N.J. Lawmaker Aims to Classify Reverse Rate Evasion as Insurance Fraud

January 17, 2013Email ThisPrintNewslettersTweetArticle3 Comments

The New Jersey Assembly’s financial institutions and insurance committee advanced a bill that would include “reverse rate evasion” as a form of insurance fraud. The bill, A2204 — introduced by the Assembly’s Deputy Speaker Pro Tempore Wayne DeAngelo (D-Mercer and Middlesex) last year — was reported out of the Assembly committee this week with amendments.

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4 Convicted in California for $154M Medical Insurance Fraud

November 28, 2012Email ThisPrintNewslettersTweetArticleComments

Orange County prosecutors say four people have been convicted of crimes relating to a $154 million medical fraud scheme in which hundreds of healthy patients underwent unnecessary surgeries to fraudulently bill insurance companies.

Farrah Emami, a spokeswoman for the Orange County district attorney’s office, says 64-year-old Roy Dickson, 58-year-old Andrew Harnen, 63-year-old Dee Francis and 66-year-old Rosalinda Landon were found guilty of multiple tax fraud counts.

The four were convicted for their roles in recruiting more than 250 healthy patients to undergo sometimes dangerous surgeries to fraudulently bill insurance companies.

The four were among 19 defendants charged in the case, which has been divided into several trials because of its size.

A total of 13 have been indicted by a grand jury and six others pleaded guilty prior to indictment.

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Email ThisPrintNewslettersTweetCategories: West NewsTopics: California, Fraud, insurance fraudHave a hot lead? Email us at newsdesk

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Appeals Allow Louisiana Cardiologist Convicted of Fraud to Remain Free

November 28, 2012Email ThisPrintNewslettersTweetArticleComments

A former Lafayette cardiologist is asking to remain free pending a request that the U.S. Supreme Court hear an appeal of his 2009 health-care fraud conviction and 10-year prison sentence.

The Advocate reports Dr. Mehmood M. Patel, who is accused of billing insurers for more than $2 million in unnecessary heart procedures, has avoided prison while appealing his federal conviction for the past three years.

The 5th Circuit U.S. Court of Appeals upheld Patel’s conviction sentence in August, and the court last week denied a request to reconsider the case.

Patel’s attorney, Amy Adelson, has asked the appeals court to allow Patel to remain free pending his request that the U.S. Supreme Court review the case.

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U.S. sues Bank of America over 'Hustle' mortgage fraud

The United States filed a fraud lawsuit against Bank of America Corp., accusing it of causing taxpayers more than $1 billion of losses by selling thousands of toxic mortgage loans to Fannie Mae and Freddie Mac.
 
Wednesday's case, originally brought by a whistle-blower, is the U.S. Department of Justice's first civil fraud lawsuit over mortgage loans sold to the big mortgage financiers, bailed out in 2008.

It also compounds the legal problems that Bank of America Chief Executive Brian Moynihan faces over the second-largest U.S. bank's disastrous July 2008 purchase of Countrywide Financial Corp., once the nation's largest mortgage lender.

According to a complaint filed in Manhattan federal court, Countrywide in 2007 invented and Bank of America continued a scheme known as the "Hustle" to speed up processing of residential home loans.

The program, also known as HSSL for "High Speed Swim Lane," operated under the motto "Loans Move Forward, Never Backward," and tried to eliminate "toll gates" designed to ensure that loans were sound and not tainted by fraud, the government said.

The program removed underwriters from all but the riskiest loans and replaced them with loan specialists, previously considered unqualified even to answer borrower questions.

This led to "defect rates" approaching 40%, roughly nine times the industry norm, but Countrywide concealed this from Fannie Mae and Freddie Mac, and even awarded bonuses to staff to "rebut" the problems being found, the government added.

Defaults and foreclosures soared, yet the bank has resisted buying back many of the defaulted loans from the scheme, which ran through 2009, the government added.
 

"The fraudulent conduct alleged in today's complaint was spectacularly brazen in scope," U.S. Attorney Preet Bharara in Manhattan said. "Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill."

