ISSUED: 2/11/2002
FOR IMMEDIATE RELEASE

DEPARTMENT ANNOUNCES TOP 10 ROTTEN APPLES FOR 2001

Superintendent Gregory V. Serio today announced the Top 10 list of worst cases of insurance fraud in New York State during 2001. These cases were part of over 900 new cases investigated by the Departments Frauds Bureau.

"The Department releases the Top 10 list as a way to educate consumers and make them aware of the various ways insurance fraud can occur. Some people think that insurance fraud is a victimless crime. That could not be farther from the truth, because the victims are you and me. No-fault insurance fraud alone is estimated to cost New Yorks drivers $1 billion a year," said Serio. "Every time someone rips off an insurance company or defrauds the workers compensation system, insurance premiums increase for all of us. We ask that you review the Top 10 list, educate yourself about insurance fraud and contact the Department if you have concerns about potential insurance fraud activity."

Worst among the offenders was a family of five accused of defrauding an insurance company of more than $40,000. The parents and their three grown children allegedly forged the signature of a physician on claim forms, submitted the forms to their insurer and collected the benefits to which they were not entitled.

Another case involved a man who filed applications with insurers seeking life insurance for a relative who was 70 years old. The defendant was named beneficiary of $20 million in life insurance benefits on the life of his elderly relative and provided false net worth and income information about the relative. In another high profile case, charges were brought against 67 individuals involved in one of the largest no-fault fraud rings ever to operate in New York. In one such staged accident, one of two indicted New York City police officers allowed his car to be used to deliberately collide with a second car. After inspecting the damage, the two drivers decided to collide again, causing further damage.

During 2001, the Frauds Bureau opened 939 investigations and made 554 fraud arrests. Below are the Top 10 Rotten Apples for 2001:

Operation Whiplash - 112 individuals and four corporations were charged in connection with the operation of a multi-million dollar automobile insurance fraud ring in the metropolitan area. Among those charged were three medical doctors, two medical clinics, two chiropractors, a physical therapist, an acupuncturist, two lawyers, and an NYPD Administrative Aide. The 14-month investigation, dubbed "Operation Whiplash," uncovered an organized network engaged in a scheme to defraud insurers by filing false accident reports and fictitious claims of physical injury. In many instances, fraudulent accident reports, doctors records, prescriptions and affidavits were created as part of the scheme. The scheme involved staged accidents, bogus accident reports allegedly generated by the NYPD Administrative Aide, and the use of runners to steer "victims" to medical providers and facilities that were part of the scheme.

A Million Here, A Million There - An Armonk man allegedly filed applications with numerous insurers seeking life insurance for a relative who was 70 years old at the time. In all but one of the applications, the defendant was named beneficiary of $20 million in life insurance benefits on the life of his elderly relative. He presented false documentation in support of his claim of insurable interest and allegedly provided false net worth and income information about the relative.

Not Dented Enough - Charges were brought against 67 individuals involved in one of the largest no-fault fraud rings ever to operate in New York. The ringleader, by his own admission, had been staging accidents for more than 20 years. Other participants indicted were two New York City police officers, the manager of a medical clinic, a police officer with the Health and Hospitals Corporation and an NYPD school safety officer. The fraud scheme worked in two ways. In the first scenario, two cars generally driven by knowing participants in the scheme deliberately collided. The drivers called the police who filed accident reports based on the false information provided to them. In one such accident, one of the indicted New York City police officers allowed his car to be used to deliberately collide with a second car. After inspecting the damage, the two drivers decided to collide again, causing further damage. In the second scenario, this same New York City police officer accepted bribes to fabricate accident reports. After the alleged accidents whether staged or fabricated the defendants went to one of several medical clinics, which paid the ringleader a cash fee per patient. The clinics would prescribe additional forms of therapy including large amounts of durable medical equipment and would bill the insurance carriers for the services and equipment. In addition, these multiple visits gave the defendants a better chance to obtain a fraudulent personal-injury settlement after they retained lawyers. Some were paid hundreds of dollars per accident, while others were promised the prospect of an insurance settlement at a later time for alleged pain and suffering.

Record Breaker - A 129-count indictment charged nine individuals and four businesses in a criminal enterprise that staged accidents, created "paper" accidents and enhanced damage claims primarily involving motorcycles. In a typical scenario, a person known as a "hitter" would report that he had an accident with a "claimant," i.e., the person who would submit a claim for payment. The hitter would accept full responsibility for the accident. Then the defendants would put damaged parts on the claimants motorcycle and submit false repair bills, estimates and towing and storage receipts. The investigation uncovered over 200 suspicious claims involving payments by insurers of approximately $2 million. More than 140 arrests have been made in this ongoing investigation which is the largest insurance fraud case in Suffolk County history.

Five County Sweep A major sweep covering five upstate counties led to the filing of criminal charges against 81 residents of the Capital Region. The Frauds Bureau worked closely with the District Attorneys of Rensselaer, Albany, Saratoga, Schenectady and Washington Counties, as well as other State agencies and state and local law enforcement agencies, on the five-month investigation.

Revoked Broker Busted - A former insurance broker was arrested on charges that he was engaged in the sale of phony auto insurance identification cards. An undercover investigator visited the office of the revoked broker and requested an identification card. The broker quoted a price of $600 and the investigator purchased the cards. The investigation later revealed that there was no insurance policy covering the investigators car. A search warrant turned up evidence that he had issued at least 56 other fraudulent cards, netting him $33,600 in illegal proceeds. In an interesting endnote, the broker himself was driving without insurance (his vehicle was impounded). In addition, to lend an air of legitimacy to his operation, he had on display a brokers license with current effective dates. However, the license listed the name of a former Superintendent of Insurance who left the Department in December 1996.

Statewide Clean Up - More than 40 suspects were arrested in the first statewide sweep ever conducted by the Frauds Bureau. In the downstate area, Frauds Bureau investigators assisted with the execution of search warrants at 11 auto body shops that netted more than 20 arrests for auto-related fraud in Kings, Queens, Nassau and Richmond Counties.

On the same day, Frauds Bureau investigators conducted sweeps in Syracuse and other upstate areas that resulted in the arrest of 21 individuals for various crimes of insurance fraud. The majority of those arrested during the upstate sweep were charged with workers compensation fraud.

Sweep Nets Unlucky 13 - Thirteen suspects were charged with various counts of insurance fraud, workers compensation fraud and welfare fraud. Among those arrested was a Colonie resident charged with collecting more than $20,000 in disability benefits while working as the owner of a moving company that earned nearly $200,000; a Troy man charged with claiming total disability and receiving $12,000 while working as a bartender; and an Albany resident accused of submitting inflated theft claims in a scheme to defraud her insurer.

A Family Affair - A two-year investigation led to the arrest of a family of five accused of defrauding an insurance company of more than $40,000 in medical and disability benefits. The parents and their three grown children allegedly forged the signature of a physician on claim forms, submitted the forms to their insurer and collected the benefits to which they were not entitled. They were charged with insurance fraud, criminal possession of a forged instrument and grand larceny.

This is Customer Service? - A woman was arrested and accused of using stolen credit cards for personal purchases. While working as a customer service representative at a telecommunications company in Utica, the defendant obtained customer credit card numbers which she then used to purchase auto insurance for her two cars.

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).