Friday, July 30, 2004

Click Here For Related Photo

REPUTED BONANNO CRIME FAMILY ASSOCIATE JOSEPH FRATTA PLEADS GUILTY TO ENTERPRISE CORRUPTION IN MAJOR INSURANCE FRAUD CASE; ADMITS RUNNING MEDICAL CLINIC WHICH BILKED INSURANCE COMPANIES OUT OF MILLIONS OF DOLLARS IN FALSE CLAIMS AND LAUNDERING OVER $1.0 MILLION IN ILLICIT PROCEEDS; FACES UP TO NINE YEARS IN PRISON

Queens District Attorney Richard A. Brown announced today that reputed Bonanno crime family associate Joseph Fratta has pled guilty to running, with others a major no-fault insurance fraud enterprise that bilked insurance companies out of millions of dollars by operating a medical clinic as a fraud factory that filed false claims and provided and billed insurance companies for unneeded medical treatment to uninjured patients and to laundering over $1.0 million in criminal proceeds.

District Attorney Brown said, "The defendant has admitted his guilt, waived his right to appeal and acknowledged that he and others ran a medical clinic in Richmond Hill, Queens for the sole purpose of ripping off insurance companies for millions of dollars in false claims. The defendant has also admitted that he hid over $1.0 million of the criminal proceeds by negotiating insurance company checks at a Manhattan check cashing outlet. Todays conviction and the tough sentence to be imposed sends a clear message that insurance fraud is a high-risk crime that leads directly to prison.

District Attorney Brown said that defendant Fratta had been charged in April in an indictment that accused 43 defendants -- 36 individuals -- including five lawyers, three medical doctors, a dentist, other state-licensed medical professionals and clinic employees posing as medical professionals -- and seven corporations in an enterprise corruption no-fault automobile-insurance operation.

The District Attorney said that Fratta, 55, of 90 Gold Street in Manhattan pled guilty earlier today in Queens Supreme Court to Enterprise Corruption - a violation of New York States Organized Crime Control Act -- and Money Laundering in the First Degree, Forgery in the Second Degree and Insurance Fraud in the Third Degree. The plea of guilty was entered before Justice Arthur J. Cooperman who indicated that on October 25, 2004 he would sentence Fratta to a term of four and one-half years to nine years in prison.

According to the District Attorney, the defendant admitted that between October 29, 2002, and October 27, 2003, at the Medical Arts Center at 107-13 Jamaica Avenue in Richmond Hill, Queens he and the other indicted defendants intentionally took part in a pattern of criminal activity to defraud insurance companies of millions of dollars in false claims by filing forged documents and then negotiating insurance company checks totaling over $1.0 million at the Wholesale Connection L.L.C. at 17 Battery Place in Manhattan, a check cashing outlet.

District Attorney Brown said that the investigation -- Operation Fraud Factory -- began in January 2003 conducted jointly by the New York Police Departments Auto Crime Division, the New York State Insurance Department's Insurance Fraud Bureau, the New York State Department of Taxation and Finances Tax Enforcement Office, the New York State Banking Departments Criminal Investigations Bureau and the Queens County District Attorney's Organized Crime and Rackets Bureau. The investigation uncovered evidence that the defendants engaged in various schemes to defraud millions of dollars from insurance companies by staging automobile accidents, submitting insurance claims for property damage, medical expenses and bodily injury that contained false and exaggerated information, ordering expensive and baseless diagnostic tests and equipment and filing fraudulent lawsuits.

The additional defendants also include eleven alleged jump-ins (purported accident victims), two runners who allegedly recruited the sham victims, the owner and two managers of the Medical Arts Center in Richmond Hill, Queens and two additional alleged money launderers.

The defendants were variously charged with Enterprise Corruption, Insurance Fraud, Forgery, Falsifying Business Records, Money Laundering, Commercial Bribery, and Conspiracy as well as violations of the New York State Tax Law. Additionally, the accused attorneys were charged with illegally soliciting clients thereby violating the Judiciary Law.

