N E W J E R S E Y Special Report: Cracking Fraud Rings

Home , Disability fraud, Insurance fraud

N E W J E R S E Y INSURANCE FFrraudaud Special Report: Cracking Fraud Rings

OIFP Draws International Praise Closing Loopholes: Proposals for Legislative and Regulatory Reform New Crime Takes Aim at Insurance Cheats

How “Runners” Corrupt the Health Care System Public and Private Sectors Join Forces in Fraud War

2003 Annual Report of the New Jersey Office of the Insurance Fraud Prosecutor How’d they find out? INSURANCE FRAUD IS A SERIOUS CRIME. Don’t Do It. Don’t Tolerate It. Call Confidentially 1.877.55.FRAUD NEW JERSEY OFFICE OF INSURANCE FRAUD PROSECUTOR

Inside Front Cover This page was intentionally left blank Annual Report of Annual Report Staff John J. Smith, Jr. First Assistant The New Jersey Insurance Fraud Prosecutor Assistant Attorney General Stephen D. Moore Office of the Editor Supervising Deputy Attorney General Melaine Campbell Co-Editor Insurance Fraud Supervising Deputy Attorney General Feature Writers John Butchko Prosecutor Special Assistant Norma R. Evans for Calendar Year 2003 Supervising Deputy Attorney General John Krayniak Supervising Deputy Attorney General Submitted Michael A. Monahan March 1, 2004 Supervising Deputy Attorney General (Pursuant to N.J.S.A. 17:33A-24d) Scott R. Patterson Supervising Deputy Attorney General Stephanie Stenzel Supervising State Investigator Contributors Jennifer Fradel Supervising Deputy Attorney General Peter C. Harvey Charles Janousek Attorney General Special Assistant Barry T. Riley Vaughn L. McKoy Supervising State Investigator Director, Division of Criminal Justice Photographers Vincent A. Matulewich Greta Gooden Brown Managing Deputy Chief Investigator Insurance Fraud Prosecutor Carlton A. Cooper Civil Investigator Production Paul Kraml Prepared by: Art Director Sina Adl Office of the Attorney General Graphic Designer Department of Law and Public Safety Division of Criminal Justice Administrative and Technical Support Office of the Insurance Fraud Prosecutor Paula Carter Susan Cedar P.O. Box 094 Joan Enright Trenton, NJ 08625-0094 Pat Miller 609-896-8888 Cynthia Ronan www.njinsurancefraud.org Lynn Wasserman Jacqueline Wendel This page was intentionally left blank Contents

Message From The Insurance Fraud Prosecutor 5

Special Report: OIFP Targets Fraud Rings 8

OIFP’s Prosecutions Prove Corrupting Influence of “Runners” On Health Care System 16

Pharmacy Scams Busted by OIFP’s Medicaid Fraud Section 26

OIFP Draws International Acclaim 32

Insurance Reforms Toughen Fraud Penalties and Give OIFP New Tools 38

OIFP Civil Enforcement Actions Pack a One – Two Punch In The Fight On Fraud 44

OIFP’s Public Awareness and Insurance Fraud Training Programs Spread the Word on Insurance Fraud 50 OIFP’s Office Structure, Organization and Operations 58

Cooperation, Coordination and Communication Key to OIFP Success 64

OIFP Funds County Prosecutors’ Insurance Fraud Fighting Efforts 74

Insurance Fraud Case Highlights 80 OIFP Criminal Case Descriptions – Insurance Fraudraudraud 84 OIFP Criminal Case Descriptions – Medicaid Fraudraudraud 142 2003 Medicaid Civil Case Settlements 150 County PPCounty rosecutors’ Offices Criminal Case Summaries 152 OIFP Civil Investigations and Actions 164 OIFP Civil Litigation 170 PPProfessional Licensing Proceedingsroceedingsroceedings 172

Closing the Loopholes on Fraud: OIFP’s Recommendations for Legislative and Regulatory Reform 176 A Message From The Insurance Fraud Prosecutor

Sowing and Reaping in the War on Insurance Fraud

I am proud to present the fifth Annual Report of the Office of the Insurance Fraud Prosecutor (OIFP) to the Governor and Legislature of the State of New Jer- sey as required by N.J.S.A. 17:33A-24d. I am pleased to report that, in 2003, we met our goals and exceeded our expectations. In 2003, OIFP prosecuted more criminal cases than any other year in OIFP’s history. In addition, we continued to sow the seeds for successful investigations and prosecutions long into the future. Over the past year, New Jersey attained record highs, both in the number of those charged with, and those convicted of, committing insurance fraud. In 2003, OIFP, together with OIFP funded County Prosecutors’ Insurance Fraud Units, filed criminal insurance fraud related charges against 730 individuals. We obtained convictions against 379 defendants, 109 of whom were sentenced to a total of 194 Greta Gooden Brown years in prison. OIFP cases, alone, accounted for over 70% of the prison time meted out to convicted insurance fraud felons. On the civil side, OIFP’s record in 2003 was equally impressive. As reported in December of 2003 by the Coalition Against Insurance Fraud in its most recent national insurance fraud survey, the New Jersey Office of the Insurance Fraud Prosecutor led the nation in the number of civil sanctions imposed, accounting for 86% of all civil actions taken in the nation. Moreover, in 2003, all of New Jersey’s enforcement efforts resulted in insurance cheats being ordered to pay over $16.5 million constituting restitution, criminal fines and civil penalties. While OIFP was conceived, in part, to address New Jersey’s burgeoning auto insurance rates, the savings to New Jersey’s insurance consumer resulting from OIFP’s successful prosecutions cannot be precisely quantified. It is un- deniable, however, that by identifying, prosecuting and punishing insurance cheats, OIFP prevents losses of millions of dollars each year. Indeed, some of the successful prosecutions highlighted in this Report, particularly with respect to staged accident rings, have resulted in savings of millions of dollars that would have otherwise been drained from New Jersey’s insurance system through the submission of fraudulent bodily injury claims alone. Further, OIFP undoubtedly deters countless other potential fraudsters from committing insurance fraud by publicizing its successful prosecutions. The fruits of OIFP’s labor increasingly drew the attention of others in 2003, both here and abroad. OIFP’s accomplishments were the feature story of the De- cember 2003 edition of Fraud International Magazine. In addition, in 2003, OIFP was selected as a national finalist for the prestigious International Association of Chiefs of Police (IACP) and ChoicePoint Award. The Award recognizes exceptional innovation and excellence in criminal investigations. While we are proud of the official record of our achievements in 2003, we are equally proud of the tireless efforts of our staff who toil daily behind the scenes to lay the groundwork for our present and future successes. Their mandate, which they fulfill with uncompromising efficacy, is to be productive while maintaining the high quality evidenced in our investigations, prosecutions and programs that have become our trademark. OIFP’s remarkable progress in its brief five year history may be attributed to several factors. The seeds of OIFP’s success were initially sown by the New Jer- sey Legislature when it created OIFP through the enactment of the Automobile

continued on next page Insurance Cost Reduction Act of 1998 (AICRA). AICRA designated OIFP as New Jersey’s lead agency in the war on insurance fraud and provided it with the resources to wage an unrelenting war. In 2003, Governor James E. McGreevey signed into law landmark legislation which created the specific crime of insurance fraud and established a reward program for members of the public to provide information leading to the identification, prosecution and conviction of insurance cheats. With this single act, Gover- nor McGreevey has sown the seeds for OIFP’s continued success by increasing the penalties for committing insurance fraud in New Jersey, solidifying New Jersey’s position as a national leader in combating fraud and enlarging OIFP’s arsenal of weapons in the war against insurance fraud. OIFP’s success may also be attributed to the contributions of our partners and allies in other law enforcement and public agencies as well as the insurance industry. The outstanding contributions of our partners in the law enforcement community and the insurance industry, in particular, enable us to bring to fruition OIFP’s statutory mission of providing for “a more effective investigation and prosecution of fraud” in New Jersey than existed in the past. Achieving this mission inures to the benefit of New Jersey’s insurance buying public who are the ulti- mate victims of insurance fraud. Finally, OIFP’s success would not have been possible without the support and leadership of Attorney General Peter C. Harvey and Assistant Attorney Gen- eral Vaughn L. McKoy, Director of the Division of Criminal Justice. Attorney Gen- eral Harvey and Director McKoy are the principal facilitators who enable OIFP to achieve the results for which it was created. We in OIFP recognize and welcome the challenges that lay before us in the months and years ahead. We will continue in the coming year to conduct thor- ough investigations, to develop solid cases, to prosecute aggressively and to sow the seeds for future investigations and prosecutions. We will continue to develop effective anti-fraud programs and initiatives. We will continue to seek new and better ways to accomplish our mission, be it the planning of successful sting operations, the tackling of organized insurance fraud rings, or the application of high tech data mining tools to identify new fraudulent patterns or trends. We will continue to spread the word to those who would dare to commit insurance fraud in the State of New Jersey, that they, too, shall reap what they sow.

Respectfully submitted,

Greta Gooden Brown New Jersey Insurance Fraud Prosecutor OIFP Targets Fraud Rings

Vehicles recovered by OIFP State Investigators in undercover sting “Operation Give and Go.”

8 OIFP Targets Fraud Rings OIFP Criminal Prosecutions at All-Time High

by Michael A. Monahan It came in to the Newark Police dis- the owner was no victim at all. He was patcher as a frantic 911 call. The caller a thief, who faked the entire carjacking said he had just been the victim of a scenario with a friend in order to file a carjacking at the intersection of William fraudulent insurance claim. How did and Halsey Streets by a man armed the authorities know? Because the car with a gun. Units from the Newark Police had been in the possession of State In- Department were immediately dispatched vestigators from the Office of the Insur- to the scene, given the very serious na- ance Fraud Prosecutor (OIFP) for six ture of the call. When the police arrived full days at the time the owner reported at the scene moments later, the victim the carjacking, having been purchased excitedly described in detail the armed from a street-level middleman during and dangerous carjacker, how he stuck Operation Give and Go, a pro-active the gun in the victim’s face, how he undercover initiative by OIFP to con- took his car. front the growing problem of owner A witness also volunteered that he “give-ups” and stolen automobiles in had seen the whole thing, confirming northern New Jersey. the car owner’s story. Despite a diligent To conduct the investigation, un- search, the Newark police could not dercover OIFP investigators gained ac- find the owner’s car or the carjacker. cess to middlemen who traffic in owner Later, the owner, a computer program- “give-ups,” where the owner literally mer for a major corporation, filed a “gives-up” the vehicle to someone else theft claim with his insurance carrier for with the understanding the vehicle will the total theft loss and the carrier paid “disappear,” allowing the owner to file a over $16,000 on the claim. false theft claim and fraudulently col- Only, there was no carjacking, and lect insurance benefits for the alleged

9 OIFP Targets Fraud Rings

State Investigators Marc Cofone and Jose Vendas examine a seized vehicle.

What Is Being Done About Insurance Fraud?

The New Jersey Office of the Insurance Fraud Prosecutor (OIFP) leads New Jersey’s fight against insurance fraud. Created by the New Jersey Legislature on May 19, 1998, pursuant to the provisions of the Automobile Insurance Cost Reduc- tion Act (AICRA), OIFP was established as a law enforcement agency within the Division of Criminal Justice in the Department of Law and Public Safety to adminis- ter a comprehensive and well integrated program to investigate and prosecute insurance fraud as effectively and efficiently as possible. Accordingly, OIFP was vested under AICRA with authority and responsibility for investigating all types of insurance fraud and for conducting and coordinating criminal, civil and administrative investigations and prosecutions of insurance and Medicaid fraud throughout New Jersey. To provide for the most effective and well integrated statewide strategy possible to combat insurance fraud, OIFP’s authority under AICRA includes responsibility for the oversight of all anti-insurance fraud efforts of law enforcement and other public agencies and departments in New Jersey, as well as appropriate coordination with private industry. Where fraud has occurred, OIFP pursues criminal prosecutions and civil sanctions, including prison sentences, monetary penalties and, in the case of professionals, permanent license revocations. In addition to traditional law enforcement functions, OIFP offers a comprehensive roster of programs to inform the public, train law enforcement officers and marshal resources of the public and private sectors to eradicate fraud.

10 loss. To lend an air of legitimacy to the operation, OIFP rented a garage in Jer- What Is sey City, completely outfitted with tools and auto parts, where the middlemen could bring the cars to the undercover Auto Insurance Fraud? OIFP investigators. Unbeknownst to Auto Insurance Fraud? would-be insurance cheats, however, the garage was also fully equipped with concealed audio and video re- Auto insurance fraud occurs when a person deceives an insurance provider corders to memorialize all activity at to collect money to which he is not entitled or to avoid paying the appropri- the shop. As a result of this initiative, ate amount of premiums. Providing false or misleading information in sup- OIFP State Investigators conducting port of a claim, on an insurance application, or in an application for an en- Operation Give and Go recovered 46 dorsement or policy renewal constitutes an act of insurance fraud. Submitting automobiles and SUVs, with a total any type of false or altered receipts, bills, repair estimates or any inaccurate value of approximately $1 million, and documents to support a loss, expense or injury is insurance fraud. Buying or 28 middlemen and “give-up” owners, selling a fake automobile insurance identification insurance card is another including the owner and friend who form of insurance fraud. faked the carjacking, were indicted for their roles in the conspiracy and thefts. Operation Give and Go is but one The most common kinds of example of many exciting and suc- auto insurance fraud in New Jersey include: cessful investigations conducted by OIFP-Criminal in 2003. Whether crack- – Fake or exaggerated injury claims ing a staged motor vehicle theft or ac- – Phony auto theft claims cident or arson-for-hire ring, or expos- ing an unscrupulous health care pro- – Staged accidents vider billing an insurance carrier for – False billing by medical providers services never rendered, or arresting a – Lying on an application for insurance dishonest insurance broker stealing premium monies, the successes of the – Using a fake automobile insurance identification card investigations in OIFP-Criminal were many and varied. In State v. Iris Salkauski, for instance, 49 defendants In New Jersey insurance fraud is a serious crime punishable by were indicted for staging car accidents significant criminal and civil penalties including jail time. in Camden County and filing fraudulent Personal Injury Protection (PIP) claims totaling $567,940 for fictitious injuries. Undercover law enforcement of- Here is What You Can Do ficers ultimately infiltrated the ring by Be aware. If a car suddenly pulls in front of you, forcing you to follow too posing as participants in one of the closely, someone may be setting you up for a staged accident. If you are in- staged accidents. volved in an accident, call the police. Record the license plate, driver’s li- The leader of that staged accident cense number, insurance information and identities of all involved, including ring, Iris Salkauski, attempted to thwart passengers and witnesses. Beware of unsolicited offers from one or more law enforcement’s efforts to bring her strangers who may contact you after an accident recommending a medical to justice by fleeing New Jersey after provider or an attorney. This unsolicited help could be the work of a fraud ring. she was indicted. As a result, If you think you are a victim of fraud, immediately contact your insurance com- Salkauski was placed on New Jersey’s pany and the New Jersey Office of the Insurance Fraud Prosecutor. Ten Most Wanted List and was tracked down to a house in Florida where officers found her cowering in a bedroom

11 OIFP Targets Fraud Rings

Attorney General Peter C. Harvey announces that Iris Salkauski, indicted leader of a “staged accident” insurance fraud ring, is one of the Division of Criminal Justice’s “Most Wanted” fugitives. The ”Appre- hended” designation in the Salkauski “Wanted Poster” tells the rest of the story. Within weeks of her indictment, Salkauski was apprehended, hiding in a closet inside a Florida residence. Salkauski’s arrest was secured through the efforts of the New Jersey/New York Fugi- tive Task Force, an unprecedented law enforcement initiative, spear- headed by the New Jersey Division of Criminal Justice, which combines the resources, intelligence gathering apprehended capabilities, investigative information and expertise of 50 law enforcement agencies and more than 150 federal, state, county and local law enforcement officers.

12 closet. Upon her return to New Jersey, this time with an OIFP-Criminal escort, What Is she pled guilty and was sentenced on November 14, 2003, to five years in State prison for her crimes. Most of the Health Insurance Fraud? other defendants in the case have also Health Insurance Fraud? pled guilty and have been sentenced to Health insurance fraud occurs when a person deceives a health coverage provider terms of imprisonment or probation. in order to collect money to which he is not entitled, to avoid paying the appropriate OIFP-Criminal investigations also amount of premiums or to obtain coverage for which he is not eligible. Providing targeted arson-for-hire rings in 2003 false or misleading information about being an employee or a member of a with great success. By way of example, union or other group to pay lower premiums, concealing a pre– existing medical in State v. Rossi, OIFP investigators condition at the time of application or submitting any type of false medical bill, cracked an arson-for-hire ring in Mer- receipt, diagnosis, treatment or service to a health insurance provider is health cer County responsible for at least six insurance fraud. arson fires which were set in resi- The most common kinds of health insurance fraud dences or businesses for the purpose in New Jersey include: of collecting insurance money. Marc Rossi, the ringleader and owner of an Provider Fraud insurance claims adjusting service, – Billing for services not provided pled guilty to conspiracy to commit ar- – Billing for more expensive services than were provided (known as “Upcoding”) son, theft by deception and other – Billing for separate procedures which must be billed collectively (known as charges. In pleading guilty, Rossi ad- “Unbundling”) mitted to either planning or participat- – Providing treatments or services which were not medically necessary ing in setting the fires which resulted in – Billing an insurer for services which the patient believes are free or complimentary various insurance carriers paying out – Billing for services rendered beyond the scope of a provider’s license over $530,000 in property damage Patient Fraud claims. Under the terms of his plea – Submitting claims for services or treatments not provided agreement, Rossi faces ten years in prison and must make full restitution to – Submitting altered or forged receipts for reimbursement – Having a medical provider misrepresent diagnosis or treatment to pay for something the insurance carriers for his role in the which is not covered scheme. All of the other participants in – Lying about residency to obtain or to keep New Jersey health insurance the arson-for-hire conspiracy have also pled guilty, including three who were Business Fraud sentenced to State prison and three – Creating a fake group or organization to obtain less expensive group coverage more who were sentenced to probation. – Adding family members or other individuals who are not employees or members of In 2003, OIFP-Criminal investiga- a group to a group policy tions also targeted dishonest health What Does It Cost? care providers. In State v. Tsilionis, for Health Insurance Fraud costs Americans $54* billion a year and accounts example, OIFP-Criminal indicted for up to 10% of the annual expenditure on health care in the U.S. Studies also show George and Lisa Tsilionis, husband that for every 1% rise in insurance premiums approximately 400,000* more people and wife chiropractors, charging them nationwide will not be able to afford health insurance. with conspiracy, health care claims * National Health Care Anti-Fraud Association fraud and money laundering for or- Here’s What You Can Do chestrating an alleged insurance fraud Always review the Explanations of Benefits you receive from your health coverage scheme which billed dozens of insur- carrier. The EOB reflects bills submitted by your medical provider for services and ance carriers more than $1.2 million for treatments which you have received and states what was paid to the provider. phony chiropractic “treatments” or Always verify that the charges accurately reflect the correct treatments, services, other services that were never pro- dates and medical equipment provided. If something doesn’t seem right or you have vided. To perpetrate the fraud, OIFP- any questions, call your health coverage provider. Criminal alleged that, over a three year

13 OIFP Targets Fraud Rings

period, the chiropractors regularly sub- surance premium money from an elderly mitted insurance claims supported by client. In State v. Robinson Barleycorn, falsified chiropractic treatment records the defendant pled guilty to the theft of and diagnostic testing results, resulting more than $300,000 in insurance premi- in the carriers paying over $430,000 for ums from his client, a tugboat company. non-existent treatments and services. Barleycorn was sentenced to probation The case is pending trial. but also served ten months in jail for the Dishonest insurance brokers also theft. In State v. Harry DelBosco, the de- kept OIFP-Criminal busy in 2003. In fendant pled guilty to the theft of State v. Robert Massa, the defendant, $887,000 of his clients’ insurance premi- an insurance agent, was sentenced to ums and was sentenced to five years in a five year jail term for his role in a State prison. complex scheme to fraudulently obtain All in all, the types of cases investi- insurance premium finance monies in gated by OIFP-Criminal are limited only excess of $5 million from various fi- by the imaginations of the criminals in- nance companies. In State v. Douglas volved. The case of State v. Daouda Ross, the defendant stole over Traore is another good example of the $140,000 of his clients’ insurance pre- lengths to which a thief will go to steal miums. Ross pled guilty and was sen- insurance proceeds. In that case, the tenced to probation but also served defendant filed claims for death benefits 396 days in jail for his crimes. In State of more than $400,000 under several v. Odell Coleman, the defendant was life insurance policies claiming the sentenced to four years in State prison deaths of his wife and son in a car acci- for stealing more than $100,000 in in- dent in Africa. To support his claim,

Criminal Convictions

204 200 154 150

100 86 78 75

Number of Convictions 1999 2000 2001 2002 2003 Year

14 Individuals Charged Criminally By Indictment or Accusation

337

250 225

150 134 118 86

Number of Individuals Charged 1999 2000 2001 2002 2003 Year

Traore submitted hospital records, charged and convicted, to the amount of death certificates and police reports. restitution recovered for the victims of in- However, an investigation revealed the surance fraud and related crimes. This documents were fictitious, and so, too, trend is expected to continue, leading to were his wife and son. When con- similarly stellar results, based on the tire- fronted, Traore admitted he created his less efforts of OIFP-Criminal investigators “wife” and “son” out of whole cloth for and attorneys, and the ofttimes seem- the sole purpose of fraudulently obtain- ingly endless parade of greedy and cor- ing life insurance benefits. Following an rupt defendants which OIFP doggedly investigation by OIFP-Criminal, Traore pursues. pled guilty to theft by deception and was sentenced to a term of probation. These are but a few of the hundreds Michael A. Monahan is a Deputy Attorney of successful insurance cases brought General in the Office of the Insurance Fraud by OIFP against insurance cheats in Prosecutor where he has served as the As- 2003. These and many other cases sistant Section Chief of the Auto Fraud Sec- brought by OIFP in 2003 are discussed tion since 1999. He previously served as an at greater length in the Insurance Fraud Assistant Prosecutor with the Union County Case Highlights Section of this Report. Prosecutor’s Office for seven years. Overall, 2003 was an unequivocal success for OIFP-Criminal, with in- creases over previous years across the board, from the number of indictments returned, to the number of defendants

15 OIFP Prosecutions Prove Corrupting Influence of “Runners” on Health Care System OIFP’s Prosecutions Prove Corrupting Influence of “Runners” on Health Care System

by by John JJJohn . SmithSmith. , JrJr, ... Since your automobile accident Doctor: last month, you have been treating with Oh, you’re a sweetheart. a medical provider around the corner from your home. While you are waiting Woman: to be taken back to a treatment room, Ok. the provider’s phone rings and you Doctor: overhear an exchange between the Thank you very much for thinking provider and a woman on the other about us. end of a speaker phone:

Woman: As your treatment concludes and you leave the provider’s office, a We’re playing phone tag. woman, whom you assume to be an- Doctor: other patient, is entering the office. You Listen, why don’t you send that patient go about your business for the rest of in and I’ll talk to you later in person. the day, and don’t give a second thought to either the odd snippet of Woman: conversation you overheard or to the Okay, my love. person who entered the provider’s office as you departed. Doctor: Unbeknownst to you, however, the I’ll definitely be in. woman who entered the provider’s office as you left, is the same person Woman: whose voice was on the other end of I’m sending two in, ok?

17 OIFP Prosecutions Prove Corrupting Influence of “Runners” on Health Care System

the speaker phone as you awaited Woman: treatment. Now, in your absence, their Ok, you owe me fifty and three fifty for conversation continues: each of the guys... Woman: Doctor: How you doing, sweetheart? Three fifty each?

Doctor: Woman: I thought you lost me and didn’t love Yep. me anymore. Doctor: Woman: First of all V. is not coming in. How are things? Good? Woman: Doctor: M. said Friday was the last day he How you doing? You look good. Thank came in. you for referring those patients in. I ap- preciate that. Were they both in the Doctor: same accident or separate ones? Yeah, he came. He says there’s nothing wrong. We can’t, we can’t do it. Woman: We’ll end up in jail if we do. The new No, same one. days with insurance companies, tells us, they say, what’s wrong with the pa- Doctor: tient. The patient says there is nothing We can send them to an attorney, wrong with them. We don’t, we can’t, alright?..Just give me a couple of we can’t do that. weeks and I will... Woman: Woman: And he’s saying there is nothing wrong Even with the attorney? with him? Doctor: Doctor: Even with the attorney. It’s different, it’s Yeah, he hasn’t been in here since. He different, it’s different with all the pre- came in four times; he came in ten cert [Pre-Certifications]...So I owe you times and he has not been here since, two and? since last month. I can’t, I’m gonna lose money on that. There’s no way he Woman: makes three fifty on that. The other one No, you said to me three, you were go- looks good, coming in frequently, but ing [to] give me one and two later. he’s on vacation in Puerto Rico. Doctor: Woman: It’s two fifty, that’s all I have in my Let me ask you something, suppose I pocket right now. talk to V.? Woman: Doctor: You owe me! It’s not gonna work, you see, it’s Doctor: the new stuff, the new stuff. It’s not I owe you fifty... like usual.