Wednesday's lawsuit seeks civil fines, as well as triple damages under the federal False Claims Act, which the government has used several times in recent years against Wall Street.

A bank spokesman said in response to the lawsuit: "Bank of America has stepped up and acted responsibly to resolve legacy mortgage matters. The claim that we have failed to repurchase loans from Fannie Mae is simply false. At some point, Bank of America can't be expected to compensate every entity that claims losses that actually were caused by the economic downturn."

In February, Bank of America agreed to a $1 billion settlement of False Claims Act allegations over home loans submitted for insurance by the Federal Housing Administration, in a case from the U.S. Attorney's office in Brooklyn, New York.
 
Whistle-blower

 Since Mr. Moynihan's predecessor, Kenneth Lewis, paid $2.5 billion for Countrywide, the Charlotte, N.C.-based bank has lost nearly $40 billion on mortgage litigation and investor demands to buy back soured loans, Credit Suisse said on Oct. 5.

Some of these costs related to Merrill Lynch & Co., which Lewis bought at the beginning of 2009. Last month, Bank of America agreed to pay $2.4 billion to settle a lawsuit accusing it of misleading investors about that takeover.
 

According to court records, Wednesday's case was originally filed under seal in February by Edward O'Donnell, a Pennsylvania resident and former executive vice president at Countrywide Home Loans who had worked there between 2003 and 2009.

In that complaint, Mr. O'Donnell said Countrywide and later Bank of America dismissed his "numerous" objections to the Hustle, and that he became "one of the lone voices" in his division pointing to escalating loan quality issues and defaults.

Mr. O'Donnell could not immediately be reached for comment, and his lawyer did not immediately respond to requests for comment.

Bank of America shares closed down 5 cents at $9.31 on the New York Stock Exchange. They have fallen 61 percent since the Countrywide takeover closed, while the Standard & Poor's 500 has risen 10%.
 
FHFA lawsuits

 Federal regulators seized Fannie Mae and Freddie Mac on Sept. 7, 2008 and put them into a conservatorship.

The mortgage financiers are now overseen by the Federal Housing Finance Agency, and have repaid only about one-fourth of the more than $188 billion of taxpayer funds they have drawn down. Fannie Mae alone has drawn down more than $116 billion.

Wednesday's lawsuit was also brought under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, which was enacted after that decade's savings-and-loan crisis.

It overlaps other cases that federal agencies have brought against Wall Street over the financial crisis, including the FHFA's 18 lawsuits last year over Fannie Mae and Freddie Mac.

These lawsuits covered losses on the sales of roughly $200 billion of securities, including more than $57 billion linked to Bank of America, Countrywide and Merrill.

Fannie Mae and Freddie Mac have in recent months stepped up their own efforts to force Bank of America and other lenders to buy back soured home loans.

Mr. Bharara's office in the past year and a half has brought five civil fraud lawsuits under the False Claims Act over FHA-insured loans against other lenders.

In February, Citigroup Inc settled its case for $158.3 million and Flagstar Bancorp Inc. settled for $132.8 million, while Deutsche Bank A.G. settled in May for $202.3 million. Cases are pending against Wells Fargo & Co. and Allied Home Mortgage Corp., Mr. Bharara said.

Copyright 2012 Reuters Limited.
 
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Father and Daughter in Central Calif. Workers’ Comp. Fraud Must Repay Over $600K

October 5, 2012Email ThisPrintNewslettersTweetArticleComments

Jerry Buffington, 69, and Cynthia Russell, 47, have pled guilty in Kern County Superior Court to one count each of workers’ compensation insurance premium fraud and eight counts each of tax evasion and were ordered to pay restitution to California’s State Compensation Insurance Fund in the amount of $475,100 and $127,899 to the Employment Development Department.

Both have been ordered to serve 10 years’ probation.

According to detectives from the California Department of Insurance Fraud Division, Buffington was the owner and president of Safehome Inc., and Buffington’s daughter, Cynthia Russell, was the chief financial officer.

Their guilty pleas are a result of an investigation led by CDI’s Fraud Division while working with the San Joaquin Valley Premium Fraud Task Force.

