Maria Mendez and Eleanor OConnell, provided physical therapy treatments to an undercover investigator posing as a patient although they were not licensed by the state as physical therapists. They also falsely billed the insurance carrier under no-fault for treatments never provided to the undercover investigator. They have been charged with Unauthorized Practice of a Profession (E felony) and Falsifying Business Records in the First Degree (E felony) and related crimes.
• Three defendants, Kevin Welch, Joanne Miranda, and Melissa Walker, are accused of running a paper accident ring. They submitted phony no-fault claims through several medical facilities in Brooklyn which included fictitious accident reports. The defendants claim injuries from three accidents which never occurred. The defendants are charged with Insurance Fraud in the Third Degree (D felony); Attempted Grand Larceny in the Third Degree (E felony); Falsifying Business Records in the First Degree (E felony); and related crimes.

"These cases represent a good cross section of the type of abuse that takes place under New Yorks no-fault system," said Spitzer. "I want to add that in addition to going after the participants of these scams, we are also focusing our energies on the professionals, including doctors and lawyers, who organize and perpetrate the fraud that is driving up the cost of auto insurance for all New Yorkers."

The arrests were made over the past two days by Spitzers Auto Insurance Fraud Unit, assisted by state Insurance Department investigators and the N.Y.P.D. Fraud Accident Investigation Squad. The Attorney General thanked the Insurance Department, the N.Y.P.D. and various insurance companies Special Investigation Units for referring the cases to his office and commended them for their assistance in the investigation.

The scams took place in Manhattan, Queens, the Bronx and Suffolk County. Some of the defendants were arraigned yesterday, the remainder are being arraigned today. All of the defendants are presumed innocent until proven guilty in a court of law.

The cases were being handled by Assistant Generals John Balestriere, James Benintendi, Jane Drummey, Brenda Hall, and Ed Rothman of the Attorney Generals Auto Insurance Fraud Unit; under the direction of Unit Chief Steve Nachman and Deputy Chief Investigator James Conway.

The Attorney Generals Office and the Department have pooled their knowledge resources in a collaborative effort to investigate and prosecute no-fault insurance fraud. The Attorney Generals staff has been working closely with the Insurance Departments Frauds Bureau sharing information on incoming fraud reports and access to the NYPDs accident reports database. The Departments Frauds Bureau hosted the Attorney Generals new no-fault investigatory unit detailing how fraud reports are received and triaged through an on-line database allowing insurers and law enforcement to cross-reference information with other reports containing common elements to coordinate investigations and better weed out fraud.

New York is aggressive in its fight against insurance fraud. To report suspected incidents of insurance fraud call 1-888-FRAUD-NY (1-888-372-8369).