18 Woman: Woman: No, I know. I know. Que stupido, uh! How the hell does he expect to get a lawsuit? Stupid. Doctor: Before you just walk in, write your Doctor: name, and get out. Now it’s all pre- But listen, I can’t give you three fifty for certification. The insurance companies every f___ing patient, you know investigate everything. They spend a that?...When he comes back the next lot of money, the doctors examine ev- time, the insurance companies, we try ery patient...But, you know, I tell the to get them in two times a week, actu- doctor whatever the patient says that’s ally, yeah, the insurance company will it. I try not to treat the patient anymore treat him one more time and that’s it. if he says there’s nothing wrong with As per...they tell us how to treat them him. You know why? and we can’t. We have to pretend everybody is an investigator that walks Woman: through the door. I know, my doctor used to tell me, “Hey, he said nothing hurts.” I said, “I’ll Woman: take care of him.” Oh, yeah, definitely. Doctor: Doctor: I don’t want my name on the front page ...Before, before I made money. Now of The Star Ledger and that’s what’s we’re just trying to make things work; gonna happen now. They call it fraud. we’re just trying to pay bills. It’s differ- Fraud is very serious and you know ent, it’s different. what, when the f___ing police come through the f___ing door, he’ll be talking Woman: like a parrot about you and me. Ok... Woman: Doctor: Who? And I have other doctors too, that we have... Doctor: If somebody, if the police come through Woman: the door and they say, “Listen you’re If V. come in, just discharge him, if he coming in here and saying there’s noth- comes in the next time. ing wrong with you, why you treating?” Doctor: Woman: J.’s good, we keep going with There’s no way of getting? J. J.’s good... Doctor: Woman: There’s no f___ing way! And I don’t Ok. want it. I don’t want them in my door. I Doctor: can’t treat someone if there is nothing Yeah, we got to do it...cause we’re wrong with them. gonna be in business here and we’re gonna be talking ten years time, you and me, you know that?

19 OIFP Prosecutions Prove Corrupting Influence of “Runners” on Health Care System

Woman: Woman: I hope so. Well, let me see what comes up. Doctor: Doctor: Yeah, you got any more juicy stuff for The secret is to stay on top of it before me? you can say, “I gave you a name.” Now you have to stay on top of these Woman: son of bitches, “that’s my job right now, No, I was gonna say, why don’t you I’m here, they treat the patients, do the stop the guy that you saw had an acci- paperwork, I’m making sure they do dent today. Can you do that? everything per...” Doctor: Woman: He spun off the road. I was doing 70 By the book. miles an hour, spun off, you know, they got a big divider like this, but it’s all Doctor: woods. By the book, ‘cause if they don’t...they come in once in a while, insurance Woman: companies will not pay. I could treat Where were you? them forever, we’re not getting paid ...You got more for me? Doctor: I was on 78 coming eastbound, way Woman: out. There were cops everywhere. Yeah, this is the situation...This is the car number one and happens to be the Woman: same last name of the other driver. It Oh no, no, no. You can’t. may seem they’re all the same family, Doctor: but they’re not family, Ok? Yeah, if it was local, I’d get out of the Doctor: car, sure. That could be suspicious! ... They Woman: could investigate this! ... I’ll tell you (Laughing) what, I’ll take it only if an attorney will take it ... That’s two and a half, that’s Doctor: for... Are you kidding me, it’s an opportunity, soliciting business, but you know it’s Woman: not really bad. No, I don’t think it is, is Two and a half? It was three and a it? That’s probably legal? half. What’s up? Woman: Doctor: Yeah, I know. They always used to do No, it’s two and a half. that, that’s the way they have these Woman: people out there. They have them No, no, no. This is what you did to me standing in front of the house, “Hey, last time. you injured? I got a doctor for you.” (Laughing) Doctor: For K.H., alright, I’ll give you three. Doctor: I know. Woman: That’s what you did to me last time.

20 You knocked me down. ever pretend not to know a patient or client may be lying about his injuries, or Doctor: about continuing to need medical care, No, I give everybody the same price ... so they can submit insurance claims? Tomorrow I got lunch with this girl, she’s Perhaps it surprises you to hear the an attorney, and I’ll send her that pa- medical provider in this case say he tient. She’s a good attorney, she fights would not take a case unless an attor- like a dog. ney also took it? Can it possibly be By now, it is obvious that the that the provider believes the lawyer is woman whom you assumed to be a pa- more capable of diagnosing a patient’s tient did not come to the provider’s of- injuries than the provider himself? fice simply because her back was ach- It may come as a surprise to you ing. Rather, she is working for your that the medical provider and the “run- medical provider. She is what is known ner” discuss how much money the pro- in law enforcement and insurance vider is willing to pay to “buy” a patient. circles as a “runner.” In return for an il- It may surprise you to learn that the legal kickback or “referral fee,” she pro- provider is worried about being investi- cures people who are injured, or pur- gated for fraud. And it may surprise portedly injured, in an accident, as pa- you to learn that the provider and the tients for medical providers or “runner” discuss lawsuits, attorneys, as clients for lawyers who represent the number of times a patient can be injury claimants. treated, and whether an insurance While you mistakenly assumed the company will pay for those treatments. woman to be a patient of your medical It may also surprise you to learn provider, the medical provider was also that the medical provider considers the mistaken. The woman he believed was payments he gives to the “runner,” a “runner,” was actually cooperating whether $200, $250, $300, $350, or with the Office of the Insurance Fraud more, to be part of his overhead, his Prosecutor (OIFP) in an undercover in- cost of “doing business.” Might this surance fraud investigation. And the medical provider be thinking about his conversations to which you have just increasing overhead costs when decid- been privy were taken directly from a ing whether you should receive addi- transcription of those conversations, tional treatment or medical supplies, or which were secretly recorded by OIFP when he is preparing bills to submit to investigators. your insurance company for payment? It may surprise you to learn that the When they study “tort” law, the law medical provider in this case considers that governs automobile accident inju- patient “J” to be a good patient, not be- ries and other types of negligent or in- cause he is responding well to therapy, tentional wrongs, law students are but because he keeps returning for taught that, “for every injury there is a treatments. It may surprise you to hear remedy,” a right to a lawsuit. Similarly, your medical provider say he “tries” not there are some in New Jersey who be- to treat patients anymore if they say lieve that “runners” perform a valuable they are not really injured and do not public service by simply advising really need to be treated. Perhaps hear- people of their “rights.” There are ing a medical provider say this causes those who believe that “runners” do you to wonder whether some patients little more than advise people of their might even lie about their injuries? right to receive treatment paid by insur- Perhaps you wonder whether “run- ance proceeds and to file a lawsuit for ners,” medical providers, and lawyers “pain and suffering” following an auto-

21 OIFP Prosecutions Prove Corrupting Influence of “Runners” on Health Care System

mobile accident. However, OIFP’s experi- censed chiropractor, owned, operated ence investigating and prosecuting “run- and controlled a string of New Jersey ners” suggests otherwise. OIFP’s experi- chiropractic clinics and employed the ence suggests that “runners” do far more chiropractors who worked in the clinics. than merely advise people of their “rights.” He allegedly also employed “runners” In New Jersey, “runners” commonly whom he paid to stage fictitious acci- commit serious crimes. Among the dents, as well as real accidents, by ac- crimes which “runners” in New Jersey tually crashing cars into innocent, un- commit are: suspecting drivers. His “runners” also re- – paying bribes to police officers to cruited persons, including children, to be write phony police reports; occupants of those cars, in order to produce a steady stream of patients for his – paying bribes to police officers to expe- chiropractic clinics. Automobile insur- dite police reports so the “runners” can ance companies were billed millions of quickly “recruit” people to become clients, dollars in claims through this illicit enter- patients, and insurance claimants; prise. As a result of OIFP’s investiga- – falsely adding people’s names to po- tion, however, he was eventually charged lice reports and other records to reflect with a number of crimes, including rack- that they were involved in an automobile eteering and is awaiting trial. accident when, in fact, they were not; It may also come as something of a – paying people to purposely cause, or surprise to learn that “runners” in New become involved in real or fictitious auto Jersey come from all walks of life. They accidents so they can treat and then are police officers and dispatchers, doc- submit phony insurance claims; tors and their office managers, private in- – intentionally causing real automobile vestigators, disbarred lawyers, ambu- accidents so as to ensure a steady lance drivers and other providers of medi- stream of clients, patients, and insur- cal transportation, and owners of medi- ance claimants; cal supply businesses. Then, there are the others, those who engage in no – staging fictitious automobile accidents other known occupation, trade, or pro- by reporting them to police as fession other than that of being a “run- if they actually occurred, and by plac- ner.” Many “runners” manage to develop ing broken automobile parts on the significant “tax free” income by simply street to make it appear as if an ensuring that attorneys and doctors have accident occurred; an endless stream of clients and pa- – pressuring medical providers and law- tients covered by automobile insurance. yers by promising that, for a fee, they Many “runners” even go so far as to ob- can produce a steady stream of clients, tain automobile insurance for those they patients, and insurance recruit as patients and clients. claimants; and Other states have attempted to – enticing people, who otherwise are not pass legislation outlawing “running,” al- inclined to treat for minor injuries, to lie beit unsuccessfully. In Pennsylvania, about their injuries, to treat for them, to lawyers were prohibited from paying re- consult with lawyers, to submit insur- ferral fees for clients, but the Pennsyl- ance Personal Injury Protection (PIP) vania Supreme Court ruled that, be- claims, and to file lawsuits. cause only the Pennsylvania Supreme In perhaps one of the most shocking Court has the legal authority to regu- prosecutions involving “running” to date, late the conduct of attorneys in the a young man, who was not even a li- Commonwealth of Pennsylvania, the

22 Pennsylvania Legislature could not con- a violation of a professional code of eth- stitutionally pass a statute prohibiting ics is not required to prove the crime of lawyers from engaging in conduct which criminal use of “runners.” was tantamount to “running.” Though the Legislature did not spe- In Florida, a “runners” statute out- cifically so state when it passed the lawing such conduct was declared un- “Criminal Use of Runners” statute, the constitutional because the statute did policy reasons underlying the “runners” not require proof that the fraudulent statute are evident. Billions of dollars are claims were submitted in connection spent each year on health care, includ- with the conduct constituting “running.” Other states have attempted to regulate “running” by prohibiting the contacting of a prospective client, patient, or insurance claimant within a certain specified time period after the occurrence of an accident. On July 12, 1999, the New Jersey On July 12, 1999, the New Jersey Legislature addressed Legislature addressed the serious problem of “running” and the adverse impact it has on the State’s insureds the serious problem of “running” and the adverse impact it and insurers by passing the “Criminal Use of Runners” statute. In New Jer- has on the State’s insureds and insurers by passing the sey, it is now a crime for a person, for a pecuniary benefit, to procure or attempt to procure, a client, patient, or cus- “Criminal Use of Runners” statute. tomer at the direction of, request of, or in cooperation with an attorney, health care professional, owner or operator of a health care practice or facility, if the purpose is to seek to obtain benefits under a contract of insurance or to as- sert a claim against an insured or an ing both general health insurance and insurance carrier for providing profes- the Personal Injury Protection (PIP) in- sional services to the client, patient, or surance coverage provided by automo- customer. The statute does, however, bile insurance policies to cover the provide exceptions for authorized pub- costs of treatment for those injured in lic advertising and for referrals other- automobile accidents. It has been esti- wise authorized by law. mated that at least ten percent of In contrast to the manner in which these costs can be attributed to fraud. Florida attempted to prohibit the Many of those in the insurance industry scourge of “running,” the New Jersey who are familiar with the problem be- Legislature unequivocally declared that lieve that the amount attributable to the crime of “running” is complete, in fraud is far greater. and of itself, when there is proof be- That the criminal use of “runners” yond a reasonable doubt that a person by medical providers and other profes- knowingly acts as a “runner,” or uses, sionals leads to insurance fraud is unde- solicits, directs, hires or employs an- niable. More often than not, in its various other to act as a “runner.” In New Jer- manifestations, it results in sey, additional proof of fraud, theft, overutilization of insurance benefits, in- forgery or similar criminal conduct, or of cluding the ordering of unnecessary di-

23 OIFP Prosecutions Prove Corrupting Influence of “Runners” on Health Care System

agnostic tests and courses of treatment driving that endangers innocent and of questionable medical validity, billing unsuspecting motorists. for professional medical services not ren- While many licensed providers, in- dered, and billing for more expensive cluding attorneys, are subject to a code professional medical services than those of ethics which limits or restricts profes- actually rendered, to mention but a few. sional relationships with “runners,” Among the more egregious types of other professional providers are not fraud engendered by the use of “runners” subject to any professional code of eth- are the staging of car accidents to cre- ics that would prohibit, limit, or other- ate and maintain a ready pool of persons wise restrict them from working with to become clients, patients, customers, “runners.” Indeed, “runners” are often and insurance claimants; the fabrication not licensed professionals, them- of “paper automobile accidents” by falsi- selves, and, thus, are not subject to fying police accident reports; and the any code of professional ethics. payment of bribes to police officers, po- By enacting legislation lice dispatchers, and other public offi- criminalizing the use of “runners,” the cials to procure automobile accident re- New Jersey Legislature has enabled a ports as quickly as possible to recruit more effective prosecution of criminally those listed in the reports as clients, pa- culpable persons who act as “runners,” tients, customers, and insurance claim- and of medical providers or others who ants. use “runners” in connection with their The integrity of the insurance deliv- professional practices. Greatly empow- ery system requires that the profes- ered by the law against using “run- sional judgments of doctors and law- ners,” in 2003, OIFP returned indict- yers remain trustworthy and impervi- ments charging numerous persons ous to corrupting outside influences. with “running,” as well as with the re- The offering of a pecuniary benefit to a lated criminal conduct which is so fre- “runner,” however, or the receiving of a quently tied to “running,” such as the pecuniary benefit by a “runner” to so- staging of automobile accidents and licit prospective clients, patients, cus- the filing of fraudulent PIP claims. Per- tomers, or insurance claimants, adds haps most importantly, in 2003, OIFP “overhead” costs and provides a finan- obtained convictions and prison sen- cial incentive in connection with a tences for persons who engaged in health insurance and personal injury “running” and related criminal activities. insurance transaction that corrupts the These cases and others are detailed in professional judgment of providers. the Insurance Fraud Case Highlights The financial incentives paid to, Section of this Report. or received by, “runners” often ultimately induce people who are not injured, or who are only slightly injured, to seek costly medical treatment John J. Smith, Jr. is the First Assistant when they would not have otherwise Insurance Fraud Prosecutor and assists been inclined to do so. These cor- the Insurance Fraud Prosecutor with all rupting financial incentives also fre- facets of the Office’s operations including quently induce “runners” to engage in its investigations, criminal prosecutions and civil litigation. He is a 19 year fraudulent conduct such as paying veteran prosecutor with the Division bribes, paying people to participate in of Criminal Justice. staged or fictitious accidents, and, in some cases, causing automobile accidents by dangerous and reckless

24 25 Pharmacy Scams Busted

26 Pharmacy Scams Busted by OIFP’s Medicaid Fraud Section

by John Krayniak The Medicaid Fraud Section of the the MCOs a negotiated amount for Office of the Insurance Fraud Prosecu- each beneficiary each month called a tor (OIFP) counted numerous crooked “capitation rate.” The MCOs provide pharmacists among those it success- most pharmaceutical products as part fully investigated and prosecuted in of the capitation rate. However, expen- 2003. It also successfully targeted a sive drugs are excluded, or carved out, variety of other scams perpetrated by of the capitation rate and the State dishonest providers of medical goods pays the MCO the equivalent of the and services to bilk our State’s Medic- fee-for-service costs. aid Program of hundreds of millions of OIFP’s Medicaid Fraud Section dollars. Because losses to the Program has responsibility for investigating and resulting from such scams are ulti- prosecuting all types of fraud against mately paid by taxpayer dollars, these the Medicaid Program. Of the many fraud artists “pick our pockets” every types of fraud that people try to commit time they succeed in obtaining reim- against New Jersey’s Medicaid Pro- bursement for a phony bill. gram, frauds involving prescription The New Jersey Medicaid Program drugs are among the most common contracts with five Managed Care Or- and costly. Pharmaceutical costs to the ganizations (MCOs) to provide Medic- New Jersey Medicaid Program ex- aid benefits to beneficiaries living in ceeded $738,000,000 in 2002. While certain geographical areas and is re- Congress hotly debated extending pre- quired to provide the same level of ser- scription drug benefits to Medicare vice of care, including pharmaceutical beneficiaries over the past year, the products, that the Medicaid fee-for-ser- Medicaid Fraud Section of OIFP was vice program provides. The State pays actively engaged in combating all man-

27 Pharmacy Scams Busted

ners of fraud involving pharmaceutical medications on forged prescriptions. secure lab billings from the Medicaid products. In 2003, the Medicaid Fraud These efforts resulted in the recovery Program worth more than $1,000,000. Section routinely encountered pharma- of $6,017,371, the conviction of seven Malik had been sentenced to five years cists who scheme to steal from the individuals, including three registered in State prison for the scam. Medicaid Program in a variety of ways. pharmacists, and the imposition of sen- Some of the scams crooked phar- tences which included two commit- The following cases illustrate macists, in particular, have attempted, ments to State prison. Two of the three some of the Medicaid Fraud include billing for “refills” of prescrip- registered pharmacists who were con- Section’s enforcement efforts in tions which patients have not refilled, victed also lost their pharmacist li- 2003 addressing frauds by phar- billing Medicaid for phony, fictitious or censes for a minimum period of one macists, or involving overbilling forged prescriptions never ordered by year at the time of sentencing and for prescription drugs: any physician, billing Medicaid for the each was referred to the Board of Steven Aberbach, a registered phar- full cost of prescription drugs pur- Pharmacy for further licensing action. macist and owner of the Springfield chased by pharmacists on the “black In one of the most significant crimi- Pharmacy in Union County, pled guilty market” for far less than their fair mar- nal court decisions of 2003, New in December to committing health care ket value, billing for unfilled or aban- Jersey’s Appellate Court upheld the con- claims fraud by billing Medicaid for pre- doned prescriptions, and billing for viction and jail sentence of Mohammad scriptions he did not dispense to Medic- extemely costly prescription medicines Saleem Malik, the mastermind of a Med- aid beneficiaries. Aberbach also ex- which are not medically warranted. icaid kickback scheme. Ruling in favor of ecuted a Consent Order pursuant to The Medicaid Fraud Section’s en- the State, the Court held that New which he agreed to pay $100,000 in res- forcement efforts in 2003 included ac- Jersey’s corporate misconduct statute, titution and a $100,000 false claims pen- tions against pharmaceutical manufac- N.J.S.A. 2C:21-9c, applied to Malik’s alty to the Medicaid Program. He also turers, retail pharmacies and registered misdeeds when he used Venditti Labora- surrendered his license as a Registered pharmacists and individuals who used tory, a corporation, to pay co-conspira- Pharmacist and was debarred as a Med- Medicaid cards to pay for expensive tors more than $300,000 in kickbacks to icaid provider for 12 years. He was scheduled for sentencing early in 2004. Kwadwo Osei Agyemang, a regis- Springfield Pharmacy was used by its owner to bilk the tered pharmacist, was sentenced to Medicaid Program through false prescription billings. two years probation and ordered to pay $27,000 in restitution and an additional $27,000 in penalties to the Medicaid Program. Agyemang was also debarred from the Medicaid Program for a minimum period of five years. Agyemang was the owner and registered pharmacist in charge of Victory Pharmacy in Newark, New Jersey. He admitted that he billed the Medicaid Program for prescription drugs that were not dispensed. Registered pharmacist, Jennifer Kim, the owner of Medicine Shop Pharmacy located in North Arlington, pled guilty to one count of Medicaid fraud. She admitted that she defrauded the Medicaid Program of over $16,000 by billing for prescriptions that were never filled and never dispensed to Medicaid beneficiaries. She was sentenced to a term of probation and ordered to make restitu- 28 tion to the Medicaid Program. Her license as a registered pharmacist was also suspended. Auto Insurance Fraud? Adebowale Oyenusi, a registered pharmacist who was the president and sole owner of Quickscript Pharmacy in East Orange, was found guilty of theft by deception and Medicaid fraud by an Essex County jury. The evidence presented at trial showed he defrauded the Medicaid Program of more than $167,000 by submitting claims to the Medicaid Program for prescriptions he knew were forged. The corporate defendant, Quickscript Pharmacy, was also found guilty of theft by deception and Medicaid fraud. Sentencing is pending for both defendants. Matthew Faenza, a registered pharmacist and the owner of McDermott’s Pharmacy in Paterson, was sentenced to four years in State prison. This fol- lowed his guilty plea to an Accusation which charged him with one count of Pharmacy shelves labeled as evidence by OIFP State health care claims fraud. He admitted Investigators in a criminal investigation. billing the Medicaid Program for dispensing an expensive anti-AIDS medi- aid Program. All of the defendants have cation, Serostim, to Medicaid benefi- pled guilty with the exception of ciaries when, in fact, he did not dis- Khawaja, who is pending trial. pense the medications. At the time of sentencing, Faenza paid $450,000 in Milton Barasch, a registered pharma- restitution to the Medicaid Program. cist, pled guilty to one count of an indictment which charged him with Michael Pacheco, a pharmacy techni- health care claims fraud. He admitted cian and employee of McDermott’s that while employed as a pharmacist at Pharmacy, was sentenced to two years S. Brothers Pharmacy in Newark, New probation following his guilty plea to an Jersey, he facilitated others in submit- accusation charging him with Medicaid ting claims to the Medicaid Program fraud. He admitted he assisted his that were based on forged prescrip- employer, Matthew Faenza, in submit- tions. His sentencing is pending. ting claims for prescriptions that were not dispensed. Azam Khan, an employee of S. Broth- ers Pharmacy in Newark, New Jersey, The State Grand Jury returned an in- pled guilty to one count of an indictment dictment charging Shahid Khawaja, which charged him with health care Dr. Axat Jani, Milton Barasch, a reg- claims fraud. He admitted that he par- istered pharmacist, and Azam Khan ticipated in a scheme to submit claims with conspiracy and theft by deception to the Medicaid Program that were for their submission of more than based on forged prescriptions. His $293,815 in false claims to the Medic- sentence is pending. Both he and

29 Pharmacy Scams Busted

Milton Barasch admitted that they billed The State Grand Jury returned an in- the Medicaid Program for more than dictment which charged Michael $293,815 for medications that were not Stavitski, a registered pharmacist, with dispensed. submitting more than $1.3 million in false claims to the Medicaid Program. Dr. Axat Jani pled guilty to one count The State Grand Jury also charged four of an indictment charging him with corporate defendants, pharmacies that health care claims fraud. He had been Stavitski owned. They are Belmar Home- charged along with Milton Barasch, town Pharmacy in Belmar, Wall Phar- Azam Khan and Shahid Khawaja, the macy in Wall Township, Avon Phar- owner of S. Brothers Pharmacy. At his macy in Avon by the Sea, and Spring guilty plea hearing, Jani admitted that Lake Heights Pharmacy in Spring Lake he wrote false prescriptions in the Heights. Stavitski and the other defen- names of Medicaid beneficiaries who dants pled guilty to second degree had visited his clinic in Newark. He health care claims fraud. sold those prescriptions and the Medic- aid beneficiaries’ identification num- Howard Williams III of Jersey City was bers to Khawaja and Barasch. His sen- sentenced to four years in State prison tencing is pending. and ordered to pay $75,388 in restitution to the Medicaid Program. He admit- A registered pharmacist, Kenneth ted that he submitted forged prescrip- Horowitz, pled guilty to an accusation tions to several Hudson County phar- which charged him with Medicaid macies using other persons’ Medicaid fraud. He admitted that he and another cards and received expensive medica- registered pharmacist, Nino Paradiso, tions which he sold on the street. the owner of Singac Pharmacy and Surgical Supply, submitted more than Other examples of remedial ac- $35,000 in false claims to the Medicaid tions undertaken by OIFP’s Medic- Program. His sentencing is pending. aid Fraud Section in 2003 included cases where: The State Grand Jury returned an indictment charging Nino Paradiso, a The Medicaid Fraud Section partici- registered pharmacist and the owner of pated in a multi-state and federal Singac Pharmacy and Surgical Supply, settlement with Pfizer, Inc. Our State with health care claims fraud and Med- received $1.2 million dollars based on icaid fraud. It was alleged that a violation of the “best price” require- Paradiso and his co-conspirator, ment of the federal Medicaid drug re- Horowitz, submitted 103 false claims to bate statute. Pfizer’s liability was based the Medicaid Program and received on its acquisition of Warner-Lambert, the developer of Lipitor. The violations $35,000 they were not entitled to. occurred prior to Pfizer’s purchase of Paradiso and Singac Pharmacy’s trials Warner-Lambert. are pending. A corporate defendant, RX Pharmacy, Inc., formerly located in Jersey City, pled guilty to a one count Accusation which charged the corporation with Medicaid fraud. At the guilty plea hearing, a corporate representative admitted that false claims totaling more than $18,506 were submitted through RX to the Medicaid Program.

30 The Medicaid Fraud Section participated in a national settlement with Lifescan, Inc. Lifescan manufactures and sells blood glucose monitors and test strips. Health Insurance Fraud? Food and Drug Administration statutes were violated by Lifescan through the marketing of an adulterated and misbranded medical device. Our State recovered $293,282.40 in restitution and false claims penalties. Additional case summaries involving criminal prosections and civil lawsuits undertaken by the Medicaid Fraud Section in 2003 are set forth in the Case Highlights Sec- tion of this report.