In 2007 State Fund discovered Safehome Inc. was underreporting their employee payroll to avoid paying the proper premium. An audit was completed and indicated that Safehome Inc. had failed to pay the proper premiums for their workers’ compensation policy in the amount of $477,285. Additionally, State Fund determined the business was operating out of its classification, which was registered as an alarm company, yet several employees were operating as roofers. The payroll related to the roofing portion of the business was never reported to either SCIF or EDD, according to investigators.

During the investigation a separate set of payroll records was located and corroborated the evidence that the business had not reported payroll to SCIF and EDD as required. The task force investigated the case and filed a complaint with the Kern County District Attorney’s Office, which charged the two with insurance fraud and tax evasion.

Buffington was convicted of one felony count for violating 11880(a) of the insurance code Section, false or fraudulent statement, four felony counts for violating unemployment insurance code Section 2117.5, failure to file return or report, and four felony counts for violating unemployment insurance code Section 2118.5, failure to collect or pay taxes.

 

Russell was convicted of one felony count for false or fraudulent statement, four felony counts for failure to file return or report, and four felony counts for failure to collect or pay taxes. In addition, she was ordered to perform 400 hours of community service.

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Md. Woman Convicted of Disability Fraud, Faces Up to 5 Years in Jail

October 12, 2012Email ThisPrintNewslettersTweetArticle1 Comments

Prosecutors say a woman who collected federal disability benefits while operating a fitness center has been convicted of making false statements to obtain those benefits.

A jury convicted 48-year-old Darlene Altvater of Mechanicsville, Maryland, on Tuesday in U.S. District Court in Greenbelt. She faces up to five years in prison at sentencing Jan. 7.

According to evidence presented at trial, Altvater, who worked for the Postal Service, sustained on-the-job head and neck injuries. She began collecting federal workers’ compensation benefits in 2001.

Prosecutors say from January 2005 through December 2011, Altvater operated a salon, day spa and fitness center. Witnesses testified that Altvater demonstrated the use of fitness equipment. She was still receiving disability benefits.

 

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Email ThisPrintNewslettersTweetCategories: East NewsTopics: Fraud, Maryland, workers' comopensationHave a hot lead? Email us at newsdesk

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Former Hackensack, N.J., Police Chief Sentenced for Insurance Fraud

September 21, 2012Email ThisPrintNewslettersTweetArticleComments

A judge sentenced former Hackensack Police Chief Ken Zisa to five years in prison on Thursday.

Zisa will remain free on bail while he appeals his conviction for improperly removing his then-girlfriend from the scene of an accident in 2008 and filing a fraudulent insurance claim for $11,000 in damages.

Zisa was sentenced to five years for official misconduct and three years for insurance fraud. The terms will run concurrently.

The Record newspaper reports Zisa told the judge he had nothing to add to what his lawyer already said.

In an unusual move last week, the judge overturned three official misconduct convictions stemming from allegations that Zisa failed to recuse himself from a 2004 investigation of his then-girlfriend’s sons.

The judge said he had substantial concerns about the evidence.

 

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Email ThisPrintNewslettersTweetCategories: East NewsTopics: insurance fraud, New JerseyHave a hot lead? Email us at newsdesk

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Nebraska Construction Company Owner Sentenced for Wire, Insurance Fraud

June 26, 2012Email ThisPrintNewslettersTweetArticleComments

A Fremont, Neb., man has been sentenced to 18 months in federal prison for a wire fraud conviction that cost banks and insurance companies in Nebraska and Iowa millions of dollars.

Thomas Herink was sentenced in Omaha’s U.S. District Court. In addition to prison, Herink was given three years of supervised probation following his release and ordered to repay $5,111,026.91 to his victims.

Herink was president and chief executive officer of Golf Services Group Inc., a construction company, according to U.S. Attorney Deborah Gilg, who says Herink falsified financial statements to defraud lenders and insurers.

Herink carried out the scheme in order to participate in large construction contracts throughout the country, according to Gilg. Prosecutors say when Herink defaulted on some of the projects, the banks and insurance companies lost more than $8 million.