The indictments charge that, between October 29, 2002 and October 27, 2003, the ring engaged in various corrupt schemes at the Richmond Hill clinic with the complicity of seven other medical corporations and billing companies operating out of the same Richmond Hill location: (1)Accurate Management Group, Inc.; (2)ALBT Enterprises, P.C.; (3)Improved Collections Services, Inc.; (4)Oberon Medical Rehabilitation, PLLC.; (5)Restorative Medical Rehabilitation, P.L.L.C.; (6)Tai Yang Medical Acupuncture, P.C. and (7)Zal Acupuncture, P.C.

The indictments charge that the ring allegedly operated under the protection of the Bonanno crime family through defendant Fratta who supervised and managed part of the rings business and received a salary from the Richmond Hill clinic where he had an office.

The indictments charge that the clinic's alleged boss, Arthur Bogoraz, and its alleged managers, including Irena Chernomaz, and alleged head runner Pasqual Richie Clemente, assisted Fratta in carrying out schemes for the criminal enterprise.

The indictments allege further that the ring paid runners up to $2,700 for each person whom they recruited to pose as injured accident victims. Fake patients, it is alleged, received payment from either a runner or a clinic employee of up to $2,000 for their participation in the scheme. In order to receive payment, the indictments allege, a fake patient had to visit a medical doctor, a chiropractor, an acupuncturist and a physical therapist several times per week, sign up with a lawyer affiliated with the scheme and receive unnecessary MRIs, X-Rays, nerve conduction studies and medical supplies.

District Attorney Brown said, Auto insurance fraud costs New Yorkers an added $1 billion each year -- nearly $200 per driver -- and that is the major reason why New York's automobile insurance coverage costs an average of nearly $2,000 per driver, second highest in the nation.

The insurance companies defrauded included: Clarendon Insurance Company, Kemper Insurance Company, National Grange Mutual Insurance Company, Auto One General Insurance, State Farm Insurance, Allstate Insurance Company, Progressive Insurance Company, American Transit Insurance, and Liberty Mutual Insurance.

District Attorney Brown said his office had notified the New York State Grievance Committee for the 2nd and 11th Judicial Districts in Brooklyn and the New York State Education Departments Division of Professional Licensing in Albany about the allegations against the attorneys, medical doctors and other medical professionals, all of whom face loss of their licenses if convicted.

The investigation was conducted by Detective David Moore of the NYPD Auto Crime Division under the supervision of Sergeant George Nash and Lieutenant Gene Borelli and the overall supervision of Captain Michael Byrne, Deputy Inspector Howard Lawrence and Chief Douglas Zeigler; NYS Insurance Department Fraud Bureau Investigator Gary Anderson under the supervision of Supervising Investigator August Durelli; NYS Taxation and Finance Department Supervising Investigator Angelo Polito and Auditor Kim Lee Stewart under the supervision of Director Nicholas Reynolds as well as Jay Vredenburg, Mark Phelan and Tim Anderson under the supervision of Frank Risler, Director of the NYS Department of Taxation and Finance's Computer Forensic Unit; NYS Banking Department Criminal Investigation Bureau Investigator Delroy Levy under the supervision of Acting Director John Dinin and Queens District Attorneys Detective Bureau Detectives Edwin Driscoll and Ronald Georg under the supervision of Chief Lawrence J. Festa and Deputy Chief Al D. Velardi.

District Attorney Brown expressed his appreciation to the New York City Police Department's Auto Crime Division, the New York State Insurance Department's Insurance Fraud Bureau, the New York State Department of Taxation and Finance's Tax Enforcement Office, the New York State Banking Departments Criminal Investigation Bureau and the Queens County District Attorney's Organized Crime and Rackets Bureau and Detective Squad for their professionalism in the investigation.

Assistant District Attorneys Peri Alyse Kadanoff, Supervisor, and Michael A. Wiesenfeld of the District Attorney's Organized Crime and Rackets Bureau are prosecuting the case under the supervision of Assistant District Attorneys Gerard A. Brave, Chief, and Marc P. Resnick, Deputy Chief, and the overall supervision of Executive Assistant District Attorney for Investigations Peter A. Crusco and Deputy Executive Assistant District Attorney for Investigations Linda M. Cantoni.