John Krayniak is a 16 year veteran of the Division of Criminal Justice and has been the Supervising Deputy Attorney General of OIFP’s Medicaid Fraud Sec- tion for ten years. He previously served for eight years as a Deputy District Attor- ney in the Los Angeles County District Attorney’s Office.

31 OIFP Draws International Acclaim

32 OIFP Draws International Acclaim

by Stephen D. MooreMoore. New Jersey’s Office of the Insur- and its role as a national leader in ance Fraud Prosecutor (OIFP) has, America’s war on insurance fraud, since its birth as a fraud fighting OIFP’s Insurance Fraud Prosecutor was agency in 1998, emerged as an inter- invited to deliver a keynote address to national leader in the war on insurance the Asia-Pacific Fraud Conference in fraud. From its founding by the New Australia in September of 2003, where Jersey Legislature only five years ago she also led a workshop addressing to serve as the State’s designated health care fraud and conferred with in- leader in fighting insurance fraud, OIFP ternational insurance industry officials has rapidly evolved from a fledgling regarding OIFP’s programs and initia- agency faced with the daunting chal- tives. Following her appearance in Aus- lenge of addressing New Jersey’s in- tralia, the Insurance Fraud Prosecutor surance fraud problems to a highly and OIFP were the featured cover story specialized law enforcement agency, of the Fraud International magazine, recognized and emulated as a model which reaches readers throughout the for fighting insurance fraud, not only in United States, Europe, Asia, the Middle the United States but throughout the East and Australia. world. As a result, OIFP has been so- Upon her return from Australia, licited for guidance and input from during the first week of October, the In- other fraud fighting agencies, both here surance Fraud Prosecutor headed and abroad, and has been highly New Jersey’s Sixth Annual Insurance praised for its innovative efforts in New Fraud Summit of insurance industry, Jersey to combat insurance fraud at law enforcement and government ex- every level and on every front. ecutives, where OIFP’s record of suc- In recognition of OIFP’s successes cess in 2003 was similarly recognized

33 OIFP Draws International Acclaim

by fraud fighting officials from such na- fighting insurance fraud,” citing OIFP’s tional organizations in the United fraud fighting statistics from its biennial States as the Coalition Against Insur- statistical reports as leading the nation. ance Fraud (CAIF) and the National At the Summit, the Alliance of Ameri- Health Care Anti-Fraud Association can Insurers also recognized the “lead- (NHCAA). NHCAA’s Executive Direc- ership role” assumed by OIFP in its ef- tor, in particular, praised OIFP as a forts to fight insurance fraud and de- “shining example of what can be done, scribed New Jersey as “a national not only at the state level, but at the na- leader in fighting insurance fraud.” tional level, to combat insurance Later in October, OIFP was named fraud.” He also described OIFP as a as a national finalist by the Interna- “genuine national leader” in our tional Association of Chiefs of Police country’s war on insurance fraud and (IACP) in presenting its Excellence in explained that “any experienced, ob- Criminal Investigations Award, which it jective person in the industry will tell offered jointly with ChoicePoint for the you that this is where they do it best.” first time in 2003. The Award recog- The Coalition’s Executive Director also nizes quality achievements in the man- praised OIFP’s record of success, ex- agement and conduct of criminal in- plaining that OIFP “has shown the way” vestigations and promotes the sharing and serves as a “national model for of information on successful programs.

Division of Criminal Justice Chief Investigator Anne Kriegner and New Jersey Insurance Fraud Prosecutor Greta Gooden Brown attended the International Association of Chiefs of Police awards breakfast where OIFP was named a national finalist for the Excellence in Criminal Investigations Award.

34 The Award is presented to the law enforcement agency, unit, task force or inter-agency task force which most Auto Insurance Fraud? demonstrates exceptional innovation and excellence in criminal investigations. IACP is among the largest and most prestigious law enforcement associations in the United States, representing the management of law enforcement, and boasts more than 17,000 members, including the leadership of most local, county, state and federal law enforcement agencies. The Award’s corporate sponsor, ChoicePoint, has a long record of supporting law enforcement through the provision of investigative information from its comprehensive databases. Other speaking engagements in 2003 similarly reflect the magnitude of OIFP Special Assistant/Industry Liaison John Butchko receives the 2003 OIFP’s influence in the American fraud Outstanding Service Award from the Delaware Valley Chapter of the fighting community. The Insurance Fraud Prosecutor delivered the keynote International Association of Special Investigative Units. l. to r. Cathy address at the May, 2003 meeting of the Gicker, Vice President IASIU, Tom Donahue, President Delaware Valley Delaware Valley Chapter of the Interna- Chapter IASIU, John Butchko, OIFP, Greta Gooden Brown, New Jersey tional Association of Special Investiga- Insurance Fraud Prosecutor. tion Units. In November of 2003, OIFP was tapped to address the Insurance Fraud Executive Council in Charleston, fraud fighting programs. OIFP’s guid- South Carolina, an honor bestowed by ance and counsel have been sought by invitation only. Among the many other other law enforcement agencies, both speaking engagements of the Insur- here and abroad, from Hawaii to New ance Fraud Prosecutor in 2003 were York, from Australia to Columbia, and appearances before the Insurance from points in between. Council of New Jersey, the New Jersey In 2003, the national and interna- Special Investigators Association, the tional media continued to herald New Jersey Judicial College and the OIFP’s successes as a model for emu- New Jersey State Bar Association. lation by others fighting insurance OIFP’s Executive Staff was also fraud, including coverage in the Fraud tapped during 2003. In March of 2003, International magazine, the Coalition OIFP’s Medicaid Fraud Section Chief Against Insurance Fraud’s Fraud Fo- was invited to participate in the Third cus, Mealey’s Litigation Report-Insur- National Forum on Fraud and Abuse in ance Fraud, and other periodicals of the Sales and Marketing of Drugs and regional and national stature. OIFP’s Medical Devices sponsored by the efforts to fight insurance fraud have American Conference Institute. also been cited as an example of effec- Not surprisingly, as in years past, tive fraud fighting by at least one lead- OIFP’s leadership in the fight against ing college textbook, Criminology. insurance fraud has also been evi- In recent years, OIFP’s many pro- denced in its ability to assist other grams have also drawn recognition

35 OIFP Draws International Acclaim

from others in the fraud fighting commu- ment agencies fighting insurance fraud nity. OIFP’s Medicaid Fraud Section has in New Jersey and the insurance indus- been nationally recognized by the fed- try. In October, 2003, he was also recog- eral government as one of the nation’s nized by the New Jersey Special Investi- most effective Medicaid Fraud Control gators Association and awarded its 2003 Units. OIFP’s media campaign has been Annual President’s Award. In addition, in commended for its excellence in ad- 2003, the Society of Investigators of dressing insurance fraud, and OIFP’s Greater Newark (SIGN) selected an series of roll call training videos are con- OIFP State Supervising Investigator to tinuously requested by law enforcement serve as its President. officials from throughout the United The achievements underlying States. OIFP’s unprecedented recognition by Individual efforts of those within the national and international fraud OIFP were also formally acknowledged fighting community in 2003 were, per- in 2003. OIFP’s Deputy Chief of Crimi- haps, best described by the National nal Investigations was cited by the Special Investigations Manager of a ma- Western New Jersey Chapter of the jor U.S. insurance carrier, when he American Society for Industrial Security praised OIFP as “the most sophisticated in May of 2003 for his exemplary dedi- prosecutorial agency in the country” in cation to fraud investigations and the the realm of insurance fraud. fostering of a spirit of cooperation between law enforcement and the business community in New Jersey. OIFP’s Insurance Industry Liaison was Stephen D. Moore is a Supervising Deputy awarded the Outstanding Service Attorney General with the Office of the Award by the Delaware Valley Chapter Insurance Fraud Prosecutor, where he of the International Association of supervises its Liaison Section and serves Special Investigation Units in June of as Editor of its Annual Report. Prior to 2003 for his dedication to the fight joining OIFP in 1999, he served seven against insurance fraud in New Jer- years as the County Prosecutor in Cape sey, his sponsorship of joint training May County. programs and ongoing working groups with the insurance industry, and his continuing efforts to foster an effective and mutually beneficial working relationship between law enforce-

36 37 Insurance Reforms Toughen Fraud Penalties and Give OIFP New Tools

36 Insurance Reforms Toughen Fraud Penalties and Give OIFP New Tools

by Norma R. Evans To send a clear and unequivocal “Insurance Fraud” is now embedded in message to the public that, if you com- the New Jersey Criminal Code. Much mit insurance fraud in New Jersey you like its counterpart, the “Health Care will be dealt with harshly, the New Jer- Claims Fraud” statute enacted in 1998, sey Governor and Legislature enacted a the crime of Insurance Fraud allows package of anti-fraud reforms in 2003 prosecutors to more aggressively con- which address the need to enhance the front specific conduct relating to insur- State’s ability to detect insurance fraud ance transactions. and severely punish those who commit By virtue of the enactment of the insurance fraud. Health Care Claims Fraud statute, pros- By making “Insurance Fraud” a ecutors were able to focus specifically specific crime, New Jersey will be able on health care providers and others to deal an even heavier blow to cheats who sought to benefit from a seemingly who perpetrate insurance scams endless variety of schemes to submit throughout the State. As a result of the fraudulent claims for payment to insur- new law, the Office of the Insurance ance carriers and similar entities. That Fraud Prosecutor (OIFP) has been em- statute specifically delineated different powered with provisions which allow penalties for health care providers and for the imposition of far more stringent others who bilked our system of health penalties to be levied against those care insurance. Although the Health who are convicted of committing fraud Care Claims Fraud Act enabled pros- as it relates to virtually every aspect of ecutors to severely punish both provider insurance coverage. and non-provider offenders, it made the Perhaps the most notable aspect punishment for providers such as doc- of this reform is that the new crime of tors and chiropractors even more se-

39 Insurance Reforms Toughen Fraud Penalties and Give OIFP New Tools

New Jersey Governor James E. McGreevey signs one of the toughest insurance fraud laws in the nation.

vere, citing the need to maintain the make false representations with respect public’s trust as essential to the preser- to any claim, application, payment or vation of the integrity of the “safety net” document used in any insurance or pre- provided by health insurance. mium finance transaction, not merely Likewise, recognizing a strong those relating to claims for health care need to directly and comprehensively benefits. criminalize all types of schemes to Prior to the enactment of this legis- commit insurance fraud, New Jersey lative package, prosecutors were se- created a new crime of “Insurance verely hamstrung in their ability to build Fraud” to toughen and streamline the major cases against those engaged in investigation and prosecution of all per- committing most types of insurance sons or entities that knowingly commit, fraud. Unless the illicit conduct fell or assist or conspire with others to within the scope of crimes defined as commit fraud against insurance com- “Health Care Claims Fraud,” prosecu- panies and other entities providing in- tors were often left with no alternative surance-like benefits. More broad in its but to prosecute the fraud as a theft by coverage than that of the prior health deception, which would require the care fraud legislation, the new crime of building of a case based upon dozens, “Insurance Fraud” makes it illegal to if not hundreds of fraudulent transac-

40 tions, to establish an aggregate theft in by greed to cheat the system. excess of $75,000, before a sentence The new law also offers added in- requiring incarceration could be im- centives to encourage members of the posed. Preparing such a complex case public to participate in the fight against would often consume years of investi- fraud by establishing, within OIFP, the gative work, allowing perpetrators to “Insurance Fraud Detection Program.” continue to fleece insurance carriers Significant financial incentives have while investigations continued on track. been provided to encourage the public Now, by creating the crime of “In- to come forward and report insurance surance Fraud,” the Legislature has fraud. By calling OIFP’s 24 hour toll-free given prosecutors a tremendous advan- hotline or visiting OIFP’s Web site at tage in fighting the war against insurance cheats. A wrongdoer need only commit five acts of fraud with an aggregate theft amount of $1,000 to be subject to a sentence of five to ten years in the New Jersey State prison system. The five acts, as required under the statute, can be found in a single document, as each and every misrepresentation is considered an additional, separate and distinct offense for purposes of the crime of “Insurance Fraud.” Previ- ously, a conviction for such conduct would have likely resulted in either probation or admission into the Pre-Trial Intervention Program (PTI), with virtually no prospect for incarceration. The potential for such significant penalties under the new law will undoubtedly have a strong deterrent effect. The new insurance fraud law also, for the first time, expressly criminalizes misrepresentations made in applications submitted to obtain various types of insurance. Such conduct, known as “application fraud” or “premium fraud,” can now potentially result in a prison sentence as well. In addition to the imposition of se- vere criminal penalties, individuals who hold licenses or certificates are now required to forfeit that license or certificate and to be permanently barred from the practice of their profession or occupation upon a second degree conviction of Insurance or Health Care Claims Fraud. This new law has, indeed, elevated the stakes for those licensed professionals who are driven

41 Insurance Reforms Toughen Fraud Penalties and Give OIFP New Tools

www.njInsuranceFraud.org, a person the issuance of a summons, but now, who provides information in accordance under certain circumstances, a failure with certain guidelines, can now receive to have one’s vehicle properly insured as much as $25,000 when that person may result in its impoundment, and has a reasonable suspicion or knowl- even forfeiture to the State. edge that someone is committing insur- New Jersey is, indeed, serious ance fraud. Consequently, everyone can about its war on fraud. While speaking play a role in insuring that law-abiding at the Sixth Annual New Jersey Insur- citizens do not pay, through their insurance Fraud Summit in October 2003, ance rates, to support the ill-gotten gains Governor James E. McGreevey stated of insurance cheats. that, “If you engage in insurance fraud, The insurance fraud reform pack- the State will take aggressive mea- age also includes provisions which are sures.” By signing one of the toughest designed to discourage the use of laws against insurance fraud in the na- counterfeit insurance identification tion, the Governor has underscored the cards and give teeth to the require- leading role assumed by OIFP as a ment that motorists possess a valid model for the nation in the aggressive motor vehicle insurance identification pursuit of insurance fraud and the pun- card. To curtail the widespread pos- ishment of those who commit it. session and use of fraudulent insurance identification cards, the legislature specifically mandated that the Commissioner of the Department of Banking and Insurance promulgate Norma R. Evans has been with New rules and regulations addressing the Jersey’s Division of Criminal Justice for five issuance, design and content of in- years and currently serves as a Supervis- ing Deputy Attorney General in charge of surance identification cards. The OIFP’s Health and Life Section. Prior to her regulations under this provision of the appointment with the Division, she was an statute will require that insurance Assistant Prosecutor with the Camden identification cards are designed so County Prosecutor’s Office for seven years. that counterfeit or fraudulent cards are readily detectable. Further, under this legislation, the failure to possess a valid insurance identification card will now result in even harsher penalties than before. Not only will such a violation result in

42 43 OIFP Civil Enforcement Actions Pack a One – Two Punch in the Fight on Fraud OIFP Civil Enforcement Actions Pack a One – Two Punch in the Fight on Fraud

by Melaine Campbell

L. C. Thomas was a licensed insurance agent, formerly doing business in Teaneck, New Jersey, who fraudulently obtained more than $1.2 million in life insurance policies. Thomas admitted that he assisted William Conyers, a licensed funeral director who owned and operated the Conyers Funeral Home in Hackensack, and Conyers’ wife, Mollie, vice-president of Conyers Funeral Home, in falsifying several life insurance applications submitted to carriers for life insurance policies. They concealed the fact that the insured persons had pre-existing medical conditions such as the AIDS virus and falsified the applications by naming persons as beneficiaries who had no insurable interest in the lives of the insured persons.

45 OIFP Civil Enforcement Actions Pack a One – Two Punch in the Fight on Fraud

L. C. Thomas was convicted of at- thefts involving 46 vehicles valued at over tempted theft by deception and sen- $1 million. By the end of 2003, 38 New tenced to probation. Both Conyerses Jersey residents were indicted for “giv- were also convicted of various offenses ing-up,” or for their involvement in the following a 17-day jury trial. William theft of late model luxury automobiles in Conyers was sentenced to 11 years in order to fraudulently collect insurance State prison and Mollie Conyers was monies. In addition to criminal prosecu- sentenced to two years probation condition, all the defendants face substantial tioned upon serving 364 days in the civil fines. county jail. Then, the civil penalty por- The Fraud Act provides for fines of tion of New Jersey’s anti-fraud insur- up to $5,000 for a first violation, $10,000 ance statute kicked in and L. C. Tho- for a second violation, and $15,000 for mas was also fined $5,000. third and subsequent violations. Each misrepresentation or fraudulent omis- Civil Actions Complement sion in a claim or application constitutes the Criminal Prosecutions a separate violation of the Act, trigger- ing liability for the specified fines. In ad- The investigation of cases of sus- dition to the imposition of civil fines, pected insurance fraud by OIFP-Civil where appropriate, OIFP-Civil also provides law enforcement with an in- seeks to recover restitution and attor- valuable weapon in the battle against neys’ fees from the violator. insurance fraud. Actions by OIFP-Civil can stand alone or can Civil Actions at Nationwide complement the prosecution of a crimi- High Levels in 2003 nal case. In fact, most cases which result in a successful criminal prosecu- Issuance of Civil Consent Orders tion also result in the imposition of civil are authorized under the Fraud Act after penalties under the Insurance Fraud an investigation reveals a violation of Prevention Act (Fraud Act). Since the the Act. A Civil Consent Order repre- imposition of a civil fine under the sents a preliminary settlement offer to Fraud Act requires the lesser “prepon- the violator providing the violator with derance of the evidence” burden of the earliest opportunity to voluntarily proof for civil cases, civil enforcement agree to the terms of the order, the find- actions can be successfully pursued in ings of the investigation, and the impo- cases where criminal prosecutions are sition of an agreed upon civil fine. Oth- not appropriate. Furthermore, the Stat- erwise, the case is referred to civil attor- ute of Limitations for civil insurance neys in the Division of Law for litigation. fraud actions is ten years, substantially OIFP-Civil imposed 4,362 Insur- longer than the five year time limit ance Fraud Sanctions in 2003. This sta- within which most criminal prosecu- tistic supports the 2003 Coalition tions can be brought. Consequently, Against Insurance Fraud report which the majority of OIFP’s insurance fraud noted that New Jersey led all other investigations are conducted by the states in the number of civil actions civil side of the Office. taken against people trying to cheat the During 2003, OIFP successfully system. Greater emphasis on better brought numerous civil actions in con- civil investigations has yielded a signifi- junction with criminal cases prosecuted cant increase in the per case resolution by OIFP or by County Prosecutors’ Of- obtained by civil attorneys in OIFP’s liti- fices. OIFP’s Operation “Give & Go” gated cases. In 2002, the average case targeted automobile “give-ups” and auto resolution was $5,600. By contrast, the

46 average case in 2003 was $9,400. The total number of judgments for 2003 was 397, as compared to 356 in 2002. In 2003, OIFP-Civil referred 318 cases to the Division of Law for the filing of civil enforcement actions stemming from the refusal of insurance fraud violators to either voluntarily ex- ecute consent orders or to make payments on outstanding consent orders. There were 345 civil actions resolved by the Division of Law in 2003, resulting in the imposition of $3,133,869 in penalties, fees and restitution. Specialization in the Fight Against Insurance Fraud OIFP-Civil is divided into squads and teams which investigate allegations of insurance fraud arising out of property and casualty, health and life, and automobile insurance coverages. When fully staffed, 54 investigators are assigned to auto insurance fraud, 34 to property and casualty insurance fraud, and 43 to health and life insurance Reprinted with the permission of the New Jersey Lawyer, Inc., copyright 2003 fraud investigations. In addition, 12 Criminal and Civil Investigators are assigned to supervisory positions in OIFP-Civil, while another six Civil In- Auto Fraud Teams vestigators perform various profes- During 2003, a significant number sional support functions in OIFP-Civil, of investigations successfully targeted such as maintaining required data- vehicle owners and lessees seeking to bases, production of OIFP training vid- dispose of their vehicles in order to col- eos and other publications, and per- lect insurance proceeds and escape forming similar tasks requiring a high their expensive lease or loan pay- level of expertise. The following de- ments. These cases are commonly scribes each of the teams and high- known as owner “give-ups.” lights typical cases brought by the John P. Fagan, a former West Or- teams throughout the year. ange police officer, filed a false police report with the Wayne Police. He also filed an Affidavit of Theft with his insurance company containing false and misleading information. Although Fagan claimed that his vehicle had been stolen, Fagan voluntarily relinquished the car to other persons as part of a scheme to obtain payment from the insurer. Fagan pled guilty to

47 OIFP Civil Enforcement Actions Pack a One – Two Punch in the Fight on Fraud

criminal charges and executed consent Health and Life Teams orders totaling $8,000 for his part in this “owner give-up” scheme. Civil Investigators conduct investi- Other types of automobile insur- gations of a variety of schemes perpe- ance fraud, such as phony and exag- trated by both medical providers and gerated claims for property damage, patients to bilk insurance companies. phony claims associated with staged Frauds perpetrated by providers in- accidents, and fraudulent claims by clude billing for services not rendered, “jump-ins” who falsely claim to have misrepresenting the nature of services been injured as passengers in an auto- rendered in order to charge a higher mobile accident when they were not in- fee, and “unbundling” or billing for mul- volved at all, are also investigated. tiple services when billing for only a Several individuals entered into single procedure is appropriate. Other Consent Orders during 2003 resulting fraud perpetrated by providers may in- from their involvement in a staged acci- volve billing for services rendered be- dent scheme. As a result of this yond the scope of a provider’s license. scheme, 28 persons were indicted on OIFP-Civil imposed a $100,000 charges that they “set-up” more than 90 civil fine against Yong Jin Kim who “staged” automobile accidents which re- practiced acupuncture without a li- sulted in 24 insurance companies pay- cense. Kim forged the signature of his ing more than $2 million in fraudulent father, Ki Min Kim, a licensed acupunc- automobile accident and personal injury turist who had died, in order to renew claims. In addition to criminal penalties his father’s license to practice acu- upon conviction, these individuals will puncture. Kim submitted claims to in- face substantial civil penalties. surance carriers using the name and In addition to the civil component of license number of his deceased father. criminal investigations, the Civil Auto Kim was charged by the Ocean County Fraud Teams investigate cases where Prosecutor’s Office with health care civil fines have traditionally been levied. claims fraud and pled guilty. These cases typically involve “rate eva- In addition to Yong Jin Kim, an- sion,” where an insured misrepresents other provider, Thomas Boselli, was the garaging location of an insured ve- fined $100,000. Boselli had been prac- hicle in order to obtain a lower premium ticing chiropractic medicine for 16 rate or “application fraud,” where the in- years without a license. An investiga- sured lies on an insurance application tion determined that Boselli submitted such as misrepresenting the individuals 1,870 claims for 56 patients since 1995 residing in the household who are of totaling more than $125,000, of which driving age, or the actual use of the ve- he was paid in excess of $54,000. hicle, or fraudulently registering com- Boselli fraudulently signed all the claim mercial vehicles as personal vehicles in forms as a licensed chiropractor. order to obtain the lower insurance Other OIFP-Civil cases involve in- rates which reflect the lower risks asso- surance fraud committed by patients or ciated with non-commercial vehicle use. purported patients. These cases include Insureds who are caught committing patients submitting fabricated bills for rate evasion or application fraud typi- treatments that were never provided or cally are fined an amount which is far subjects submitting bills for reimburse- greater than the savings they would ment of fraudulent prescriptions. have enjoyed by misrepresenting the Patricia and Paul Sullivan were use or drivers of their vehicles to their fined $25,000 for three schemes de- insurance companies. signed to defraud Metlife Insurance

48 Company and Blue Cross/Blue Shield relation to a fire loss of their residence. for a fee, dispose of the cars by burning out of $48,380. The schemes included The investigation revealed that Louise them in Philadelphia. The owners or les- altering co-pays on prescription re- Miller conspired with her brother-in- sees then file false insurance claims for ceipts, seeking reimbursement for law, David Clark, in the arson of the theft. To date, OIFP-Civil has imposed costs not actually incurred, and seek- home, for the purpose of collecting in- several civil penalties in New Jersey re- ing reimbursement for the full costs of surance benefits. John Miller became sulting from this initiative. drugs when the drugs were never actu- aware of the arson after the incident, Throughout 2003, Civil Investiga- ally dispensed. The Sullivans were but failed to notify Ohio Casualty that tors continued to develop significant also prosecuted criminally. the fire had been set intentionally. The cases, analyze trends, and explore Cassandra Hankins and Jay Earl Millers were civilly fined $6,500 and new and creative ways to combat the Hankins defrauded MetLife Insurance prosecuted criminally, Louise for com- endemic problem of insurance fraud in Company. Cassandra misrepresented mitting arson to collect insurance, and New Jersey. herself as Jay’s ex-wife, using the ex- John for hindering apprehension. wife’s insurance card to obtain an Fireman’s Fund Insurance Com- abortion and dental work. Cassandra pany referred an allegation that and Jay Hankins were each fined civilly Solomon “Sammy” P. Bouzaglou in the amount of $5,000. falsely claimed that his inventory was Melaine Campbell is a Supervising Deputy Attorney General and serves as a accidently damaged by a faulty sprin- John Currie repeatedly misrepre- Special Assistant to the Insurance Fraud sented his inability to work, receiving kler head, when, in fact, he had con- Prosecutor. She has been a prosecuting $38,169 in disability benefits to which spired with others to purposefully de- attorney for over 23 years, serving terms he was not entitled. Surveillance and stroy the inventory and collect the in- as an Assistant Prosecutor in Hunterdon employment verification by Unum surance proceeds. Bouzaglou and co- County and Acting County Prosecutor in Provident SIU revealed that Currie was conspirator, Joseph Benlolo, were Somerset County. employed full time while claiming to be each fined $5,000 by OIFP-Civil in ad- disabled. Currie reimbursed Unum for dition to facing criminal prosecution by the claim and paid a $10,000 fine lev- OIFP-Criminal. ied by OIFP-Civil. OIFP Civil 2003 Initiatives Property and Casualty In addition to investigating and de- Teams veloping cases referred to OIFP by in- Cases investigated by the Property surance carriers or citizens, OIFP-Civil and Casualty Teams arise out of differ- Investigators continued working in ent types of insurance policies, includ- 2003 on proactive initiatives to ferret ing homeowners and commercial in- out insurance fraud in its many forms. surance policies. Fraudulent claims un- Contractors who thought they der these policies often involve the ex- could beat the system by paying aggeration or fabrication of claimed cheaper rates for private passenger losses due to theft, burglary or casu- auto insurance on their commercial ve- alty, or the making of multiple claims hicles were in for a rude awakening in for a single loss. The Teams also in- 2003. Civil Investigators targeted this vestigate instances of suspected insur- fraud scheme, successfully bringing ance agent fraud which typically in- actions against numerous contractors. volve the embezzlement of clients’ pre- OIFP-Civil continued working with miums or the purposeful misrepresen- the Philadelphia Fire Marshal’s Office tation of information on insurance ap- and other law enforcement agencies to plications in order to obtain lower rates investigate auto “give-ups” which have been found burned in Philadelphia. on behalf of a client. These cases involve New Jersey ve- John P. Miller and Louise Miller hicle owners and lessees who “give- filed a fraudulent homeowners claim in up” their cars to co-conspirators who,