United Fire and Casualty Co. (UFCC), based in Cedar Rapids, Iowa, and Employers Mutual Casualty Co. (EMCC), based in Des Moines, Iowa, were insurance companies that provided various insurance products, including surety bonds, to construction contractors, the U.S. attorney’s office said. These bonds, which included bid, performance, and payment bonds, guaranteed that the contractor would fulfill his commitments according to the specifications outlined in the construction contracts. Both UFCC and EMCC provided bid, performance, and payment bonds to Herink and his business entities, according to Gilg’s announcement.

Source: U.S. Attorney’s Office, Associated Press

 

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Bexar County, Texas, Gets Special Insurance Fraud Prosecutor

May 25, 2012Email ThisPrintNewslettersTweetArticleComments

The Texas Department of Insurance (TDI) has expanded its fight against insurance fraud into San Antonio. TDI Commissioner Eleanor Kitzman has announced the placement of a special insurance fraud prosecutor and investigator who have joined the Bexar County District Attorney’s Office.

Bexar County now joins Dallas and Harris Counties where specialized fraud teams are tracking criminals involved with insurance fraud. Bexar County District Attorney Susan Reed said her new fraud fighters demonstrate her office’s ongoing dedication to the prosecution of white collar crime in Bexar County.

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New Law in Oklahoma Toughens Penalties for Insurance Fraud

May 14, 2012Email ThisPrintNewslettersTweetArticleComments

A bill recently passed and signed by the governor toughens the penalties for insurance fraud, state officials say.

Senate Bill 1439, requested by Oklahoma Insurance Commissioner John D. Doak, is expected to save taxpayers millions of dollars, according to the Oklahoma Insurance Department.

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Seeking to Combat Insurance Fraud, Louisiana Joins Federal Network

May 7, 2012Email ThisPrintNewslettersTweetArticleComments

Louisiana has agreed to share information with a federal network designed to cut down on insurance fraud.

The Advocate reported that the agreement is between the Treasury Department’s Financial Crimes Enforcement Network and the Louisiana Department of Insurance.

State Insurance Commissioner Jim Donelon says the problem of fraudulent claims is about the same in all 50 states. Insurance industry studies have suggested that 10 percent or more of property-casualty claims are fraudulent

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Va. DOT Contractor Pleads Guilty to Fraud, Used Uninsured Vehicles

April 4, 2012Email ThisPrintNewslettersTweetArticleComments

A Staunton contractor accused of defrauding the Virginia Department of Transportation has pleaded guilty to commercial fraud.

Thirty-two-year-old Jeffrey T. Jennings faces up to 15 years in prison.

The News Leader reports that Jennings entered his plea last week in August County Circuit Court. In exchange for his plea, seven counts of obtaining money by false pretenses were dropped.

The state contracted with Jennings’ company, Legacy Builders, for snow removal services. Augusta County chief deputy prosecutor Rupen Shah said Jennings filed paperwork with the Department of Transportation between 2007 and 2009 falsely claiming his fleet of vehicles was insured.

Shah says Jennings received thousands of dollars in fees.

 

Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Email ThisPrintNewslettersTweetCategories: East NewsTopics: Fraud, Virginia Department of TransportationHave a hot lead? Email us at newsdesk

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Miami Boat Captain Charged with Insurance Fraud Over Sinking of $1.8M Yacht

May 10, 2012Email ThisPrintNewslettersTweetArticleComments

A Miami boat captain has been arrested on a first-degree grand theft charge for allegedly sinking a $1.86 million yacht in 2009 off the Bahamas.

Florida Chief Financial Officer Jeff Atwater announced the arrest of Robert Figueredo by detectives from the Florida Department of Financial Services Division of Insurance Fraud (DIF).

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N.J. Regulator Offers Advice for Avoiding Auto Insurance Fraud

April 12, 2012Email ThisPrintNewslettersTweetArticleComments

Consumers often face important decisions on insurance, medical treatment and auto repair in the aftermath of an auto accident.

But unfortunately, they can end up paying unnecessary expenses or even become victims of fraud if they make a hasty or unwise decision, New Jersey’s top insurance regulator cautioned.


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