49 OIFP Public Awareness

50 OIFP Public Awareness and Insurance Fraud Training Programs Spread the Word on Insurance Fraud

by John Butchko From its inception in 1998, the New Industry Awareness Efforts Jersey Office of the Insurance Fraud Prosecutor (OIFP) has dedicated itself OIFP’s multi-channeled approach to educating and informing friend and to education and training in the field of foe, alike, that insurance fraud is a seri- insurance fraud has spawned frequent ous crime that will not be tolerated in opportunities for sharing New Jersey’s New Jersey. Or, as stated in OIFP’s “zero tolerance” approach to the inves- award winning public awareness cam- tigation and prosecution of insurance paign, “New Jersey is Fed Up,” OIFP’s fraud with insurance industry profes- multi-channeled, multi-media approach sionals, not only locally and nationally, to public outreach and training efforts but throughout the world. In September has been a major contributing factor to of 2003, New Jersey Insurance Fraud OIFP’s success as an international Prosecutor Greta Gooden Brown was leader in the war on fraud in 2003. By invited to be the guest keynote speaker developing specialized fraud awareness at the annual Asia Pacific Fraud Con- and training programs for the insurance ference in Australia, where she was industry, County Prosecutors and local joined by members of the Federal Bu- law enforcement, as well as by pursuing reau of Investigation, the Coalition a statewide fraud awareness program Against Insurance Fraud, Europe Pol, for the general public, OIFP continues and the Australian Health Insurance to effectively spread the word regarding and Crime Commissions to provide in- the significant impact of insurance fraud formation on effective insurance fraud on the residents of New Jersey, as well detection and prosecution strategies to as how we can each do our part in professionals from countries around stamping it out. the Pacific Rim. Prosecutor Brown and

51 OIFP Public Awareness

OIFP were subsequently featured on the These opportunities have proven to be cover of Fraud International magazine’s highly beneficial in fostering the spirit of November-December issue, which cited cooperation and collaboration necessary OIFP’s successes as a model for similar to successfully investigate and pros- fraud fighting agencies. ecute insurance fraud. In 2003, OIFP also hosted, and OIFP’s Liaison Section, working provided assistance to, a representa- with the Division of Criminal Justice’s tive of the Columbian Institute for Media Center, has also implemented a Fraud Prevention and Detection, who mechanism, relying upon “broadcast” visited the United States for guidance e-mails, to provide insurance industry and advice in establishing a similar representatives with all OIFP press re- agency in the country of Columbia to leases virtually immediately upon their fight insurance fraud. Representatives dissemination to the news media. This of OIFP were also requested to share new program to promptly inform the in- their insurance fraud fighting expertise surance industry of individuals who as keynote speakers and lecturers at have been criminally charged by OIFP, many other insurance fraud workshops or who have been convicted or sen- and conferences, including the Insur- tenced for insurance fraud in the ance Fraud Managers’ Council, the courts, provides claims representatives Delaware Valley Chapter of the Inter- and industry fraud investigators with national Association of Special Investi- timely and invaluable information gative Units, the New Jersey Special which enables them, in many cases, to Investigators Association, the Insur- expeditiously assess potential claims ance Council of New Jersey, the exposure stemming from possible or Greater Philadelphia Claims Associa- proven insurance fraud. tion, the Health Insurance Finance Managers Association and the Charter Law Enforcement Property/Casualty Underwriters of Training Programs Central Jersey. With the support and commitment As in past years, OIFP in 2003 of the New Jersey insurance industry, again provided in-service training for in 2003, OIFP established the OIFP/In- Assistant Prosecutors and investigative dustry Joint Training Program, where personnel from the 19 County Prosecu- insurance fraud detection and prosecutors’ Offices receiving insurance fraud tion techniques can be shared among grants from OIFP. This annual training is New Jersey insurance professionals. designed to update County Prosecutor Through the Program, OIFP has pro- staff assigned to handle insurance fraud vided lectures, hands-on training, and cases on current and emerging insur- other informational presentations to ance fraud issues, as well as to offer nearly two thousand insurance com- them legal and investigative training in pany employees in 2003, including in- insurance fraud in order to better enable surance industry producers, underwrit- them to investigate and prosecute insurers, claims adjusters, SIU investigators ance fraud in their respective counties. and defense attorneys. By reaching out With the assistance of OIFP’s County to every segment of the insurance Prosecutor Liaison, who served as or- community, OIFP and its industry part- ganizer and moderator, County Pros- ners remind us all to maintain our col- ecutor personnel participated in the lective vigilance in detecting, reporting 2003 13th Annual New Jersey Special and prosecuting insurance fraud. Investigators Association (NJSIA) Con-

52 ference. Many of those in attendance and interests of the particular officers benefited by participating as panel mem- receiving the training. For police re- bers or otherwise contributing to a work- cruits, introductory insurance fraud shop in the form of a “County Investiga- training is provided at county police tors Roundtable Discussion,” which pre- training academies that addresses the sented a wide variety of the most suc- detection and investigation of insur- cessful pro-active insurance fraud pro- ance frauds ranging from phony insur- grams being implemented by County ance identification cards to staged Prosecutors’ Offices from around the auto accidents and thefts. In 2003, State. OIFP conducted training for over 415 The Insurance Fraud Prosecutor police officers over the course of 16 and County Prosecutor Liaison, on separate sessions. The OIFP’s Liaison several occasions throughout the year, Section also staffed exhibit booths at also made presentations directly to the the New Jersey Police Expo held in State’s 21 County Prosecutors, ex- conjunction with the annual New Jer- plaining in detail the operations of sey Chiefs of Police Convention in At- OIFP, its program of insurance fraud lantic City in June 2003, and the annual grants available to their respective of- NJSIA Conference, also held in Atlantic fices and the Attorney General’s re- City later in the year. Information and other cently promulgated Guidelines for the resource materials, including brochures, Investigation and Prosecution of Insur- manuals and OIFP produced Insur- ance Fraud. The County Prosecutor Liaison and grant experts from the Di- vision of Criminal Justice also con- Joy Champion, Special Agent of the National Insurance Crime Bureau, ducted meetings directly with represen- addresses members of the OIFP Civil Investigator Academy. tatives of County Prosecutors’ Offices to review and explain the program requirements of the County Prosecutor Insurance Fraud Reimbursement Pro- gram, now entering its sixth year of providing financial assistance to County Prosecutors who wish to establish or augment insurance fraud units within their offices. Through its Law Enforcement Liai- son, OIFP’s law enforcement outreach efforts continued to provide insurance fraud identification training to local police officers. Recognizing that the patrol officer on the street often represents the first line of defense against insurance scams such as “staged” accidents, fraudulent auto thefts, and false or inflated burglary loss claims, OIFP conducts a comprehensive program of specialized training to both rookie and veteran police officers. For experienced officers, training is offered on varying topics depending on the needs

53 OIFP Public Awareness

OIFP Civil Supervisor Michele Margiotta hands out literature at the 13th Annual New Jersey Special Investigators Association Training Conference.

ance Fraud Roll Call Training Videos, Statewide Public Anti-Fraud were made available to attendees at Awareness Campaign both events. In addition to its roster of training op- With the conclusion of the third portunities provided to other law enforce- and final phase of OIFP’s first, highly ment agencies, at least once a year, acclaimed public awareness cam- OIFP conducts a Basic Course for Civil paign, which featured television and ra- Investigators spanning several weeks, as dio commercials, billboards, newspa- well as providing other in-service training per advertisements and posters on opportunities for in-house State Investi- New Jersey Transit trains and buses, gators and Deputy Attorneys General OIFP continued its public awareness who investigate and prosecute OIFP’s program in 2003 through additional, al- criminal cases. ternative channels, including the distribution of anti-insurance fraud posters and literature which were originally produced as part of its first media campaign. In 2003, OIFP began developing a new media campaign which is ex-

54 pected to build on the success of its first Annual New Jersey Insur- effort. Accordingly, it is anticipated that ance Fraud Summit OIFP will launch a new public awareness message in 2004, which will am- OIFP’s public awareness efforts plify and expand upon the message of culminate annually in the holding of an the prior campaign, that insurance insurance fraud summit, which has fraud is a serious crime that can put evolved over the last several years to you “behind bars.” become one of the most important meetings of insurance fraud officials in OIFP Online the world. The Summit is hosted by OIFP also maintains an informative OIFP, co-sponsored by the New Jersey Web site, www.njInsuranceFraud.org, Special Investigators Association where, in addition to explaining OIFP’s (NJSIA) and the Insurance Council of mission and offering general information New Jersey (ICNJ) and attended by of- regarding insurance fraud, OIFP posts ficials such as New Jersey Governor its Annual Reports to the Governor and James E. McGreevey, Attorney Gen- Legislature as well as OIFP press re- eral Peter C. Harvey, Director of the Di- leases reporting significant events in vision of Criminal Justice Vaughn L. the progress of OIFP’s cases, such as McKoy and Insurance Fraud Prosecu- the indictment, conviction and sentenc- tor Greta Gooden Brown, as well as by ing of individuals who have committed insurance industry and law enforce- insurance fraud in New Jersey. The Web site explains the most commonly committed types of insurance fraud and offers the public several means of re- www.njInsuranceFraud.org porting cases of suspected insurance fraud to OIFP, including an online reporting form and the listing of both an e- mail address and hotline phone number staffed by OIFP employees. The Web site also enables visitors to view OIFP’s media campaign television ads, and posts information and forms for the insurance industry regarding their requirements for reporting fraud to OIFP. By the end of 2003, OIFP, working with the Media Center of the Division of Criminal Justice, was nearing completion of a major expansion of the Web site, which will offer additional online resources for law enforcement officials engaged in the investigation of insurance fraud. This expansion is expected to go online early in 2004.

55 OIFP Public Awareness

to OIFP, as well as in their cooperation and coordination with OIFP, and the out- come of their investigations. The Summit included breakout sessions for insurance industry executives, SIU representatives and members of the law enforcement community, where current issues of particular interest to each group were explored in depth. Summit keynote speakers, including Dennis Jay, Executive Direc- tor of the Coalition Against Insurance Fraud, and William J. Mahon, Presi- dent and CEO of the National Health Care Anti-Fraud Association, used the occasion to offer a national perspec- tive on New Jersey’s noteworthy insurance fraud accomplishments in 2002 and 2003.

John Butchko is a 25 year veteran of State government and currently serves as a Special Assistant in the Office of the Insur- ance Fraud Prosecutor where he acts as the Liaison to the insurance industry, the New Jersey Department of Banking and In- surance, and the New Jersey Motor Vehicle Commission. Prior to joining OIFP in 1998, he served as the Chief Investigator and Deputy Director of the Division of Insurance Fraud Prevention in the New Jersey De- partment of Banking and Insurance.

ment executives. The Summit serves as a vehicle to emphasize the importance of the public/private partnership between government and industry officials in New Jersey’s war against insurance fraud. At this year’s Sixth Annual Summit, the First Annual Insurance Fraud Prosecutor’s “Excellence in Investigation Award” was presented to Prudential Property & Casualty as the Special In- vestigative Unit which most exemplified excellence in the quality of their referrals

56 57 OIFP’s Office Structure, Organization and Operations

58 OIFP’s Office Structure, Organization and Operations

A Blueprint for Fighting Insurance Fraud

by Scott PPby attersonattersonatterson and Stephanie Stenzel

When it was created on May 19, public agencies and departments in 1998, by the New Jersey Legislature New Jersey, with private industry. pursuant to the provisions of the Auto- OIFP was established as a law en- mobile Insurance Cost Reduction Act forcement agency within the Division of (AICRA), the Office of the Insurance Criminal Justice in the Department of Fraud Prosecutor (OIFP) was estab- Law and Public Safety, under the au- lished as New Jersey’s designated thority of the New Jersey Attorney Gen- lead agency to implement a compre- eral, with a primary mission to crimi- hensive program to investigate and nally prosecute insurance fraud. How- prosecute insurance fraud as effec- ever, in order to unify both civil and tively and efficiently as possible. Ac- criminal authority for investigating and cordingly, OIFP was vested under prosecuting insurance fraud in one AICRA with authority and responsibility agency, AICRA also required that cer- for investigating all types of insurance tain civil enforcement functions previ- fraud, and for conducting and coordi- ously within the purview of the Division nating criminal, civil, and administrative of Insurance Fraud Prevention in the investigations and prosecutions of in- Department of Banking and Insurance surance and Medicaid fraud throughout be transferred to OIFP pursuant to a New Jersey. In order to provide for the plan of reorganization, which became most effective and well integrated effective on August 24, 1998. Among statewide strategy possible to combat other things, the reorganization plan insurance fraud, OIFP was also em- transferred the entire civil investigative powered under AICRA to oversee and staff of the Division of Insurance Fraud coordinate the anti-insurance fraud ef- Prevention to OIFP, thereby eradicat- forts of law enforcement, and other ing the former fragmented approach to

59 OIFP’s Office Structure, Organization and Operations

combating insurance fraud in the State All referrals to OIFP, whether from in- of New Jersey and consolidating both surance companies, the OIFP hotline criminal and civil enforcement authority or web site, citizen complaint letters or in one agency, OIFP, and under one walk-ins, administrative agencies or agency head, the Insurance Fraud other law enforcement agencies, are Prosecutor. In addition to the traditional received by OIFP’s Case Screening, functions of investigation and prosecu- Litigation and Analytical Support Sec- tion as a law enforcement agency, OIFP tion (CLASS). CLASS, formerly desig- administers a wide range of programs nated within OIFP as the Analytical designed to inform the public, train law Case Tracking and Information Unit enforcement and engage both the pub- (ACIU), services both the criminal and lic and private sectors in OIFP’s efforts civil sides of OIFP. The unit is headed to eradicate insurance fraud. by a Supervising Deputy Attorney Gen- OIFP is managed and directed by eral (SDAG) and a Supervising State the New Jersey Insurance Fraud Pros- Investigator (SSI), and is staffed with ecutor, a gubernatorial appointee, and Civil Investigators, Analysts, Technical comprises both a criminal and civil bu- Assistants and clerical/administrative reau. Each bureau, in turn, is com- support personnel. prised of several specialized sections. The CLASS unit is more than sim- In order to achieve the increased effi- ply a depository for all insurance fraud ciencies resulting from greater special- referrals, however. In anatomical terms, ization, OIFP undertook a major struc- it represents the central nervous system tural reorganization in 2002 and 2003, of the OIFP organizational structure. Its which culminated in the creation of primary function is to intake and input all separate investigative sections within referrals, compare them to existing da- both the criminal and civil sides of tabases, and then direct the referrals to OIFP. OIFP-Criminal now includes the appropriate specialized units within specialized insurance fraud sections OIFP for investigation whenever it ap- focusing on auto fraud, health and life pears that a viable insurance fraud fraud, and property and casualty fraud, prosecution, either civil or criminal, or as well as a Medicaid Fraud Section. both, can be developed. In those situa- OIFP-Civil is comprised of similarly tions where the incoming referral does specialized teams of Civil Investigators not involve a violation of the Fraud Act who investigate cases of possible vio- or a possible criminal violation, the lations of the New Jersey Insurance CLASS unit insures that referrals are Fraud Prevention Act (Fraud Act) and made to appropriate outside entities or pursue restitution and the imposition of agencies, such as the Department of civil fines in appropriate cases. OIFP- Banking and Insurance or a profes- Civil frequently imposes fines or ob- sional licensing board. tains restitution in cases where OIFP Because of the lucrative nature of would otherwise be unable to pursue a committing insurance fraud and the successful criminal prosecution be- ease with which it can often be com- cause of the heightened burden of mitted, the CLASS unit receives a volu- proof required in criminal cases. minous number of referrals each year. At the heart of OIFP’s success in Upon receipt of each referral by combating insurance fraud is a care- CLASS, documentation relating to the fully crafted blueprint for receiving, referral is promptly date stamped. Sub- screening, assigning and tracking jects of the referrals are then searched nearly 10,000 new cases each year. in existing databases and entered into

60 Law Manager, OIFP’s case tracking da- corporate filings, investigative reports, tabase. Case numbers are subsequently surveillance reports, telephone tolls, assigned. The information received in the electronic surveillance transcripts or referral is screened by Civil Investigators tapes, interviews, testimony and public who determine whether there is sufficient databases. Typically, the products gen- evidence to initiate a civil and/or criminal erated by an OIFP Analyst include re- investigation. If a referral appears to in- ports, tables, graphs, charts, flow dia- volve a criminal violation, it is reviewed grams and free form charts, many of by the SDAG who decides whether to which are later used as Grand Jury or accept or decline it for criminal investi- trial exhibits. gation. The screening process usually OIFP’s success is attributable, in includes obtaining additional back- great part, to the ability of its several in- ground information on subjects from formation management systems to queries of various governmental and track and manage cases. These sys- public records databases. All cases are tems contain information for tracking then assigned for investigation, referred and managing cases referred to, and to other agencies, or closed and refer- from, OIFP, as well as information enced for possible later review, should which can be tapped for investigative the subject of the referral again come to research to identify possible patterns the attention of OIFP authorities. and trends in insurance fraud. The Law Cases that warrant investigation are coded by type of insurance fraud, such as auto, life or disability, and assigned to one of OIFP’s three regional offices. After cases have been assigned, Analysts and Technical Assis- tants in CLASS continue to support civil and criminal investigators by providing additional database support, as needed, and in-depth analyses of evidence developed in designated cases. Many of OIFP’s larger and more complex investigations often require CLASS unit Analysts and Technical Assistants to assist in the investigations, and, on a case by case basis, use a variety of cutting edge software applications to analyze complex relationships among individuals, businesses, and their financial dealings. Depending upon the requirements of the investigation, various types of analyses are performed, including association, event flow, insurance claim, commodity flow, financial transaction, times series, telephone record, and statistical analyses. Among the records that may be subject to OIFP’s various analytical tools are insurance billings, financial records,

61 OIFP’s Office Structure, Organization and Operations

Manager Database Integrated Computer- OIFP is mindful that insurance ized Case Tracking System, which cap- cheats continually refine current fraud tures data in incoming referrals to OIFP schemes and seek ways to devise new and monitors the progress of investiga- ones. History has demonstrated that, to tions stemming from those referrals, was be effective in combating fraud, OIFP significantly enhanced in 2003 to incor- must continue its leadership role in porate information on criminal, as well pursuing insurance “fraudsters” with as civil, investigations. the most effective investigative and Always in the forefront of fighting legal “ammunition” possible. Using cur- fraud, OIFP partnered in 2003 with In- rent and innovative analytical software surance Claims Services, Inc., while and employing the most highly trained addressing AICRA’s mandate for the personnel is essential to this task. The development and maintenance of an goal of deterring, if not eradicating, All Claims Database. The All Claims insurance fraud in New Jersey is an Database will enable OIFP to access enormous one. Carefully contemplated claims related to auto accidents and and crafted legislation enacted by our related property damage for all New elected representatives, which pro- Jersey insurance carriers writing pre- vides our prosecutors and investigators miums in excess of $2 million per year, with the most effective tools to investi- and who are required by law to submit gate and prosecute insurance fraud, to- claims to the organization. Most insur- gether with OIFP’s commitment to “stay ers in New Jersey write enough auto ahead of the curve” in the areas of per- insurance business in New Jersey to sonnel, training and technological ad- meet the threshold for submitting their vances, will only continue to ensure that data, making the database a substan- OIFP’s vision of defeating insurance tial and relatively comprehensive fraud on every front becomes a reality. investigative resource. Access to the All Claims Database and the ability to review nearly all claims submitted in New Jersey will now provide OIFP with a bird’s eye view of auto- Scott R. Patterson is a 14 year veteran mobile accident claim activity that would with New Jersey’s Division of Criminal Jus- not otherwise be accessible to indi- tice and currently serves as the Supervis- vidual carriers. Analysis of the claims ing Deputy Attorney General in charge of data will also enable OIFP trained per- OIFP’s Case Screening and Litigation sonnel to detect new and emerging Support Section. He previously served as trends and patterns of insurance fraud. an Assistant Prosecutor in Passaic County. Link analysis tools integrated with the Stephanie Stenzel has been with the Divi- All Claims Database will allow investiga- sion of Criminal Justice for 17 years, serving tors and analysts to associate claim- as a Supervising State Investigator for the ants, automobiles, providers, and attor- past ten years. Previously, she worked for neys in such a way that staged auto ac- two years as a Special Agent in the FBI’s cidents and orchestrated “ring” activities Las Vegas Division. She currently serves as a supervisor in OIFP’s Case Screening, can be detected. These software appli- Litigation & Analytical Support Section. cations will prove beneficial not only to the State Investigators who use them in developing their investigations, but also to prosecutors, judges and jurors when the investigations are complete and matters proceed to trial.

62 63 Cooperation, Coordination and Communication Key to OIFP Success

Sheila Breeding of Allstate New Jersey joins Attorney General Peter C. Harvey, Division of Criminal Justice Director Vaughn McKoy and Insur- ance Fraud Prosecutor Greta Gooden Brown in announcing the State indictment against staged accident ringleader Iris Salkauski.

64 Cooperation, Coordination, and Communication Key to OIFP Success

by Stephen D. MooreMoore.

While the Office of the Insurance in the Preamble to the law which gave Fraud Prosecutor’s record of success- birth to OIFP, the Automobile Insur- ful investigations and prosecutions ance Cost Reduction Act of 1998 may have established it as the nation’s (AICRA), “...while the pursuit of those most emulated model for fighting insur- who defraud the automobile insurance ance fraud, it has been through a win- system has heretofore been addressed ning combination of communication, by the State through various agencies, cooperation and coordination that the it has been without sufficient coordina- Office has been recognized within New tion to aggressively combat fraud, lead- Jersey as the leader in New Jersey’s ing to the conclusion that greater con- war on insurance fraud. solidation of agencies which were cre- When the New Jersey Legislature ated to combat fraud is necessary to ac- established the Office of the Insurance complish this purpose....” Fraud Prosecutor (OIFP), it did more Whereas the consolidation con- than merely create another govern- templated by the Legislature was ment agency to fight insurance fraud. It largely realized by transferring civil in- endowed that agency with the mandate surance fraud investigatory responsi- and the tools to ensure that, from that bilities from the Department of Banking time forth, insurance fraud cases would and Insurance to a fledgling OIFP not “fall between the cracks” of the dis- within the Department of Law and Pub- parate New Jersey bureaucracies hav- lic Safety’s Division of Criminal Justice, ing responsibility for addressing differ- a law enforcement agency, lawmakers ent aspects of insurance fraud. As ex- also ensured that OIFP would have a pressly recognized by the Legislature statutory mechanism to fulfill the

65 Cooperation, Coordination and Communication Key to OIFP Success

Liaison Section Perhaps most significantly, the Legislature required in AICRA that OIFP establish an institutional mechanism to implement these measures by specifically designating a section of the Office “to be responsible for establishing a liaison and continuing communication between the office and the Department of Health and Senior Services, the De- partment of Human Services, any professional board in the Division of Consumer Affairs in the Department of Law and Public Safety, the Depart- ment of Banking and Insurance, the Division of State Police, every county prosecutor’s office, such local government units as may be necessary or practicable and insurers.” OIFP, in turn, established the OIFP Liaison Section, whose primary responsibility is to ensure the ongoing statewide coordination of the activities of virtually every public and private entity in New Jersey involved in any aspect of addressing New Jersey’s pandemic of insurance fraud. Selective Insurance Assistant Vice Legislature’s expectation that OIFP To ensure that the coordination ef- President Joanne Roberts lectures would lead New Jersey’s fight against forts of its Liaison Section adequately investigators on fraud prevention insurance fraud by coordinating the embrace the overlapping responsibili- and awareness. anti-fraud efforts of others in both the ties and activities of public agencies public and private sectors. which investigate or otherwise encoun- As envisioned by the Legislature, ter insurance fraud, particularly those in coordination would be achieved by the law enforcement community, as well having OIFP establish a comprehen- as those in various areas of the insur- sive system for making and receiving ance industry, OIFP assigned veteran insurance fraud referrals and equally staffers to act, respectively as its County comprehensive databases for docu- Prosecutor, Law Enforcement, Insur- menting, tracking, evaluating and ana- ance Industry and Professional Boards lyzing those referrals. Coordination Liaisons. Each of these Liaisons has would be further enhanced by requiring been specifically tasked with coordinat- OIFP to meet regularly with insurance ing OIFP’s corresponding investigations industry representatives, County Pros- and prosecutions with the activities of ecutors, and other units of state and lo- those agencies or entities within their cal government which investigate fraud. respective spheres of responsibility.

66 County Prosecutor Liaison matter or individual, there exists the potential that one or more of the inves- As the title suggests, the County tigative activities of the involved agen- Prosecutor Liaison is responsible, cies might adversely impact upon the among other things, for coordinating in- activities of the other, such as the case vestigations and prosecutions emanat- where one agency prematurely arrests ing from the State’s 21 County Pros- a “target” who is being wiretapped, or ecutors’ Offices with those undertaken unwittingly arrests an informant or un- by OIFP. In order to avoid the possibil- dercover agent working for another ity of OIFP and a County Prosecutor’s agency. Identifying such cases early in Office working on the same case unbe- the process, at the very least, prevents knownst to each other, OIFP’s County the agencies involved from unnecessar- Prosecutor Liaison established, as ily expending resources to undertake contemplated by AICRA, a comprehen- identical investigative measures. Con- sive system of referrals and statistical versely, identifying cases which have reporting to monitor county investiga- caught the attention of more than one tions and, when appropriate, take mea- law enforcement agency may facilitate sures to ensure that the activities of the sharing of critical investigative infor- OIFP State Investigators participate their respective agencies complement, mation among those agencies. in auto arson forensic training rather than conflict with, one another. The information reported monthly provided by Allstate as part of The protocol established by the by County Prosecutors’ Offices also the new OIFP/Industry Joint County Prosecutor Liaison requires enables OIFP to open corresponding Training Program. that County Prosecutors provide OIFP with “Cumulative Monthly Reports” which set forth the names, addresses and other identifiers of all subjects under investigation in their offices for suspected insurance fraud. County Pros- ecutors update their reports on a monthly basis, including information concerning the type of suspected insurance fraud and the current status of any investigative or prosecutorial efforts undertaken in their offices with respect to the reported matters. This information is added to, and integrated into, OIFP’s own databases. By reviewing and tracking every insurance fraud matter opened by a County Prosecutor’s Office in the State, the County Prosecutor Liaison is able to identify cases which may already be the subject of an investigation by OIFP, and which would result in a duplicative, if not a dangerous, use of precious law enforcement resources. Whenever more than one law enforcement agency is investigating the same

67 Cooperation, Coordination and Communication Key to OIFP Success

civil investigations in cases where the tact with Investigators, Detectives and law provides authority for the imposi- Assistant Prosecutors in the County tion of a civil fine. Inasmuch as pros- Prosecutors’ Offices. The County Pros- ecutors are sometimes unable to suc- ecutor Liaison also meets regularly cessfully prosecute the subject of in- with representatives of County Pros- surance fraud investigations because ecutors’ Offices at quarterly regional they are unable to establish proof of law enforcement coordination meet- the suspected crimes “beyond a rea- ings hosted by OIFP at its three re- sonable doubt,” OIFP is often able to gional offices, where OIFP provides impose a civil fine on the very same guest speakers and opportunities for subjects reported by the counties in networking and sharing information as their monthly reports, because the im- to pending insurance fraud investiga- position of a civil penalty requires the tions within their respective offices. lesser burden of proof by a “preponder- The County Prosecutor Liaison also ance of the evidence.” conducts annual insurance fraud train- Accordingly, every case reported ing at OIFP’s central offices in by a County Prosecutor’s Office is Lawrenceville, New Jersey, and is promptly reviewed upon receipt by responsible for administering the OIFP to determine whether it is appro- County Prosecutor Insurance Fraud priate to assign for investigation by Reimbursement Program, which pro- OIFP Civil Investigators. Where it ap- vides funding that enables County pears that the matter falls within the Prosecutors to establish or augment purview of the Insurance Fraud Pre- Insurance Fraud Units within their of- vention Act (Fraud Act), which permits fices. In its fourth full year of operation the imposition of civil insurance fraud in 2003, the Reimbursement Program penalties, the matter is promptly as- provided over $3 million in funding to signed to a Civil Investigator, who con- County Prosecutors. tacts an Assistant Prosecutor or Inves- tigator in the reporting County Law Enforcement Liaison Prosecutor’s Office to identify an ap- In recognition of the fact that virtu- propriate point of contact and open a ally every law enforcement agency in channel of continuing communication New Jersey is apt to encounter insur- to coordinate the investigative and ance fraud at one time or another, prosecutorial activities of the reporting OIFP has also assigned a Law En- county with those of the OIFP Civil In- forcement Liaison to work with law en- vestigator. This process often enables forcement agencies other than those OIFP to obtain a voluntary Consent Or- agencies assigned to the County Pros- der, requiring a subject to pay a civil ecutor Liaison. The Law Enforcement fine, within the context of a negotiated Liaison’s primary responsibility is to en- guilty plea. Such reporting by County sure the appropriate coordination of Prosecutors in 2003 enabled OIFP to OIFP’s investigations and prosecutions open 797 civil cases for investigation. with those of other law enforcement Many of the most substantial fines im- agencies, both within and without New posed by OIFP in 2003 resulted di- Jersey. Those law enforcement agen- rectly from cases reported by County cies range from local and county police Prosecutors’ Offices. departments, to County Sheriffs’ De- In order to assist in particular in- partments, to the New Jersey State Po- vestigations and, when necessary, pro- lice, and their counterparts in adjoining vide technical assistance, the County states, as well as federal law enforce- Prosecutor Liaison is frequently in con- ment agencies having a presence in

68 New Jersey, such as the Federal The Law Enforcement Liaison also Bureau of Investigation. regularly attends meetings of numer- The Law Enforcement Liaison’s re- ous law enforcement and related orga- sponsibilities also include the adminis- nizations and associations, such as the tration of OIFP’s protocols for issuing Anti-Fraud Association of the North- documentation used in undercover in- east, the New Jersey Special Investi- vestigations, such as fictitious insur- gators Association, the Delaware Val- ance cards and pretext insurance poli- ley Chapter of the International Asso- cies, which contribute to the aura of au- ciation of Special Investigation Units, thenticity necessary to the success of the National Insurance Crime Bureau undercover sting operations. His re- (NICB), the Mid-Atlantic States Insur- sponsibilities also extend to the distri- ance Fraud Association (MASIFA) and bution of training and other informa- the Northeast Chapter of the Interna- tional materials to local police depart- tional Association of Vehicle Theft In- ments. For example, whenever OIFP vestigators. He is also responsible for produces a roll call training video, supervising OIFP’s informational dis- OIFP distributes those videos, through play booths at such events as the an- the Law Enforcement Liaison, to every nual NJSIA Conference and the Police Members of the OIFP executive law enforcement agency in New Jer- Expo held in conjunction with the an- staff (l. to r.) Stephen Moore, John sey, including county and municipal nual convention of the New Jersey J. Smith, Jr. and Melaine Campbell police departments. In 2003, in addi- Chiefs of Police Association. discuss an investigative plan during tion to OIFP’s initial distribution of roll Because insurance fraud is, by its a strategy session. call training videos to New Jersey law enforcement agencies, the OIFP Law Enforcement Liaison distributed another 44 training videos to requesting law enforcement agencies, including many from outside of New Jersey. The Law Enforcement Liaison was also responsible for the distribution of over 1,000 copies of OIFP’s Uninsured Mo- torist Identification Directory (UMID), which is produced by OIFP to provide law enforcement agencies with a comprehensive directory of insurance company insurance verification hotline telephone numbers. The UMID is now commonly used by patrol officers throughout New Jersey to verify the legitimacy of insurance cards presented to them by motorists. In his role as OIFP’s representative to the law enforcement community, the Law Enforcement Liaison is also responsible for scheduling and hosting OIFP’s regional law enforcement coordination meetings which, in 2003, featured guest speakers with expertise in such areas as identity theft, health care fraud and ethnic insurance fraud rings.

69 Cooperation, Coordination and Communication Key to OIFP Success

very nature, a crime of relative subtlety those cases where the request of an in- and complexity, it is essential that any surance company investigator for an ac- program to combat insurance fraud of- cident report is met with resistance by a fers training which is tailored to the local police department, OIFP’s Law En- needs and expertise of those who are forcement Liaison works as an interme- most likely to encounter such fraud in diary with local police departments to any of its many forms. As law ensure that the reports are provided as enforcement’s front line in the war on required by law. insurance fraud, local police officers frequently encounter situations in Insurance Industry Liaison which insurance fraud in one form or Because the overwhelming major- another may be lurking, yet traditional ity of OIFP’s insurance fraud cases re- law enforcement training has rarely sult from referrals made by the insur- provided those officers with the tools to ance industry, effective coordination effectively detect or investigate such and open channels of communication fraud. OIFP, however, has stepped in are essential to the success of both to fill that void and, through its Law En- OIFP and insurance industry fraud in- forcement Liaison, offers a compre- vestigations. Consequently, AICRA hensive roster of training opportunities for law enforcement officers at every specifically provided that OIFP should level of experience, including basic formally establish a liaison to ensure and in-service training in such areas continuing communications with insur- as identifying and charging offenses ers. OIFP’s Insurance Industry Liaison involving counterfeit insurance cards, is assigned a variety of responsibilities Director of Division of Criminal Justice falsely reported auto thefts and to ensure that the respective efforts of Vaughn L. McKoy gives keynote “staged” accidents. OIFP and insurance industry investiga- address at the New Jersey Special tors complement and assist one an- Investigators Association Seminar. OIFP’s Law Enforcement Liaison also routinely fields requests for assis- other in the investigation of suspected tance from other law enforcement insurance fraud. Among other things, agencies, and works diligently to en- the Insurance Industry Liaison ensures sure that such assistance is forthcom- that appropriate standards for referrals ing. In 2002 and 2003, the Law En- from insurance companies are estab- forcement Liaison worked closely with lished, maintained and communicated the Insurance Council of New Jersey to insurance industry investigators. (ICNJ) to assist insurance company in- Perhaps more importantly, the Insur- vestigators in obtaining accident re- ance Industry Liaison maintains a ports from local police departments. close working relationship with officials Police departments in New Jersey from all sectors of the insurance indus- have historically been reluctant to re- try, including both executive and staff lease accident reports to persons other level personnel, to ensure that issues than those involved in the reported ac- are identified and addressed both cidents because the reports have often promptly and effectively. been used by “runners” to recruit pa- As OIFP’s primary point of contact tients for medical and chiropractic with the insurance industry, the Insur- “treatment mills.” Pursuant to AICRA, ance Industry Liaison also provides however, insurance company investi- guidance, advice and technical assis- gators are entitled to receive informa- tance to the insurance industry with re- tion from such reports within 24 hours spect to a wide spectrum of issues and after the occurrence of an accident in concerns, such as the sharing of inves- which their company has an interest. In tigative information, compliance with

70 statutory reporting requirements, and the Theft Investigators Association and formulation of solutions to problems con- the Delaware Valley and national fronted by the insurance industry when meetings of the International Associa- dealing with insureds who commit insur- tion of Special Investigative Units. In ance fraud. The Insurance Industry Liai- 2003, the Insurance Industry Liaison son and his assistant provided assis- also provided training to nearly 2,000 tance or guidance to industry personnel employees of the insurance industry on 917 occasions in 2003. concerning the structure and opera- The Insurance Industry Liaison also tions of OIFP and insurance industry hosts the OIFP/Insurance Industry fraud reporting requirements. Working Group Meetings which regu- OIFP’s Insurance Industry Liaison larly meet to discuss, and seek solu- also works closely, on behalf of OIFP, tions to, issues and problems of the with the New Jersey Department of most concern to those in the insurance Banking and Insurance. In this regard, industry. Many proposals conceived in the Liaison’s responsibilities include these meetings have been refined and the coordination and tracking of OIFP incorporated as recommendations for cases which involve professionals li- legislative or regulatory reform by OIFP censed by the Department of Banking in its Annual Report to the Governor and Insurance, including licensed in- and Legislature. Different working surance producers, public adjusters groups have been established by the In- and real estate agents. In 2003, the In- surance Industry Liaison to address the surance Industry Liaison tracked 67 concerns of those in the insurance in- such cases. dustry working, respectively, in the ar- The program established by the In- eas of property and casualty insurance, surance Industry Liaison in 2002 to dis- as well as those working in the areas of tribute OIFP’s press releases to ap- life and health insurance. The Insurance proximately 125 insurance industry offi- Industry Liaison has also been an im- cials grew substantially in 2003, as the portant member of OIFP’s working list of those wishing to receive the group created to implement AICRA’s re- press releases continues to expand. As quirement that OIFP establish a data- noted elsewhere in this Report, the In- base incorporating all paid claims in surance Industry Liaison also contin- New Jersey involving automobile insur- ued to play a significant role in OIFP’s ance. It is anticipated that regulations public awareness programs, distribut- reflecting the deliberations of this working thousands of fraud awareness ing group will be adopted in 2004. posters and brochures, and again play- OIFP is also represented by the ing an important part in planning and Insurance Industry Liaison in meetings conducting both the Annual Confer- with insurance companies and insur- ence of the New Jersey Special Inves- ance industry trade associations, which tigators Association and the annual provide a continuing opportunity for the New Jersey Insurance Fraud Summit. candid exchange of information and ideas on matters of mutual interest. Among the meetings attended by the Insurance Industry Liaison in 2003 were gatherings of the Anti-Fraud As- sociation of the Northeast, the NICB, the Insurance Council of New Jersey, the New Jersey Special Investigators Association, the New Jersey Vehicle

71 Cooperation, Coordination and Communication Key to OIFP Success

Professional County Prosecutor’s Office or one of the Boards Liaison State’s professional licensing boards. The database includes information concerning the nature and source of the Because many types of insurance complaint or referral, as well as the sta- fraud are committed by individuals who tus of any proceedings brought by the are licensed to provide medical and Enforcement Bureau of the Division of other health related services, OIFP has Consumer Affairs, the enforcement arm also designated an individual within its of the licensing authorities. It also in- Liaison Section to act as its “Profes- cludes information as to the status of sional Boards Liaison.” Among those any investigation or prosecution of a licensed individuals who sometimes listed licensee by OIFP or a County succumb to the temptation to commit Prosecutor’s Office. The Professional insurance fraud are physicians, chiro- Boards Liaison has also established a practors, pharmacists, physical thera- protocol providing for the prompt notifica- pists, dentists and others in the allied tion to the professional licensing boards medical professions. Effective coordi- whenever OIFP undertakes investigation nation between OIFP and professional of a licensee under a board’s jurisdic- licensing authorities is essential to en- tion, as well as a reciprocal requirement sure that complaints received by OIFP providing that professional licensing involving licensed professionals are boards advise OIFP whenever they re- brought to the attention of the appropri- ceive a complaint against one of their ate licensing authorities, and that those licensees involving insurance fraud. authorities are provided with such in- The Professional Boards Liaison formation as may be necessary to en- conducts bi-monthly meetings with key able those authorities to take appropri- members of the Division of Consumer ate action against licensees who have Affairs Enforcement Bureau and OIFP committed, or are suspected of com- supervisory investigative and mitting, insurance fraud. Coordination prosecutorial personnel to review and by the Professional Boards Liaison discuss the status of any proceedings, also ensures that, whenever a com- whether planned or pending, against plaint to one of the licensing authorities any licensee in the database, whether involves possible insurance fraud, the those proceedings are administrative, matter is brought to the attention of criminal or civil in nature. By sharing in- OIFP investigators in order to deter- formation in this manner, the Profes- mine whether a civil or criminal investi- sional Boards Liaison is able to ensure gation by OIFP is warranted. In the ab- that actions taken by one agency do sence of such coordination, matters not, in any way, negatively impact upon under review by the professional li- the proceedings of any other agency censing boards might otherwise escape concerned with the licensee under the scrutiny of law enforcement authori- scrutiny. The exchange of information ties or, conversely, matters under inves- at these meetings also enhances the tigation by OIFP or County Prosecutors’ ability of each agency to more effec- Offices might otherwise avoid review by tively conduct its own investigations, the professional licensing boards. and to determine whether further pro- OIFP’s Professional Boards Liai- ceedings may be warranted with re- son has established, and maintains, a spect to a particular licensee. comprehensive database of profes- This group, designated as the Liai- sional licensees who have been the son and Continuing Communications subject of complaints to either OIFP, a Group, monitored some 626 active insur-

72 ance fraud related cases in 2003. Since its inception late in 1998, the Group has reviewed and disposed of 693 cases through civil or criminal dispositions by OIFP, licensing sanctions by a professional licensing board or by administrative closure. Of those under review in 2003, ten licensed professionals were indicted, 15 pled guilty or were found guilty after trial, and nine received sentences ranging from one year of probation with restitution and fines, to jail terms of up to three years. This collaboration between OIFP and the professional licensing boards has also facilitated the imposition of various disciplin- ary actions by professional and occupa- tional boards within the Division of Con- sumer Affairs involving 26 licensed professionals in 2003. Like his counterparts in OIFP’s Liai- son Section, the Professional Boards Li- aison communicates daily with professionals in such other agencies as the Board of Medical Examiners and the Chiropractic, Dentistry, Pharmacy, and Nursing Boards, providing them with technical assistance and advice as needed. Within OIFP, the Professional Boards Liaison also works closely with the Case Screening Litigation and Ana- lytical Support Section (CLASS) to make sure that referrals to OIFP involving professional licensees are entered into the database which he maintains, and to make sure that those matters are properly assigned and coordinated among investigators and attorneys in OIFP’s criminal and civil sections. Though the Legislature’s statutory mandate may have required a mechanism within OIFP to oversee and coordinate insurance fraud efforts throughout the State, those within OIFP’s Liaison Section have personally adopted as their credo, “Leadership through Communication, Cooperation and Coordination.”

73 OIFP Funds County Prosecutors’ Insurance Fraud Fighting Efforts

First Assistant Insurance Fraud Prosecutor John J. Smith, Jr. (c.right) suggests investigative strategy at a meeting with Union County Prosecutor’s Office staff.

74 OIFP Funds County Prosecutors’ Insurance Fraud Fighting Efforts

by Stephen D. MooreMoore.

Aided by funding provided by the ment Program, administered by OIFP Office of the Insurance Fraud Prosecu- on behalf of the Attorney General, has tor (OIFP), New Jersey’s County Pros- funded fraud fighting personnel and ecutors continued in 2003 to expand equipment in 20 of the State’s 21 their efforts in the State’s war on insur- County Prosecutors’ Offices. ance fraud through the undertaking of The funding of County Prosecu- criminal investigations and prosecutors’ Offices to enhance their ability to tions at the county level. From an investigate and prosecute insurance Essex County initiative targeting own- fraud is an integral part of New ers who burn their cars in order to file Jersey’s broad-based war on insur- phony insurance claims to a unique ance fraud because County Prosecutors Salem County ride along program are often able to detect, investigate aimed at drivers who use fraudulent in- and prosecute insurance scams surance identification cards, County which might otherwise “fly below the Prosecutors have used OIFP funding radar screen” of a statewide criminal to launch or toughen programs to catch justice agency. Through their close and punish insurance cheats. working relationship with local law en- Pursuant to the Automobile Insur- forcement agencies, their cultivation of ance Cost Reduction Act of 1998 local informants, their ability to tap local (AICRA), the Attorney General is au- law enforcement resources and their thorized to reimburse County Pros- unique familiarity with local crime de- ecutors for their efforts to combat in- mographics, County Prosecutors are of- surance fraud. Since its inception in ten able to identify and develop promis- 1999, the New Jersey County Pros- ing leads which culminate in successful ecutor Insurance Fraud Reimburse- criminal prosecutions.

75 OIFP Funds County Prosecutors’ Insurance Fraud Fighting Efforts

expeditiously and efficiently as possible. In 2003, the Essex County Ve- hicle Fire Initiative opened well over 300 cases involving over $3 million in potential insurance claims. All of these cases were also reported by the Essex County Prosecutor’s Office to OIFP on monthly reporting forms, which enabled OIFP to open civil insurance fraud investigations to complement any criminal prosecutions ultimately undertaken by the Essex County Prosecutor’s Office. Without funding from OIFP, local law enforcement authorities would have lacked sufficient resources to adequately investigate most of these cases. At the other end of New Jersey, in Salem County, OIFP funding enabled the Salem County Prosecutor’s Office to implement a new Insurance Fraud Ride Along Program. Under this Pro- gram, the county’s OIFP funded insurance fraud Investigator rides along with municipal police officers in patrol cars which have been specifically assigned to make motor vehicle stops to perform With OIFP’s financial backing, document checks, which include verify- County Prosecutors continued in 2003 ing the authenticity of motor vehicle in- to implement new and innovative initia- surance identification cards produced by tives carefully tailored to investigate the vehicles’ drivers. In order to verify and prosecute insurance cheats within whether a card is fictitious, or whether their jurisdictions. In Essex County, the underlying insurance was canceled New Jersey’s most urban county, the for non-payment of premium, the Pro- Essex County Prosecutor used OIFP gram relies, in large part, upon the Unin- funding to inaugurate an Essex County sured Motorist Identification Directory Vehicle Fire Initiative at the end of (UMID) issued by OIFP to all County 2002. The Initiative hit its stride in 2003 Prosecutors’ Offices and all local police as it implemented protocols for pro- departments. The UMID, a directory of cessing, reviewing and screening all insurance company “hotline” numbers, vehicles burned in the county. The Ini- was specifically compiled, published and tiative operates as a separate program distributed to law enforcement agencies within the Essex County Arson Task throughout New Jersey by OIFP in order Force. Personnel assigned to the Initia- to provide them with an efficient and ef- tive work closely with insurance com- fective tool to directly contact insurance pany investigators and local police de- companies to verify insurance coverage. partment detectives to ensure that ev- Salem’s Ride Along Program resulted in ery motor vehicle fire in the county is the charging of numerous drivers with investigated by qualified personnel as the crime of displaying a fictitious insur-

76 ance identification card, and has sent a lion in 2003 and supported or contributed message to drivers in Salem County that to the salaries of 40 detectives and in- using a counterfeit insurance card in lieu vestigators, nine assistant prosecutors of properly insuring one’s vehicle is a and six technical and administrative sup- crime in New Jersey. port staff assigned to investigate and In 2003, the OIFP funded insurance prosecute insurance fraud. Pursuant to fraud unit in the Morris County the requirements of AICRA and the Prosecutor’s Office was empowered by County Prosecutor Insurance Fraud Re- the Morris County Prosecutor’s issu- imbursement Program, county insurance ance of a county-wide directive to all po- fraud units work closely and coordinate lice departments in Morris County. The their activities with OIFP on an ongoing Directive required all police departments basis. All County Prosecutors’ Offices to complete and submit specific reports submit periodic reports to OIFP, which to the Morris County Prosecutor’s Office include names, addresses and other in every case where a motor vehicle is pertinent identifying information regard- reported stolen, in every case where a ing any subjects under investigation for motor vehicle that had previously been reported stolen is recovered, and in every case where a person presents a police officer with a fictitious or fraudulent insurance identification card. The Directive is intended to ensure that every possible insurance fraud case involving a motor ve- OIFP Funds hicle theft or counterfeit insurance card is brought to the attention of detectives and prosecutors who are experienced in in- State Police Fraud Unit to vestigating and prosecuting cases of insurance fraud. The Directive serves as a Fight Insurance Fraud model of what can be accomplished Fight Insurance Fraud when a County Prosecutor takes bold As part of its multi-faceted program to combat insurance fraud, the New steps to ferret out insurance fraud. Jersey Office of the Insurance Fraud Prosecutor (OIFP) also provides funding After a brief hiatus, in 2003, the which pays the salaries of the eight New Jersey State Troopers assigned to the Union County Prosecutor’s Office re- Insurance Fraud Unit of the New Jersey State Police (NJSP). Established with the joined the County Prosecutor Insurance assistance of OIFP in 1999, the Unit targets motorists on roadways within the Fraud Reimbursement Program with a jurisdiction of the State Police who violate New Jersey’s insurance laws. Since it renewed vigor and the assignment of began operation, the NJSP Insurance Fraud Unit has opened more than 800 highly experienced investigators and insurance fraud related investigations, and filed over 900 charges against more prosecutors to its Insurance Fraud Unit. than 850 individuals. Most of the efforts of the Unit have focused on the With funding provided through OIFP, the widespread use of counterfeit or “fictitious” automobile insurance identification Union County Prosecutor’s Office re- cards by motorists attempting to circumvent New Jersey’s system of mandatory structured its insurance fraud investiga- automobile insurance. tive unit and developed a close working In 2003, the NJSP Insurance Fraud Unit reported that it initiated relationship with the highly successful approximately 166 insurance fraud investigations, effected 172 arrests and filed Essex/Union Auto Theft Task Force, a 135 insurance fraud related charges. The Unit has also conducted, or participated relationship that promises to yield the in, the training of hundreds of law enforcement officers at the municipal and State Unit significant insurance fraud leads. levels with respect to identifying, investigating and charging offenses involving Funding provided by OIFP to these the use of counterfeit insurance cards. County Prosecutors’ Offices and others throughout the State, totaled over $3 mil-

77 OIFP Funds County Prosecutors’ Insurance Fraud Fighting Efforts

insurance fraud within their offices. The cooperation provided by County Pros- status of all matters under investigation ecutors’ Offices investigators and assis- are updated in monthly reports which tant prosecutors funded by OIFP. provide OIFP with information which is County Prosecutors’ Insurance added to its own database of cases to Fraud Units charged a total of 393 defen- ensure that its own investigations do dants in 2003 and obtained 175 convic- not duplicate or overlap those under- tions by guilty plea or trial, which re- taken by the counties. sulted in jail terms of more than 61 The information reported by county in- years in the aggregate. Some of their surance fraud units funded by OIFP en- most notable cases are summarized in ables OIFP, in most cases, to open cor- this Report. responding civil cases whenever it appears that OIFP may have authority to impose a civil fine pursuant to the provisions of the Insurance Fraud Prevention Act. In 2003, the reporting of subjects under investigation by County Prosecu- tors’ Offices resulted in OIFP opening nearly 800 (797) civil investigations, most of which would not have come to OIFP’s attention but for the reports submitted by the counties. Many of the substantial civil cases opened by OIFP-Civil have resulted from these county referrals. The civil investigations conducted by OIFP as a result of these county referrals benefit from the assistance and

78 79 Insurance Fraud Case Highlights

OIFP Deputy Attorney General Frank Holstein addresses the Honorable Frederick De Vesa in Middlesex County Superior Court.

80 Insurance Fraud Case Highlights

The law provides for a number of however, other sanctions may be im- means by which the Office of the Insur- posed upon Medicaid defendants, such ance Fraud Prosecutor (OIFP), and as debarment from participation in the those law enforcement agencies work- Medicaid Program as a Medicaid pro- ing in conjunction with OIFP, can take vider. Where a criminal prosecution is action against insurance fraud viola- not viable, Medicaid providers may tors. The most formidable of those ac- also be sued under civil federal or tions are those involving criminal pros- State false claims statutes. Oftentimes, ecutions. Criminal prosecutions may these cases result in settlements in- result in penalties ranging from the im- volving restitution and the imposition of position of State prison or county jail civil fines. Highlights of such cases are sentences to probationary or diversion- included herein. ary dispositions. These sentences are The Insurance Fraud Prevention also usually accompanied by the impo- Act (Fraud Act), N.J.S.A.17:33A-1, et sition of criminal fines and/or the pay- seq., specifically provides OIFP with ment of restitution. Summaries of some authority to impose civil fines on insur- of the most significant criminal cases ance fraud violators in addition to or as brought by OIFP and County Prosecu- an alternative to criminal prosecution. tors in 2003 are set forth in this section Summaries of cases in which OIFP en- of the Report. tered into Consent Orders providing for Those who defraud the Medicaid the voluntary payment of such fines, as Program are subject to the same crimi- well as cases in which OIFP’s civil at- nal sanctions as those who defraud pri- torneys pursued such violators through vate insurance carriers. In addition to civil litigation are also included. the imposition of criminal penalties, When persons who are licensed by

81 Insurance Fraud Case Highlights

the State commit insurance fraud, ac- ees who committed insurance fraud. tion may be taken by the appropriate li- As reflected in the criminal table, in censing board against the person’s li- 2003, OIFP opened 474 new criminal cense. Such actions may include the investigations and filed criminal suspension or revocation of the li- charges by Accusation or indictment cense, or provide for a voluntary sur- against 337 defendants. OIFP prosecu- render of the license. Summaries of tions during the year resulted in the cases in which licensing authorities conviction of 204 defendants. Of the and OIFP coordinate their efforts in or- 224 defendants sentenced in 2003, 46 der to effect a licensing sanction are received jail terms totaling 117 years. also included in this Report. Further, a total of over $8 million in res- The following tables summarize titution was ordered, including restitu- OIFP’s 2003 statistics in criminal and tion imposed in civil actions. civil actions. Also included is a table of As indicated in the civil table, OIFP licensing actions taken by the licensing opened 10,100 new civil insurance authorities against professional licens- fraud cases in 2003 and assigned

OIFP Criminal Investigations and Prosecution Statistics January 1, 2003 - December 31, 2003

New Cases Opened 474 Indictments/Accusations Filed 215 Number of Defendants Charged 337 Number of Defendants Convicted 204 Number of Defendants Sentenced 224 Number of Defendants Sentenced to State Prison 26 Total Number of Years 106 Number of Defendants Sentenced to County Jail 20 Total Number of Years 11 Total Criminal Fines Imposed $24,350 Total Criminal Penalties Imposed $34,805 Total Civil Penalties/Fines Imposed in Medicaid Cases $2,813,927 Total Restitution Imposed $8,028,5951

1. This total includes restitution imposed in all OIFP criminal and civil actions.

82 OIFP Civil Investigations and Litigation Statistics2 January 1, 2003 - December 31, 2003

Civil Investigations Number Dollar Amount New Cases Opened 10,100 - Number Forwarded for Investigation 5,776 - No Investigation Warranted 4,324 -

Sanctions Imposed Insurance Fraud Letters of Admonition 2,251 - Administrative Consent Orders Issued 563 $3,312,750 Administrative Consent Orders Executed 359 $1,251,613 Settlements Entered 168 $519,024 Judgments Entered 397 $3,094,195 Complaints Filed 284 -

Collections (Department of Banking and Insurance)3 Number of OIFP Accounts Paid in Full 562 - Total Amount Received - $1,846,821

2. These statistics comprehensively reflect the number of discrete actions undertaken by the Office of the Insurance Fraud Prosecutor in pursuing civil sanctions against insurance fraud violators. It should be noted that, in some instances, more than one action was taken against a single violator or for a single violation.

3. These figures were reported by the Department of Banking and Insurance which is responsible for the Collections function.

5,776 for further investigation. OIFP issued 563 Administrative Consent Or- ders totaling $3,312,750 during 2003. OIFP obtained 359 Executed Consent Orders totaling $1,251,613 in which subjects voluntarily admitted committing insurance fraud and agreed to pay the civil fine imposed. In addition, OIFP effected 168 settlements totaling $519,024 and obtained 397 judgments totaling $3,094,195. Further, OIFP civil attorneys filed 284 lawsuits against Fraud Act violators in 2003.

83 OIFP Criminal Case Descriptions – Insurance Fraud

Auto scheduled to be sentenced early in 2004. The remaining defendants are Insurance Fraud pending trial.

Altering of Vehicle Criminal Identification Use of “Runners”

State v. State v. Rafael “Bugzy” Ramos, Ian Haynes Ceaser Labrego, et al. On April 15, 2003, an Accusation Investigators from the Office of the was filed charging Ian Haynes, an East Insurance Fraud Prosecutor (OIFP) ar- Orange police officer, with bribery and rested Rafael “Bugzy” Ramos and corrupt influence for accepting money Ceaser Labrego for engaging in a from a “runner” for East Orange Police scheme to sell re-tagged vehicles, in- Department accident reports. A “run- cluding high end luxury vehicles, in ner” is a person paid by a licensed some cases using fraudulently gener- medical service provider to procure pa- ated automobile documentation. A re- tients for a medical practice so that in- tagged vehicle is one in which the Ve- surance claims can be submitted for hicle Identification Number (VIN) has providing treatment. On May 31, 2003, been altered to conceal the identity of Haynes was admitted into the PTI Pro- the rightful owner. Further investigation gram conditioned upon completing 50 resulted in a State Grand Jury indict- hours of community service. ment variously charging Rafael “Bugzy” Ramos, Ceaser Labrego, Neil State v. Arruda, Hernando Cardoso, Richard Cyrano Green Pina, Manuel Pinto, and Denise Braga On March 24, 2003, Cyrano Green Simao with conspiracy, alterations of was sentenced to three years in State motor vehicle trademarks and identifi- prison after a jury found him guilty of cation numbers, receiving stolen prop- conspiracy, official bribery, and gifts to erty, tampering with public records or public servants. Green, acting as a information, attempted theft and theft “runner,” conspired with an undercover by deception. In a separate indictment, Newark police officer to provide Green Michael Garafalo was charged with re- with Newark Police Department auto- ceiving stolen property. mobile accident reports in order to so- On October 9, 2003, Pina pled licit the persons named in those re- guilty to theft by deception and was ad- ports to become insurance claimants. mitted into the Pre-Trial Intervention (PTI) Program conditioned upon performing 50 hours of community service. On October 9, 2003, Garafalo pled guilty to receiving stolen property and, on the same date, was admitted into the PTI Program conditioned upon performing 50 hours of community service. On December 15, 2003, Labrego pled guilty to alterations of motor vehicle trademarks and identification numbers. He is

84 State v. time. As a result of the phony accident ance Company and AIG Claims Ser- Rajauhn Sharrieff, Shirley described in the fictitious police report, vices, Inc. It also alleged that Dr. Lobo Jenkins, Abdul Jenkins Colonial Penn Insurance Company paid and Mercy Lobo prepared false patient and Bernard Zeigler approximately $1,563 for alleged prop- records to reflect that certain health On March 31, 2003, a State Grand erty damage to an automobile. The State care services were rendered when Jury returned an indictment charging also alleged that Zeigler settled a phony those services were not, in fact, ren- Rajauhn Sharrieff, Shirley Jenkins, bodily injury claim, based in part on the dered, so that phony bills could be and Abdul Jenkins with conspiracy, phony accident report, for approximately submitted to the insurance carriers. All several counts of bribery in official $15,000 with Colonial Penn. of the claims which formed the basis of matters, and health care claims fraud. Zeigler pled guilty to conspiracy, the health care claims fraud charges In a separate but related indictment, health care claims fraud, and theft by were for services rendered to OIFP Bernard Zeigler was charged with deception and was sentenced on Sep- investigators working undercover as conspiracy, health care claims fraud, tember 8, 2003, to two years probation patients treating at the Pain Manage- and theft by deception. conditioned upon paying $36,563 in res- ment Clinic. Parkway Insurance paid The first indictment alleged that, be- titution to Colonial Penn Insurance Com- PIP claims totaling approximately tween February of 1999 and October of pany and payment of a $3,000 civil in- $6,481, while AIG Claims Services, 1999, Sharrieff, Shirley Jenkins, and surance fraud fine. Shirley and Abdul Inc., paid PIP claims in the approxi- Abdul Jenkins conspired to pay bribes to Jenkins pled guilty to conspiracy, bribery mate amount of $2,150. On September an East Orange police officer who was in official matters, and health care 11, 2003, Angel Lobo pled guilty to working in an undercover capacity for claims fraud. On October 3, 2003, health care claims fraud and is sched- OIFP. The undercover investigation fo- Shirley Jenkins was sentenced to two uled to be sentenced early in 2004. On cused on allegations that persons were years probation conditioned on serving October 30, 2003, Mercy Lobo pled acting as “runners” on behalf of various 90 days in county jail. On the same guilty to health care claims fraud and medical service providers to obtain auto- date, Abdul Jenkins was sentenced to is also scheduled to be sentenced mobile accident police reports so that 364 days in county jail as a condition of early in 2004. the persons identified in those police re- three years probation. The case as to ports could be solicited to become pa- Sharrieff is pending trial. Sharrieff was tients of the medical service providers also named in a separate indictment as and file automobile PIP insurance part of the Allied Trauma investigation. claims. The indictment also alleged that State v. the defendants agreed to pay the under- Dr. Angel Lobo cover East Orange police officer several and Mercy Lobo hundred dollars for a genuine East Or- ange police automobile accident report, A State Grand Jury charged Angel so that the “runners” could coax the per- Lobo, M.D., and Mercy Lobo with con- sons identified in those reports to submit spiracy, health care claims fraud, theft PIP claims. It also specifically alleged by deception, criminal use of “runners,” and falsification of medical records. Dr. that Sharrieff solicited the undercover po- Angel Lobo, a licensed medical service lice officer to create a fictitious automo- provider, and his office manager, Mercy bile accident police report in which sev- Lobo (no relation), operated the medi- eral people were falsely represented to cal practice known as Pain Manage- have been involved in a hit and run auto- ment Clinic located in Paterson. The mobile accident that purportedly oc- indictment alleged that Dr. Lobo and curred on March 11, 1999, in East Or- Mercy Lobo paid persons to act as ange. The accident purportedly involved “runners” to procure patients for the four persons who were passengers in medical practice so that PIP insurance Sharrieff’s car, though Sharrieff was not claims for medical services rendered reported as the driver of the car at that could be submitted to Parkway Insur-

85 OIFP Criminal Case Descriptions – Insurance Fraud

State v. Chiropractic Licensing Board for Michael Baer appropriate licensing action. A State Grand Jury indicted Dr. Michael Baer for health care claims State v. fraud, criminal use of “runners,” and theft by deception. According to the Lt. Jerome F. Bollettieri, indictment, Dr. Baer, a chiropractor Sgt. Thomas G. DiPatri (ret.), who owned and operated his own chi- Sgt. Philip N. Ferrari (ret.) ropractic practice, allegedly submitted and Charles Warrington, II false PIP insurance claims on behalf In 2002, a State Grand Jury re- of patients who were undercover in- turned an indictment charging former vestigators, to Hanover Insurance Camden Police Department Lt. Company and Parkway Insurance Jerome F. Bollettieri and Sgt. Tho- Company totaling nearly $20,153. The mas G. DiPatri (ret.) with conspiracy, indictment also alleged that Dr. Baer official misconduct, bribery, and knowingly used, solicited, or em- criminal use of “runners.” At the time ployed “runners” to procure patients of the conduct alleged in the indict- for his chiropractic practice. On June ment, Bollettieri was the officer in 17, 2003, Baer pled guilty to health charge of the Camden Police care claims fraud and criminal use of Department’s Traffic Records Bu- “runners.” He is scheduled to be reau. According to the indictment, sentenced early in 2004. The matter DiPatri, a retired Camden police of- was also referred to the Chiropractic ficer, illegally obtained police acci- Licensing Board for appropriate dent reports from Bollettieri by pay- licensing action. ing him bribes. The indictment also alleged that DiPatri obtained the po- State v. lice accident reports to identify per- Mohsen Mosslehi sons who were in automobile acci- A State Grand Jury returned an dents in order to solicit prospective indictment charging Dr. Mohsen patients for treatment at American Mosslehi with health care claims Spinal Care, Inc., (ASC), a fraud, criminal use of “runners,” and Collingswood chiropractic facility theft by deception. According to the in- which submitted PIP automobile indictment, Dr. Mosslehi, a chiropractor surance claims to insurance compa- who owned and operated his own chi- nies. On August 8, 2003, following a ropractic practice, allegedly submitted six day bench trial, Thomas DiPatri false PIP insurance claims to Colonial was found guilty of all the charges. Penn Insurance Company and Park- On October 3, 2003, DiPatri was way Insurance Company totaling ap- sentenced to three years in State proximately $4,363 on behalf of pa- prison. The case as to Bollettieri is tients who were actually undercover pending trial. investigators. The indictment also alleged that Dr. Mosslehi knowingly employed “runners” to procure patients for his chiropractic practice. On Octo- ber 2, 2003, following a 14 day jury trial in Essex County, Mosslehi was acquitted of the charges. The matter, however, was also referred to the

86 Fraudulent were not injured. The first indictment PIP Insurance Claims further alleged that, between May 1, 1998 and October 4, 2000, DiLisio Involving Health and the other defendants submitted Care Providers a dozen false claims to Allstate In- surance Company, Selective Insur- State v. ance Company, G.U.F.A.C. Insur- Franca DiLisio, et al. ance Company, and Colonial Penn On July 30, 2003, a State Grand Insurance Company for purported Jury returned two indictments charg- chiropractic treatments on 302 sepa- ing a licensed chiropractic physician rate dates for patients who had not and seven other persons variously appeared for those treatments. with health care claims fraud, crimi- Those claims totaled approximately nal use of “runners,” theft and $36,380, of which $3,435 had been attempted theft by deception. One paid by insurance carriers. defendant was also charged with The second indictment charged misconduct by a corporate official. Marie Amay, Imaguerite Francois, All of the charges relate to allega- Mimose Pierre, Joane Amay, and tions that the defendants staged ac- Murielle Francois with health care cidents for the purpose of submitting claims fraud and attempted theft by phony PIP insurance claims to five deception for acting as passengers insurance carriers, or that automo- in staged accidents and generating

bile insurance companies were billed phony medical treatment claims. for chiropractic treatments that were DiLisio allegedly submitted 16 PIP never rendered. insurance claims for these defen- The first indictment alleged that, dants to Allstate Insurance Com- between May 1, 1998 and October 4, pany, Selective Insurance Company, 2000, Franca DiLisio, a licensed chi- Colonial Penn Insurance Company, ropractor, arranged staged accidents Crawford Insurance Company, and with the assistance of Gerard Blanc Ohio Casualty totaling $65,153. and Rolando Pierre, who acted as a None of the 16 PIP claims were paid. “runner.” It also alleged that the ac- Some of these cases are also pend- cidents were staged so DiLisio could ing in civil court and/or arbitration. treat the occupants of the vehicles in The criminal cases of all eight defen- the staged accidents for injuries they dants are awaiting trial. purportedly sustained, and then bill insurance carriers for PIP insurance claims even though the patients

87 OIFP Criminal Case Descriptions – Insurance Fraud

State v. legal patient referral fees (known as Lisa Tsilionis, George Tsilionis, “runners’ fees”) that Lisa and Carl Love, Jr., Rajauhn Sharrieff George Tsilionis paid to Love, and Rudolf Hora Sharrieff, and Hora as purported On December 11, 2003, a State transportation costs. Grand Jury returned an indictment The indictment also alleged that charging Lisa Tsilionis and her Love and Sharrieff, through Essex former husband, George Tsilionis, Shuttle, fraudulently billed various in- who were both chiropractors and the surance carriers approximately owners and operators of Allied $5,400 for transportation services Trauma and Health Care Center, that were not rendered. The indict- Inc., with conspiracy, health care ment alleged that Love, who was the claims fraud, theft by deception, president and owner/operator of money laundering, and misconduct Essex Shuttle, Inc., as well as an- by a corporate official. The indict- other patient transportation corpora- ment also charged Carl Love, Jr., tion operating out of East Orange, and Rajauhn Sharrieff, who operated used his corporations to solicit pa- Essex Shuttle, Inc., a transportation tients for Allied Trauma, acting, in company which purportedly trans- essence, as a “runner.” The indict- ported patients to and from medical ment alleged that, while both of appointments, with conspiracy, these businesses were purportedly health care claims fraud, theft by de- incorporated to transport PIP claim- ception, and misconduct by a corpo- ants to and from treating medical rate official. Another defendant, service providers, Love actually used Rudolf Hora, was charged with con- his corporations to solicit patients for spiracy. Love was also separately Allied Trauma so that automobile in- charged with unlawful possession of surance PIP claims could be submit- a weapon. ted to insurance companies. Most of According to the indictment, be- Allied Trauma’s patients were auto- tween July of 1996 and March of mobile accident insurance claimants 1999, Lisa and George Tsilionis, in who sought treatment at Allied their capacities as owners and op- Trauma Chiropractic under their au- erators of Allied Trauma, Inc., tomobile insurance PIP coverage. fraudulently billed numerous insur- The indictment alleged that Love ac- ance companies for chiropractic ser- cepted payments from the vices and electro- diagnostic tests Tsilionises in return for directing pa- known as Somatosensory Evoked tients to Allied Trauma for treatment Potentials (SSEP) that they had not so that false PIP claims could be provided. The State also alleged that submitted to various automobile in- the Tsilionises, through Allied surance companies for diagnostic Trauma, fraudulently billed approxi- tests and other chiropractic treat- mately 30 different insurance carriers ments and services that were not ac- over $1.2 million of which approxi- tually rendered to the patients. Love mately $435,000 was paid. The in- Courier, Essex Shuttle, and Allied dictment further alleged that, be- Trauma all ceased operations follow- tween June of 1998 and December ing the commencement of the of 1998, Love and Sharrieff created State’s investigation in approxi- a patient transportation business mately March of 1999. called Essex Shuttle, to disguise il- As part of the joint investigation conducted by OIFP and the Division

88 of Criminal Justice’s Civil Forfeiture State v. Operation Unit, bank accounts for Love Cou- Diane Hughes rier, Inc., and Essex Shuttle totaling On February 24, 2003, a “Give and Go” approximately $2,800 were frozen Monmouth County Grand Jury re- subject to possible forfeiture. Addi- turned an indictment charging Diane On June 18, 2003, OIFP ob- tionally, a lien was filed on Love’s Hughes with theft by deception, tam- tained 22 criminal indictments residence in West Orange, and he pering with public records, and falsi- against 38 persons on charges that subsequently filed for bankruptcy. fying records. The indictment alleged they planned or participated in The State also seized and forfeited that, on May 7, 2001, Hughes re- owner-involved automobile thefts, the Tsilionis home in Bergenfield and ported to the Eatontown Police De- otherwise known as automobile approximately $895,000 in bank ac- partment and her insurance com- “give-ups,” in order to collect more counts they controlled. All defen- pany, State Farm, that her 2000 than $790,000 in bogus insurance dants are awaiting criminal trials. Mazda Millenia had been stolen claims. As a result of a complex un- from the Monmouth Mall when her dercover investigation probing phony Fraudulent Automobile car had actually already been lo- “owner initiated” automobile “give-up” Theft Claims cated by New York City police. insurance claims, these individuals Hughes pled guilty to theft by de- were charged variously with con- ception and was admitted into the spiracy, theft by deception, receiving State v. PTI Program on July 3, 2003, condi- stolen property, tampering with pub- Geuris Valdez-Fernandez tioned upon paying restitution in the lic records or information, false On March 14, 2003, Geuris amount of $20,938 and a $5,000 swearing, alterations of motor ve- Valdez-Fernandez was entered into civil insurance fraud fine. She was hicle identification numbers, and the PTI Program for 36 months con- also ordered to perform 75 hours of simulating a motor vehicle insurance ditioned upon paying restitution to community service. identification card. Newark Insurance Company in the OIFP initiated this undercover in- amount of $10,154 and a civil insur- State v. vestigation in order to address the in- ance fraud fine of $4,000. Valdez- Diana Fonseca creasing problem of automobile theft Fernandez previously pled guilty to On April 11, 2003, Diana and automobile insurance “give-ups” an Accusation charging him with Fonseca was sentenced to three in North Jersey. OIFP investigators, conspiracy. Valdez-Fernandez ad- years probation conditioned upon working undercover, leased a garage mitted that, on October 17, 2001, he paying restitution in the amount of on Tonnele Avenue in Jersey City voluntarily gave his 1998 Toyota $13,527 to Liberty Mutual, a $5,000 and, in the guise of an auto repair fa- Camry to another individual for the civil insurance fraud fine, and com- cility, spread the word that anyone purpose of disposing of the vehicle pleting 100 hours of community ser- who owned or leased a car and in order to have the insurance com- vice. Fonseca pled guilty to an Ac- wanted to get rid of it to avoid further pany pay off the outstanding loan ob- cusation charging her with theft by car payments or lease payments, or ligation and to avoid continued auto- deception. Fonseca admitted that, because the car was damaged or mobile payments. on July 27, 2001, she falsely re- needed expensive repairs, could “give ported her vehicle stolen in order to it up” at the facility or to the facility submit a fraudulent stolen vehicle operators. An automobile “give-up” is claim to Liberty Mutual Insurance the term given by insurance fraud Company. Liberty Mutual paid the investigators to the voluntary trans- claim totaling $13,130 to Fonseca fer of an automobile by the owner to and the lien holder. She also admit- another person who then disposes ted that she arranged to have an- of the vehicle, often for a cash pay- other person dispose of her vehicle ment, for the purpose of allowing so that she could submit the fraudu- the owner to file a false auto insur- lent insurance claim. ance theft claim with his automobile insurance carrier and collect

89 OIFP Criminal Case Descriptions – Insurance Fraud

insurance money for the phony of the investigation were returned to Martinez pled guilty to receiving stolen theft, or to have his car loan or car the insurance companies or to the le- property, namely, a stolen Cadillac lease paid off by the insurance carrier. gitimate holder of title to the car. Escalade. On November 7, 2003, he In the course of the investigation, Restitution for the amount of claims was admitted into the PTI Program State Investigators recovered 46 money paid may be sought from the conditioned upon performing 60 hours cars and SUVs from several persons defendants in court. of community service. On November who acted as “middlemen” and re- Two of the defendants identified 17, 2003, Gilberto Pasqual pled guilty ceived the “give-up” automobiles during this undercover investigation, to receiving stolen property. He is from their owners so that the cars Ryan December and Jason Decem- scheduled to be sentenced early in could be falsely reported stolen. Un- ber, had been previously arrested on 2004. Edward G. Whyte pled guilty to dercover State Investigators also re- January 12, 2003 by OIFP investiga- receiving stolen property on Septem- ceived some vehicles directly from tors. Ryan December was charged ber 29, 2003. On November 14, 2003, the owners themselves. The total with conspiracy and receiving stolen he was admitted into the PTI Pro- market value of all the vehicles re- property, and Jason December was gram conditioned upon performing 60 covered by OIFP investigators ex- charged with conspiracy. Arrest war- hours of community service. ceeded $1 million. More than 32 rants were issued for nine of the 38 Whyte was charged with pos- phony automobile insurance theft defendants, including Richard Ruiz, sessing a stolen 2003 Mercedes claims stemming from the sting were Carmen Marchitello, Anthony Benz on December 20, 2002 that submitted to 21 insurance carriers, Marchitello, Gilberto Pascual, Rafael was stolen from a Mercedes Benz including First Trenton Indemnity, Padilla, Jason December, Juan dealership located in Plumstead, Ohio Casualty Insurance Company, Naut, Alex Carvalho, and Guillermo Pennsylvania, by means of a “key Allstate Insurance Company, Metro- Guzman a/k/a “Junior.” Nineteen of swap.” A “key swap” theft occurs politan Property and Casualty, New the defendants were issued sum- when a person, posing as a cus- Jersey Manufacturers Insurance monses. Some of the defendants in- tomer, enters an automobile dealer- Company, Progressive Insurance dicted as a result of this undercover ship and takes a test drive. During Company, Liberty Mutual Insurance operation were charged with “re-tag- the test drive, the genuine ignition Company, State Farm Insurance ging” three vehicles. A “re-tagged” key is “swapped” for a fake key, and Company, Hanover Insurance Com- vehicle is a car whose VIN has been later the car is stolen by using the pany, Prudential Insurance Com- altered in order to conceal the true genuine ignition key. Of the nine per- pany, USAA Insurance Company, identity of the car and its owner, as sons for whom arrest warrants were State and Country Fire Insurance well as the fact that it has been issued, six were arrested by OIFP Company, AIG Insurance Company, “given- up,” all to facilitate fraudu- investigators on June 24, 2003. The Rutgers Casualty Insurance Com- lent auto theft insurance claims. six persons arrested were Richard pany, Travelers Insurance Company, Two of the defendants who were al- Ruiz, Carmen Marchitello, Anthony Selective Insurance Company, Erie legedly involved in automobile re- Marchitello, Jason December, Insurance Company, Penn National tagging conduct, Rafael “Bugzy” Guillermo Guzman, and Juan Naut. Insurance Company, Motors Insur- Ramos and Ceaser Labrego, were While conducting these arrests, ance Company, Sompo Japan Insur- previously arrested in August of OIFP investigators also arrested Luis ance Company of America, and Uni- 2002 by OIFP investigators and Flores, a fugitive from the Essex versal Underwriters Insurance Com- charged with conspiracy to commit County Sheriff’s Office who was be- pany. Carriers paid approximately altering motor vehicle trademarks ing sought on unrelated charges. On $791,094 for these phony auto insur- and conspiracy to commit posses- December 5, 2003, Guillermo ance theft claims. Another $48,056 sion of altered property. Guzman pled guilty to the attempted in insurance claims were not paid ei- Also, as part of this investigation, theft by deception count of the indict- ther because the insurance company three of the defendants charged with ment and is scheduled to be sen- was suspicious of the claim or be- receiving stolen property and simu- tenced early in 2004. Guzman also cause OIFP’s investigation inter- lating a motor vehicle insurance pled guilty on December 5, 2003, to rupted the claims process. Forty-six identification card, pled guilty. On an unrelated Accusation which cars obtained by OIFP in the course September 2, 2003, Joaquin

90 charged him with attempted theft by 2000, Lowery conspired with deception. Guzman admitted that on Tomassini and Gonzalez to dispose of August 4, 2001, he reported his 1984 Lowery’s 1988 Chevrolet Corvette, val- Oldsmobile Cutlass stolen in ued at approximately $8,000, so that Secaucus. He submitted a theft Lowery could file a fraudulent stolen claim to Prudential Insurance Com- vehicle claim with his insurance company supported by various fraudulent pany. It is alleged that Gonzalez re- invoices indicating that he had a moved the vehicle from Lowery’s place $1,000 stereo system and $850 of business using a flatbed tow truck worth of rims and tires recently in- and gave the keys to the Corvette to stalled in the car. Guzman admitted Tomassini, who subsequently re- that the invoices were phony and the turned the keys to Lowery. stereo system, rims and tires had not According to the indictments, on actually been installed. Guzman will January 17, 2000, Lowery filed a also be sentenced for this matter false stolen vehicle report with the early in 2004. Perth Amboy Police Department. It is further alleged that on January 19, 2000, Lowery submitted a

State v. fraudulent stolen vehicle insurance Robert Lowery, Carlos Gonzalez claim with CNA Insurance Com- and Antonio Tomassini pany. On October 16, 2003, On August 1, 2003, a Middlesex Gonzalez was admitted into the PTI County Grand Jury returned sepa- Program conditioned upon paying rate indictments against three defen- standard fines in the amount of dants involved in an automobile “give- $125. The case as to the remaining up” scheme. The first indictment defendants is pending trial. charged Robert Lowery with conspiracy, attempted theft by deception, and tampering with public records or information. The second indictment charged Carlos Gonzalez with conspiracy and attempted theft by deception, and the third indictment charged Antonio Tomassini with conspiracy and attempted theft by deception. The indictments alleged that on January 4,

91 OIFP Criminal Case Descriptions – Insurance Fraud

“Give and Go” Guilty Pleas

Defendant Charges Plea Sentence Sentence Date Date

Thomas Wasso Conspiracy - 3rd Degree 8/22/03 11/14/03 (3rd Degree Conspiracy) Theft by Deception - 3rd Degree 2 years probation; $30,220.45 restitution

Luis Trabal Conspiracy - 3rd Degree 9/22/03 11/14/03 (3rd Degree Theft by Deception) Theft by Deception - 3rd Degree Tampering with Public Records 2 years probation; or Information - 3rd Degree $33,723.80 restitution

Nidia Munoz Conspiracy - 3rd Degree 9/30/03 11/21/03 (3rd Degree Tampering with Theft by Deception - 3rd Degree Public Records or Information) Tampering with Public Records or Information - 3rd Degree 3 years probation; $19,526 restitution

Aldemar Palacios Conspiracy - 3rd Degree 10/24/03 12/12/03 (3rd Degree Theft by Deception) Theft by Deception - 3rd Degree Tampering with Public Records 3 years probation; $3,000 civil fine; or Information - 3rd Degree 150 hours community service

Ysrael Tavarez Conspiracy - 3rd Degree 10/17/03 12/12/03 (3rd Degree Attempted Theft by Deception) Attempted Theft by Deception - 3rd Degree Admitted into PTI; $5,000 civil fine; Tampering with Public Records 50 hours community service or Information - 3rd Degree

Luigi Andriano Conspiracy - 3rd Degree 10/17/03 12/8/03 (3rd Degree Conspiracy) Theft by Deception - 3rd Degree (Postponed) Pending sentencing

Renee Perez Conspiracy - 3rd Degree 10/24/03 1/13/04 (3rd Degree Attempted Theft Attempted Theft by Deception by Deception) - 3rd Degree Tampering with Public Records 1 year probation; $250 criminal fine or Information - 3rd Degree

92 Defendant Charges Plea Sentence Sentence Date Date

Richard Pina Theft by Deception - 3rd Degree 10/9/03 10/9/03 (3rd Degree Theft by Deception) Tampering with Public Records or Information - 3rd Degree Admitted into PTI; 50 hours community service

Michael Garafalo Receiving Stolen Property 10/9/03 10/9/03 (Receiving Stolen Property - 3rd Degree) - 3rd Degree Admitted into PTI; 50 hours community service

Joaquin Martinez Receiving Stolen Property - 3rd Degree Simulating a Motor Vehicle Insurance 9/2/03 11/7/03 (3rd Degree Receiving Stolen Property) Identification Card - 4th Degree Admitted into PTI; 60 hours community service

Edward G. Whyte Receiving Stolen Property 9/29/03 11/14/03 (Receiving Stolen Property - 3rd Degree) - 3rd Degree Admitted into PTI; 60 hours community service

Gilberto Pasqual Conspiracy - 3rd Degree 11/17/03 1/16/04 (Receiving Stolen Property - 3rd Degree) Theft by Deception - 3rd Degree Receiving Stolen Property 3 years State prison - 3rd Degree

Maria A. Mora Conspiracy - 3rd Degree` 11/20/03 1/23/04 (Theft by Deception - 3rd Degree) Theft by Deception - 3rd Degree Tampering with Public Records 5 years probation; or Information - 3rd Degree $11,342.70 restitution

Gary Albanese Conspiracy - 3rd Degree 12/5/03 1/23/04 (Conspiracy - 3rd Degree) Theft by Deception - 3rd Degree 2 years probation; $250 criminal fine; full restitution

Guillermo Guzman Conspiracy - 3rd Degree 12/5/03 1/23/04 (Attempted Theft by Deception Attempted Theft by Deception - 3rd Degree) - 3rd Degree 2 years probation; $200 criminal fine

93 OIFP Criminal Case Descriptions – Insurance Fraud

State v. his insurance carrier, Allstate Insur- Omar K. Gordon ance Company. On October 31, 2003, On August 5, 2003, a Hudson Cirino was sentenced to two years County Grand Jury charged Omar K. probation and ordered to pay Gordon with attempted theft by de- a $3,500 civil insurance fraud fine. On ception, tampering with public December 10, 2003, a State Grand records or information, and falsifying Jury returned an indictment charging records. According to the indictment, Halpin with conspiracy, arson for hire, on August 24, 2001, Omar Gordon aggravated arson, arson to collect in- reported to the Jersey City Police surance proceeds, and theft by de- Department that his 1996 Nissan ception. Halpin’s case is pending trial. Maxima had been stolen from the Jersey City Pep Boys parking lot. State v. The indictment also alleged that on Husam A. Hamdan September 24, 2001, Gordon sub- On September 15, 2003, mitted an Affidavit of Vehicle Theft to Husam Hamdan pled guilty to an State Farm Insurance Company Accusation charging him with con- claiming that he last saw his vehicle spiracy. Hamdan admitted that on on August 23, 2001, in the Pep Boys June 1, 2003, he offered to pay a parking lot and reported it missing on co-conspirator to take Hamdan’s August 24, 2001. The State intends 1994 Mazda 626 and dispose of it to prove that, because New York City so that he could file a fraudulent Police Department Detective Ken- stolen vehicle insurance claim with neth DeStefano recovered Gordon’s American International Insurance vehicle in the Bronx, New York, on Company of New Jersey. Hamdan August 23, 2001, it could not have also admitted that after he turned been in the Pep Boys parking lot as over the vehicle to his co-conspira- reported by Gordon. His case is tor, he filed a stolen vehicle report pending trial. with the East Orange Police Depart- ment. On November 21, 2003, State v. Hamdan was admitted into the PTI Joseph Cirino, Jr. Program conditioned on performing On August 18, 2003, Joseph 50 hours of community service. Cirino pled guilty to an Accusation charging him with arson of property State v. for the purpose of collecting insur- Harold Davis ance proceeds. Cirino admitted that, On March 24, 2003, Harold on November 2, 2002, he met a per- Davis pled guilty to an Accusation son identified as Robert Halpin in the charging him with attempted theft by WalMart parking lot located in Berlin, deception. Davis, an Atlantic City ca- New Jersey, and gave him his 2000 sino employee, admitted that, on Honda Accord along with $500, in September 27, 2001, he submitted a order for Halpin to take Cirino’s car false automobile insurance claim to to an undisclosed location and set it Rutgers Casualty, claiming that he on fire. Cirino planned to discontinue had driven his car into New York City his lease payments and file a fraudu- on September 11, 2001, and that it lent insurance claim. Cirino admitted sustained damage from falling debris that he reported the vehicle stolen from the terrorist attacks on the and submitted a fraudulent claim to World Trade Center Towers. The in-

94 vestigation revealed that Davis and his Street in Trenton. It was determined State v. car were at his place of employment that there was no evidence that the Trisha Townsend in Atlantic City on September 11, vehicle had been stolen and that the Trisha Townsend was charged by 2001, and, therefore, that his car fire was the result of arson. Because a Mercer County Grand Jury with at- could not have sustained damage in of the suspicious nature of Davis’ tempted theft by deception. According New York City as he claimed. Davis theft claim, Liberty Mutual denied the to the indictment, on May 26, 2001, admitted that the damage to his ve- claim and referred it to OIFP. Davis Townsend falsely reported to the Tren- hicle was caused by highway debris. was sentenced to two years proba- ton Police Department that her 1994 Davis was admitted into the PTI Pro- tion conditioned upon paying a Dodge Intrepid had been stolen and gram on May 1, 2003, conditioned $3,000 civil insurance fraud fine. filed a fraudulent auto theft claim with upon performing 75 hours of com- her insurance company, New Jersey munity service and paying a $2,500 State v. Manufacturers Insurance Company, civil penalty. Anna M. White four days later. On January 27, 2003, A Cumberland County Grand Townsend was admitted into the PTI State v. Jury returned an indictment charging Program conditioned upon payment of Donald Bracco Anna M. White with falsifying a $5,000 civil insurance fraud fine. Donald Bracco pled guilty to an records. According to the indictment, Accusation charging him with tam- on June 2, 2001, White submitted a State v. pering with public records or infor- falsified Affidavit of Theft for her mation. Bracco admitted that, on No- 1992 Dodge Caravan to Ohio Casu- On March 18, 2003, a Bergen vember 30, 2001, he submitted a alty Insurance Company in conjunc- County Grand Jury returned an in- false report with the Old Bridge Po- tion with a fraudulent insurance dictment charging lice Department claiming that his claim. White had, in fact, loaned her with attempted theft by deception. 2001 Ford Explorer, which he was van to another person who was then According to the indictment, on Feb- leasing from Ford Motor Credit, had involved in an accident. White ruary 1, 2001, owner of the been stolen. Bracco knew that the wanted the insurance carrier to be- a Paramus auto vehicle had not been stolen, but, in lieve her car was damaged after it repair shop, reported to the Paramus fact, had been abandoned in was purportedly stolen. On February Police Department that his 1992 Marlboro, where it had been recov- 3, 2003, White pled guilty to falsify- Mercury Grand Marquis had been ered by the Marlboro Police Depart- ing records. On April 25, 2003, she stolen the day before from his place ment. On March 24, 2003, Bracco was admitted into the PTI Program of business. On the same date, was sentenced to three years in conditioned upon performing 30 allegedly submitted a ve- State prison, ordered to pay restitu- hours of community service. hicle theft claim to the Motor Club of tion in the amount of $584, and America (MCA) in the approximate agreed to pay a $5,000 civil insur- amount of $4,325. MCA denied the ance fraud fine. claim and referred the matter to OIFP for investigation. The State in- State v. tends to prove that the 1992 Mercury Ernest Davis Grand Marquis which alleg- On February 20, 2003, Ernest edly reported stolen on February 1, Davis pled guilty to an Accusation 2001, was actually recovered by the charging him with attempted theft by New York Police Department on deception. Davis admitted that, on January 28, 2001, in New York City, December 5, 2001, he filed a false thus casting doubt on the veracity of automobile theft claim with his insur- report. case is ance company, Liberty Mutual, scheduled for trial early in 2004. claiming that his 1998 Toyota Avalon had been stolen on November 26, 2001, when Trenton police found Davis’ Toyota in flames on Broad

95 OIFP Criminal Case Descriptions – Insurance Fraud

State v. Angel Rodrigo State v. On February 28, 2003, Angel Michael Scarpa Rodrigo pled guilty to an Accusation On May 13, 2003, a Hudson charging him with falsifying or tam- County Grand Jury returned an indict- pering with records. Rodrigo admit- ment charging Michael Scarpa with ted that on September 11, 2001, he attempted theft by deception, tamper- fraudulently submitted an Affidavit of ing with public records or information, Vehicle Theft claim to New Jersey and falsifying records. According to Citizens United Reciprocal Ex- the indictment, on December 22, change, claiming that his 2000 2001, Scarpa reported to the Jersey Mercedes-Benz C280 had been sto- City Police Department that his 1992 len on September 2, 2001. The in- Chevrolet Suburban had been stolen vestigation revealed that the vehicle from the Hudson Mall in Jersey City. had been recovered by the Hillside On December 26, 2001, Scarpa sub- Township Police Department on Au- mitted a stolen automobile claim with gust 28, 2001, four days prior to the State Farm Insurance Company for time Rodrigo reported last seeing the $11,103, the value of the insured car Mercedes Benz. On May 16, 2003, at the time of the claim. State Farm Rodrigo was sentenced to three denied the claim and referred the mat- years probation conditioned upon ter to OIFP for investigation. The OIFP completing 100 hours of community investigation revealed that, unbe- service and paying restitution in the knownst to Scarpa, on December 18, amount of $2,279 as well as a 2001, four days prior to Scarpa’s sto- $2,500 civil insurance fraud fine. len vehicle report to the Jersey City Police Department, his 1992 Chevrolet State v. Suburban had been “tagged” in the Wendy Montalvo Bronx, New York, as a “derelict” ve- On April 1, 2003, Wendy hicle and, on December 19, 2001, the Montalvo pled guilty to an Accusa- Suburban was removed and crushed tion charging her with tampering with by the New York City Sanitation De- public records or information. partment. Scarpa pled guilty to at- Montalvo admitted that, on May 3, tempted theft by deception and, on 2002, she falsely reported to the November 7, 2003, he was sen- Kearny Police Department that her tenced to one year probation with the 2001 Honda Civic had been stolen in conditions that he pay a $5,000 civil order to submit a fraudulent stolen insurance fraud fine and perform 100 vehicle theft claim to Liberty Mutual hours of community service. Insurance Company. On May 14, State v. 2003, Montalvo was admitted into the PTI Program conditioned upon completing 25 hours of community service and paying a $5,000 civil insurance fraud fine.

96 Jorge L. Velazquez State v. theft claim. However, OIFP’s investi- On June 19, 2003 Jorge Julio Arenas gation revealed that two weeks prior to Velazquez pled guilty to an Accusa- On May 13, 2003, a complaint the purported October 14, 1999 theft tion charging him with tampering summons was issued to Julio Are- date, the car had been involved in a with public records or information. nas charging him with attempted police chase and abandoned in the Velazquez admitted that, on Decem- theft by deception. The complaint al- City of Camden. The investigation fur- ber 25, 2002, he falsely reported to leged that in December of 2001, Are- ther revealed that the Camden Police the Elizabeth Police Department that nas falsely reported his 1998 Department impounded the car and his 1999 Ford Contour had been sto- Cadillac Catera stolen to the Newark that it was towed to a garage in len so that he could submit a false Police Department and subsequently Pennsauken where it remained until auto insurance theft claim. He admit- filed a phony vehicle theft insurance June 18, 2001. On July 24, 2003, ted that he had actually been in- claim with Liberty Mutual. Arenas Smith pled guilty to theft by decep- volved in a hit-and-run accident in subsequently admitted that the tion and was sentenced to two years Linden involving a parked car, fled Cadillac had not been stolen, but probation, conditioned on serving 64 the scene and abandoned the car in that he had voluntarily destroyed the days in county jail, and payment of another location. He filed a vehicle vehicle by setting it on fire, as part of $9,000 in restitution to the Allstate In- theft insurance claim with Prudential a scheme to steal insurance money surance Company. He was also or- Insurance Company, but subse- from Liberty Mutual and avoid further dered to pay a $5,000 civil insurance quently withdrew the insurance expensive car payments. Liberty Mu- fraud fine. claim. On August 15, 2003, tual denied the claim. On June 24, Velazquez was admitted into the PTI 2003, Arenas pled guilty to an Accu- State v. Program conditioned upon perform- sation charging him with the crime. James Good ing 60 hours of community service He was admitted into the PTI Pro- On October 30, 2003, James and paying a $5,000 civil insurance gram on August 15, 2003, condi- Good was charged by an Essex fraud fine. tioned upon performing 50 hours of County Grand Jury with falsifying community service. records. According to the indictment, State v. on January 10, 2002, Good filed a Mariusz Kwiatkowski State v. stolen vehicle claim with his insur- On June 30, 2003, Mariusz Robert E. Smith ance carrier, Liberty Mutual Insur- Kwiatkowski pled guilty to an Accu- A Burlington County Grand Jury ance Company, stating that his 1989 sation charging him with tampering returned an indictment charging Subaru had been stolen, even with public records or information. Robert E. Smith with theft by decep- though he knew that the vehicle had Kwiatkowski admitted that, on Janu- tion, unsworn falsification to authori- not been stolen and that he was not ary 11, 2003, he lost control of his ties, and falsifying or tampering with entitled to the insurance money. The 2003 Nissan, hitting a parked car. records. According to the indictment, State intends to prove that, on Octo- Following the accident, Kwiatkowski sometime between October 14, 1999 ber 12, 2001, Good’s 1989 Subaru fled the scene. Kwiatkowski falsely and November 22, 1999, Smith re- was involved in an automobile acci- reported to the Lawrence Police De- ported to the Moorestown Police De- dent in Newark in which the driver partment that his Nissan had been partment that his former wife’s 1994 and a passenger fled the scene. It is stolen and filed a fraudulent automo- Saab 900 had been stolen from the alleged that Good submitted the bile theft claim with Liberty Mutual In- Moorestown Mall parking lot on Oc- false claim with Liberty Mutual in or- surance Company to cover the dam- tober 14, 1999. The indictment fur- der to cover up for the person driving age done to the car in the accident. ther alleged that, on October 26, the car because she had wrongfully On September 17, 2003, 1999, Smith signed and submitted left the scene of the accident. His Kwiatkowski was admitted into the an affidavit of theft to Allstate Insur- case is pending trial. PTI Program conditioned upon per- ance Company falsely stating that State v. forming 75 hours of community ser- the vehicle had been stolen from the vice and paying a $5,000 civil insur- Moorestown Mall, causing Allstate to ance fraud fine. pay approximately $12,000 on the

97 OIFP Criminal Case Descriptions – Insurance Fraud

Jorge A. Salamanca Martino A. Cartier On October 28, 2003, Jorge On October 14, 2003, Martino Salamanca pled guilty to an Accusa- Cartier pled guilty to an Accusation tion charging him with tampering charging him with theft by deception. with public records or information. Cartier admitted that, in September Salamanca admitted that, on June of 2001, he brought his 2000 11, 2002, he falsely reported to the Chrysler Sebring to a body shop in Elizabeth Police Department that his Philadelphia for repairs. When 1996 Acura had been stolen. He also Cartier was unable to pay the re- admitted that he filed a fraudulent maining mechanic’s lien on the ve- stolen car insurance claim with hicle, he conspired with the body Allstate Insurance. He represented shop repair man to abandon the car to Allstate that he last saw his ve- at Penn Station in Philadelphia. hicle at 5:30 p.m. on June 9, 2002, in Cartier then falsely reported his car Elizabeth, New Jersey. However, the stolen to Allstate Insurance Com- vehicle was found at 1:30 a.m. on pany, which paid the lien holder June 10, 2002, in Miami, Florida, $19,370. On December 1, 2003, which would have made it impos- Cartier was admitted into the PTI sible for him to have seen his car at Program conditioned on paying resti- the time and date in Elizabeth that tution in the amount of $19,327. he claimed. Allstate denied the claim and referred the matter to OIFP. State v. Salamanca is scheduled to be sen- Modesta Vendittoli tenced early in 2004. On December 9, 2003, a State Grand Jury returned an indictment State v. charging Modesta Vendittoli with at- Lojza Gruevski tempted theft by deception and tam- On October 17, 2003, Lojza pering. According to the indictment, Gruevski pled guilty to an Accusa- on January 28, 2002, Vendittoli re- tion charging her with attempted ported to the Secaucus Police De- theft by deception. Gruevski admit- partment that her 1999 Acura had ted that, on May 4, 2001, she falsely been stolen from the Harmon reported to Allstate Insurance Com- Meadow Plaza parking lot in pany that her 1995 Nissan Path- Secaucus while she was inside finder had been stolen the previous shopping. Allegedly, Vendittoli also day in New York City, in order to reported the purported theft to her in- conceal the fact that her uninsured surance carrier, First Trenton Indem- son had been driving the car and nity Insurance Company. The State was involved in an automobile acci- intends to prove that Vendittoli’s dent in New York City. Allstate de- Acura had, in fact, been impounded nied the claim and referred the mat- by the Jersey City Police Department ter to OIFP for investigation. on January 19, 2002, nine days prior Gruevski was admitted into the PTI to the reported theft in Secaucus. Program conditioned on performing Vendittoli’s case is pending trial. 25 hours of community service.

State v.

98 Other Fraudulent made payable to Johnson and State v. Automobile Related Jefferson Loan Company as a result Peter Mangiola of a vehicle theft claim submitted by Insurance Claims On February 10, 2003, Peter Johnson in November 1999, in which Mangiola pled guilty to an Accusa- he claimed his 1990 Acura had been tion charging him with attempted State v. stolen. Johnson was supposed to theft by deception. Mangiola admit- Narenda Solanki endorse the check over to Jefferson ted that, on October 17, 1996, he Narenda Solanki pled guilty in Loan Company to pay the balance of fraudulently reported to General Ac- 2002 to an Accusation charging him the loan that Johnson owed on the cident Insurance Company that sev- with falsifying records. Solanki admit- Acura. Instead, Johnson cashed the eral items, including a Nikon camera ted that, on May 29, 1998, he falsely check and kept the money for his and a pair of Ray Ban sunglasses, reported to the North Brunswick Po- own use. On June 17, 2003, had been stolen from his automobile. lice Department that his car had Johnson pled guilty to uttering a Mangiola submitted two fraudulent been burglarized and that approxi- forged document and on September credit card receipts as proof of the mately $8,000 in cash and gift items 4, 2003, he was sentenced to three value of the camera and sunglasses were stolen from the vehicle. Solanki years probation conditioned upon pay- and General Accident paid his claim also admitted that he made a theft ing restitution to the Jefferson Loan in the amount of $1,277. Mangiola claim to State Farm Insurance Com- Company in the amount of $2,173. also admitted that, on May 5, 1999, pany in the amount of $8,000 and, in he submitted the same two fraudu- order to support his claim, submitted State v. lent receipts to Hanover Insurance phony receipts that were provided to Daniel Pascuite Company, reporting that the same him by Timetron Watch Company lo- On March 12, 2003, Daniel items, along with clothing and com- cated in Edison. On March 28, 2003, Pascuite pled guilty to an Accusation puter equipment valued at $5,921, Solanki was admitted into the PTI charging him with attempted theft by were stolen from his car. Hanover Program and ordered to pay a deception. Pascuite admitted that, on $5,000 civil insurance fraud fine. December 16, 2000, he falsely re- The investigation is continuing and ported to Clarendon National Insur- further civil or criminal insurance ance Company that the rims and fraud penalties against other per- tires from his 1999 Chevrolet Cor- sons who may have assisted vette had been stolen. He also ad- Solanki are pending. mitted that, on May 10, 2001, he submitted altered receipts to the in- State v. surance company in order to steal Alloy Johnson claim money to which he was not en- On January 2, 2003, a Middlesex titled. On July 16, 2003, Pasciute County Grand Jury handed up an in- was admitted into the PTI Program dictment charging Alloy Johnson with with the condition that he perform 50 theft by deception and forgery. Ac- hours of community service. cording to the indictment, on January 15, 2000, Johnson, without authorization, cashed and kept for himself the proceeds of a New Jersey Manu- facturers Insurance Company settlement check in the amount of $2,173 by forging the endorsement signature of Sean Caposella, Vice-Presi- dent of Jefferson Loan Company. The settlement check was issued by New Jersey Manufacturers and

99 OIFP Criminal Case Descriptions – Insurance Fraud

denied the claim and referred the case store receipt to a Morris Township po- to OIFP. On May 2, 2003, Mangiola lice officer in support of his claim that was sentenced to two years probation the television was stolen. Parsam conditioned upon paying $1,278 in subsequently submitted an insurance restitution to the insurance company. claim to Liberty Mutual Insurance He was also ordered to pay a $10,000 Company with the intent to defraud civil insurance fraud fine. the insurance company into replacing the television and repairing damage to State v. his vehicle allegedly sustained in the Zurab Tandilashvili attempted theft. On May 30, 2003, On November 21, 2003, Zurab Parsam was admitted into the PTI Tandilashvili pled guilty to an Accu- Program conditioned upon completing sation charging him with forgery. 50 hours of community service and Tandilashvili admitted that, on No- paying a $1,500 civil insurance vember 1, 2001, he submitted false fraud fine. garage rental and car rental receipts totaling $3,450 in support of an auto- State v. mobile insurance liability claim to Michael Marchevsky Allstate Insurance Company. The in- On October 22, 2003, Michael surance claim related to an automo- Marchevsky was admitted into the bile accident which occurred on Au- PTI Program conditioned upon per- gust 14, 2001, in New York City in forming 100 hours of community ser- which Tandilashvili’s vehicle was vice and paying a $2,500 civil insur- struck by an Allstate insured vehicle. ance fraud fine after he pled guilty to On November 21, 2003, Tandilashvili an Accusation charging him with at- was admitted into the PTI Program tempted theft by deception. In July of conditioned upon performing 50 hours 2002, Marchevsky’s 2000 Ford F150 of community service and paying a pick-up truck was burglarized and a civil insurance fraud fine in the window shattered. Marchevsky amount of $5,000. claimed that several items valued at over $4,000, including speakers and State v. a laptop computer, had been stolen Pretam R. Parsam from his truck. Marchevsky subse- On April 17, 2003, Pretam quently filed a loss of property insur- Parsam pled guilty to an Accusation ance claim with Selective Insurance charging him with attempted theft by Company of America in the approxi- deception. Parsam admitted that, on mate amount of $4,980. Marchevsky June 24, 2002, he falsely reported admitted that he submitted a phony the attempted theft of his 1993 receipt from AVIV Electronics in sup- Honda Accord to the Morris Town- port of his claim and that, in fact, he ship Police Department. Parsam had not suffered the loss as claimed. also admitted that, on July 17, 2002, he falsely reported to the Morris Township Police Department that a Sony television-stereo combo valued at $1,244 had been stolen at the time of the attempted theft of his automobile. Parsam presented a phony

100 Personal Injury and operated Best Buys Auto Parts fraudulent auto theft insurance claim Claims Adjuster Fraud and Cars in Cedar Grove. Some of the with First Trenton Indemnity Insurance stolen cars were dismantled and the Company which paid $31,518. On parts sold. False insurance claims May 19, 2003, VonSee pled guilty to State v. were submitted with respect to some the charges and was admitted into Joseph DeGregorio of the stolen cars. Among the stolen the PTI Program conditioned upon A State Grand Jury returned an vehicles supplied by Robinson were a completing 75 hours of community indictment in 2001 charging Joseph 1992 Ford valued at approximately service and paying $27,669 in restitu- DeGregorio with theft by unlawful $10,000, a 1995 Dodge valued at ap- tion to First Trenton Indemnity. On taking. The indictment alleged that proximately $14,425, a 1995 Honda June 9, 2003, Levine pled guilty to DeGregorio, who worked as an ad- valued at approximately $13,775, a conspiracy and was admitted into the juster/paralegal for personal injury 1990 Mazda valued at approximately PTI Program conditioned upon com- lawyers, misappropriated approxi- $6,500, a 1990 Toyota valued at ap- pleting 75 hours of community ser- mately $87,000 in insurance claim proximately $9,725, a 1991 Toyota vice. settlement checks from various valued at approximately $7,825, a claimants who were clients of the law 1994 Toyota valued at $15,750, a State v. firm that employed him. The settle- 1995 Toyota valued at approxi- Artan Rosania ment checks were deposited into mately $22,725, and a 1997 On January 31, 2003, Artan DeGregorio’s bank account which Volkswagen valued at approxi- Rosania was sentenced to three was in the name of JRD Adjusting, a mately $18,000. Holgate pled guilty years in State prison following his corporation he created. Following in- to receiving stolen property and, on guilty plea to receiving stolen prop- dictment, DeGregorio fled to Florida October 31, 2003, was sentenced to erty. The charges related to the fact where investigators from OIFP ar- four years probation conditioned that Rosania, as a salesman for rested him. DeGregorio pled guilty to upon serving 275 days in county Newton Motor Sports, sold car keys theft by deception and, on Septem- jail. Holgate’s restitution will be de- for luxury automobiles to under- ber 19, 2003, he was sentenced to termined by the Court. cover State Investigators so the four years in State prison and or- Robinson pled guilty to con- cars could be stolen. OIFP investi- dered to pay restitution in the spiracy and receiving stolen property gators along with Organized Crime amount of $102,000. and on October 31, 2003, was sen- and Racketeering Bureau investiga- tenced to five years probation condi- tors in the Division of Criminal Jus- Receiving tioned upon serving 364 days in tice investigated the case. Stolen Property county jail. Robinson was also or- State v. dered to pay $24,000 in restitution. State v. The indictment charging Levine Thomas Robinson, David Levine and VonSee alleged that, between August 11, 1998 and October 14, and Robert VonSee 1998, VonSee “gave up” his 1990 On April 1, 2003, Thomas Mercedes Benz to Levine who then Robinson was charged by a Passaic provided the vehicle to Holgate. County Grand Jury with conspiracy Levine assisted VonSee in falsely re- and receiving stolen property. Also porting his 1990 Mercedes stolen. named in a separate but related in- Levine also allegedly falsely reported dictment were David Levine and the Mercedes stolen to the Wayne Robert VonSee, who were charged Police Department. VonSee filed a with conspiracy and theft by deception. The indictment against Robinson alleged that, between June of 1997 and January of 1999, Robinson provided stolen cars to Frank Thomas Holgate who owned

101 OIFP Criminal Case Descriptions – Insurance Fraud

Andrzej Domanski Fictitious Accidents On June 12, 2003, Andrzej Domanski pled guilty to an Accusa- State v. tion charging him with receiving sto- Anhuar Bandy, len property. Domanski admitted Alejandro Ventura, Elvin Castillo, that, on February 20, 2003, he took Raynaldo Cuevas, Cesar Caba, possession of a 2001 BMW X5 automobile for compensation, knowing Victor Almonte, et al. the car had been falsely reported The prosecution of this large- stolen in East Orange two days ear- scale staged accident ring ad- lier. On July 18, 2003, Domanski vanced significantly in 2003. was sentenced to two years proba- Twenty-eight persons were named tion, receiving credit for two days in ten separate State Grand Jury in- served in county jail. dictments in 2002 charging them variously with racketeering, con- State v. spiracy, health care claims fraud, at- M. M. tempted theft and theft by decep- On October 2, 2003, OIFP inves- tion, use of a 17 year old or younger tigators executed a search warrant to commit a criminal offense, and and arrested a suspect known in the possession of a weapon without a investigation as M.M. Numerous cars permit. All of the charges relate to and car parts were seized during the allegations that the defendants par- search, suggestive of the operation ticipated in phony automobile acci- of a “chop shop” and probable auto- dents in and around Union County mobile insurance fraud. M.M. was to submit false insurance claims. charged with receiving stolen prop- The main indictment in this case erty, dealing in stolen property, and charged racketeering and related certain alterations of motor vehicle crimes, alleging that Anhuar Bandy, identification numbers. Bail was set who owned, controlled, or operated at $50,000 with a 10% cash option. as the chief corporate officer of six The identity of M.M. has not been re- North Jersey chiropractic clinics, and leased to preserve the integrity of Alejandro Ventura, Elvin Castillo, OIFP’s ongoing investigation. Raynaldo Cuevas, Cesar Caba and Victor Almonte, all of whom were associated with Anhuar Bandy or the Staged and clinics, allegedly fabricated eight phony automobile accidents. It also alleged that, as a result of these eight phony automobile accidents, claimants submitted PIP insurance claims in excess of $331,000 to several insurance companies. Addition- ally, the indictment alleged that insurance claims in excess of $2 million were also submitted in conjunction with more than 90 other phony accidents. According to the indictment, the accidents were constructed by obtaining cars, soliciting drivers and passengers, faking acci-

102 dents, and then sending the occu- pany, Bayside Casualty, Clarendon Jones, and Rashonda Harris, all of pants of the cars to treat at chiro- National, Continental Insurance, whom claimed to have sustained inju- practic clinics in order to submit the Farm Family Insurance Company, ries requiring medical treatment. PIP fraudulent insurance PIP claims. As Liberty Mutual Insurance Company, insurance claims of approximately part of the conspiracy to construct Maryland Insurance Company, the $47,700 were submitted to Keystone phony accidents, the State alleged Moxon Company, National Conti- Insurance Company/AAA Mid-Atlantic that Ventura, Castillo, Cuevas, Caba, nental Progressive, National Gen- Insurance Company under Holly’s au- and Almonte acted as “runners” and eral Insurance Company, N.J. Cure, tomobile insurance policy for this pur- recruited persons to participate in the Ohio Casualty Insurance Company, ported accident. The State further al- phony automobile accidents. The Parkway Insurance, Progressive leges that the second phony accident State also alleged that the persons Casualty, Red Oak Insurance Com- planned by Campbell took place on who participated in the phony acci- pany, United States Automobile As- September 16, 1998 in Newark involv- dents became patients at several of sociation (USAA), and New Jersey ing co-defendants Robert Paul the Bandy owned, controlled, or op- Manufacturers Insurance Company. Mitchner erated chiropractic clinics, as well as During calendar year 2003, three a/k/a “Shaboor,” Chad Watson, at other medical service provider of- of the six indicted racketeers pled Ramil Robinson, Duane Smith, fices, even though they were not hurt guilty to conspiracy to commit rack- Monesha Gray, and Deborah Mathis in the phony accidents. The indict- eteering and face prison sentences. and that they also submitted phony ment also alleged that the “runners” Another defendant also pled guilty to PIP insurance claims to Keystone In- were sometimes known as “con- health care claims fraud and faces a surance Company/AAA Mid-Atlantic structors” because they allegedly prison sentence. To date, approxi- Insurance Company totaling approxi- constructed these automobile acci- mately 24 of the 28 indicted defen- mately $42,950. In both cases, Key- dents. The other indictments dants charged with participating in stone Insurance Company/AAA Mid- charged the remaining 22 defen- the ring have pled guilty. Atlantic Insurance Company became dants for their participation in the suspicious of the claims, denied pay- eight phony accidents as passen- State v. ment, and referred the matters to gers, drivers and/or claimants. Dannie Campbell, et al. OIFP. On October 24, 2003, These 22 defendants were named On March 19, 2003, a State Campbell failed to appear in Court based on their participation as pas- Grand Jury returned three indict- and a bench warrant was issued for sengers, vehicle operators, and in- ments charging Dannie Campbell his arrest. The cases as to the surance claimants treating at various and ten other defendants with con- other defendants are pending trial. chiropractic clinics in order to submit spiracy, health care claims fraud, State v. insurance claims as part of the con- and attempted theft by deception. Ali Harvey, Roy Bailey spiracies involving these phony auto- According to the indictments, be- mobile accidents. The State further tween July of 1997 and March of alleged that most of the claim money 1999, Dannie Campbell master- was paid to Bandy owned, operated, minded two fictitious automobile ac- or controlled chiropractic clinics. The cidents involving other co-conspira- victimized insurance companies in- tors in order to have the co-conspira- cluded Allstate Insurance Company, tors treat for injuries purportedly sus- Kemper Insurance Company, MDA/ tained in the phony accidents and Newark Insurance Company, Pru- submit Personal Injury Protection dential Insurance Company, Repub- (PIP) insurance claims to an insur- lic Western Insurance Company (U- ance company. The State alleges Haul of Arizona), Selective Insurance that the first phony automobile acci- Company, Sentry Insurance Com- dent planned by Campbell took pany, State Farm Insurance Com- place on July 24, 1997, in Hillside, involving co-defendants George Holly, Jr., Shaheen Johnson, Nathaniel

103 OIFP Criminal Case Descriptions – Insurance Fraud

and Irene Smith On March 7, 2003, Rene Obredor guilty to charges arising out of this il- An Essex County Grand Jury was sentenced to one year probation licit scheme. In November of 2002, handed up an indictment in 2002 conditioned upon completing 50 hours Lareen Blakney-Reed was sen- charging Roy Bailey and Irene Smith of community service and paying a tenced to 18 months probation and with conspiracy to commit theft by $750 criminal fine. Obredor had pled ordered to pay $12,041 in restitution, deception and attempted theft by de- guilty to an Accusation charging him while Danielle Miller was sentenced ception. According to the indictment, with attempted theft by deception, ad- to one year probation and ordered to on February 11, 1997, Ali Harvey, mitting that he caused a purported pay $9,143 in restitution. On Decem- Bailey, and Smith reported to the Glenwood Police Department automo- ber 13, 2002, Loreen Blakney was Newark Police Department that they bile accident report to be falsified so sentenced to three years probation were passengers in an automobile as to reflect that, on or about February and ordered to pay $15,916 in resti- which was struck by another vehicle 11, 1999, he was injured in an auto- tution. On January 31, 2003, Yvonne that had run a stop sign and fled. mobile accident. Obredor also admit- Blakney was sentenced to two years The indictment alleged the accident ted that he used the false police acci- probation conditioned on paying never occurred and that they treated dent report to support an automobile $10,634 in restitution to General Ac- at an East Orange chiropractic clinic insurance PIP claim which was sub- cident Insurance Company and serv- for injuries they falsely claimed to mitted to First Trenton Indemnity In- ing 100 hours of community service. have sustained in the phony accident surance Company and New Jersey so that bodily injury and PIP claims Manufacturers Insurance Company, State v. could be submitted to State Farm In- along with several other falsified claim Robin Ellison, et al. surance Company. State Farm de- documents. At his guilty plea hearing, A Burlington County Grand Jury nied the claims and referred the case Obredor admitted that he sought returned an indictment in 2002 to OIFP for investigation. Harvey medical treatments for purported in- charging Robin Ellison, Denise pled guilty to an Accusation charging juries arising from the accident, even Gaines, Patricia Oglesby, and him with conspiracy. He was admit- though he was not really injured in Deborah Thomas with conspiracy, ted into the PTI Program and or- an automobile accident as he had health care claims fraud, and theft dered to complete 50 hours of com- claimed to the insurance companies. by deception. According to the in- munity service. On November 22, The insurance companies denied dictment, on April 10, 1998, 2002, Bailey was arrested pursuant fraudulent PIP claims of approxi- Gaines, Oglesby and Thomas were to a bench warrant issued for unre- mately $5,000 and referred the case passengers in a vehicle being lated charges and arraigned in for investigation. driven by Ellison in Philadelphia, Essex County Superior Court. He Pennsylvania, when they conspired State v. later failed to appear for a court to falsely claim that an automobile hearing and a second bench warrant Yvonne Blakney, et al. accident had occurred. Ellison re- was issued for his arrest. Smith pled Loreen Blakney falsely reported ported the collision to the Philadel- guilty to the charges in the indict- to the Camden Police Department phia Police Department and all four ment and was sentenced on March on August 9, 1997, that her vehicle defendants told the responding of- 7, 2003, to two years probation con- was struck by an unidentified hit- ficer that they were injured in the ditioned upon completing 100 hours and-run driver while she was driving. phony accident. Ellison also re- of community service. She also claimed that Lareen ported to State Farm Insurance State v. Blakney-Reed, Loreen’s twin sister; Company that her vehicle was in- Rene Obredor Yvonne Blakney, Lareen’s daughter; volved in a motor vehicle accident. and Danielle Miller, a friend, were The indictment alleged that all passengers in the vehicle. Following four defendants subsequently sub- the falsely reported accident, they re- mitted fraudulent PIP claims to State ceived treatment from medical ser- Farm for reimbursement for health vice providers, causing General Ac- care services for injuries they claimed cident Insurance Company to pay to have sustained. Oglesby, PIP medical payments totaling over Gaines, and Thomas pled guilty to $47,000. All four defendants pled

104 one count each of theft by deception. John Groff, et al. On January 10, 2003, Oglesby was A State Grand Jury returned an sentenced to five years probation con- indictment charging John Groff, Luis ditioned upon serving 180 days in Ruiz and 27 others with conspiracy county jail, payment of $2,011 in resti- and attempted theft by deception in tution to State Farm and payment of a July of 2001. Groff and Ruiz, who es- $2,500 civil insurance fraud fine. sentially acted as “runners,” conspired Gaines was also sentenced on Janu- ary 10, 2003 to three years probation conditioned upon serving 180 days in county jail, payment of $7,560 in restitution to State Farm, and payment of a $2,500 civil insurance fraud fine. On January 17, 2003, Thomas was sentenced to five years probation conditioned upon serving 180 days in county jail, paying restitution in the amount of $7,560 to State Farm, and paying a $2,500 civil insurance fraud fine. Ellison pled guilty to conspiracy and health care claims fraud and on January 17, 2003, she was sentenced to three years in State prison, with 27 other defendants to stage a to- payment of $16,741 in restitution to tal of seven automobile accidents in State Farm, and a $5,000 civil insur- and around Camden County. As a re- ance fraud fine. On August 4, 2003, sult of these phony accidents, phony Pauline Whitfield pled guilty to an PIP claims totaling nearly $97,000 Accusation charging her with health were submitted to five insurance carri- care claims fraud and imperson- ers, including Allstate Insurance Com- ation, admitting that she also pany, State Farm Insurance Company, fraudulently claimed to have been Liberty Mutual Insurance Company, injured in the same automobile acci- Prudential Insurance Company, and dent as the other four defendants. In Material Damage Adjustment Corpora- particular, she admitted that she tion. False police reports were made to had misrepresented herself to be six police departments, including Paulette Jones to the investigating Pennsauken, Voorhees, Cherry Hill, officer and to State Farm Insurance Bellmawr, Camden, and Gloucester Company for the purpose of submit- Township. Due to the suspicious nating fraudulent health insurance ture of the claims, the carriers re- claims in the amount of $16,908, of fused payment and referred the case which State Farm paid approxi- to OIFP for further investigation. Ruiz mately $5,900. On December 19, pled guilty to conspiracy to commit 2003, Whitfield was sentenced to theft by deception in January of 2002 five years probation conditioned and was sentenced to three years in upon serving 364 days in county State prison with one year of parole jail, ordered to pay $5,913 in restitu- ineligibility. He was also ordered to pay tion to State Farm, and to pay a a $20,000 civil insurance fraud fine. $5,000 civil insurance fraud fine. Groff pled guilty to attempted theft by deception, admitting that he conspired State v. with the 28 other defendants to “stage”

105 OIFP Criminal Case Descriptions – Insurance Fraud

the phony accidents. On September to be sentenced in early 2004. Seven 19, 2003, he was sentenced to seven of the co-conspirators had been previ- years in State prison with three and a ously charged by OIFP in three sepa- half years of parole ineligibility. The rate indictments returned, respec- other defendants were admitted into tively, by the Essex County Grand the PTI Program conditioned upon Jury on May 9, 2003, and by the paying a $1,000 civil insurance fraud Union County Grand Jury on April 9, fine and continued cooperation with 2003. An eighth co-conspirator had the State. been previously charged by a State Grand Jury. State v. Neil Arruda State v. and Simone Fernandes Rui Salgado, Anthony Padovano, On August 29, 2003, a State Ricardo Ventura Grand Jury returned two separate in- and Joseph Caponegro dictments against Neil Arruda and In another case stemming from his girlfriend, Simone Fernandes, the M&A Auto Body investigation, a arising out of an OIFP investigation Union County Grand Jury returned of M&A Auto Body. The first indict- an indictment charging Rui Salgado, ment charged Arruda with con- Anthony Padovano, Ricardo spiracy, theft by deception, and false Ventura, and Joseph Caponegro incrimination. Fernandes was with conspiracy and theft by decep- charged in the second indictment tion. According to the indictment, on with conspiracy, theft by deception, October 22, 1999, Padovano inten- and hindering apprehension or pros- tionally drove his 1998 Toyota into a ecution. The indictments alleged 1998 Ducati motorcycle and a 1999 that, between March of 1998 and Kawasaki Ninja motorcycle, both of February of 2000, Arruda orches- which were parked without riders in trated five staged accidents with the front of Caponegro’s house. The help of nine co-conspirators, includ- State alleged that Padovano falsely ing Fernandes, which generated reported to the Union Township Po- over $80,000 in fraudulent automobile lice Department that the collision insurance claims submitted to various was an accident so that he could insurance companies. On November submit false insurance claims. The 21, 2003, Fernandes pled guilty to indictment also alleged that theft by deception. She is scheduled Padovano, Caponegro, Salgado, and Ventura conspired to stage the purported accident and shared in the proceeds of the insurance claims monies paid by Rider Insurance Company, Elco Administrative Ser- vices, and Prudential Insurance Company in the amount of $13,334. Ventura pled guilty to theft by deception and, on October 3, 2003, was sentenced to three years probation conditioned upon serving 180 days in county jail and ordered to pay a $500 criminal fine. Padovano and

106 Caponegro were acquitted by a jury $1,000. Pursuant to the plea agree- health care claims fraud, and at- following a trial in Union County. On ment, as to Oliviera, the second in- tempted theft by deception. The in- October 14, 2003, Salgado pled dictment was dismissed at sentenc- dictments alleged that one of the guilty to an amended charge of hin- ing. Antunes pled guilty to unsworn conspirators, Eric Boyer, master- dering apprehension or prosecution falsification to authorities, and on De- minded three staged accidents in- and was sentenced to one year pro- cember 12, 2003, was sentenced to volving 21 other co-conspirators bation conditioned upon paying a two years probation and payment of a which resulted in the submission of $750 criminal fine. $500 criminal fine. On October 20, multiple phony PIP insurance claims 2003, da Cruz pled guilty to the to several insurance companies. The State v. amended charge of making a false re- indictments alleged that, between Antonio Oliviera, port to law enforcement authorities October of 1998 and October of Francisco da Cruz, and was sentenced to probation and 1999, Boyer planned and orches- Maria Antunes payment of a $500 fine. trated the three fictitious automobile and Nelson Soares A State Grand Jury returned an- accidents with 21 other defendants As part of the M&A Auto Body in- other indictment, also stemming from who posed as passengers in the ac- vestigation, Antonio Oliviera, Fran- the M&A investigation, charging cidents. According to the indict- cisco da Cruz, and Maria Antunes Nelson Soares with conspiracy, theft ments, these three fictitious acci- were variously charged in two sepa- by deception, and hindering appre- dents resulted in the submission of rate Essex County indictments with hension. This indictment alleged over $204,378 in fraudulent PIP in- conspiracy, theft by deception, and that, on August 21, 1998, Soares surance claims to Progressive Insur- unsworn falsification to authorities. and several others rented a U-Haul ance Company, State Farm Insur- The first of the two indictments al- truck to purposely cause an accident ance Company, and Alamo-National leged that, between March 11, 1998 to generate a phony insurance claim. Union Fire Insurance Company. and October 26, 1998, Oliviera and According to the indictments, Soares One of the indictments alleged that da Cruz conspired to obtain a 1999 then drove the U-Haul truck into a Boyer orchestrated a staged acci- Isuzu Rodeo from a body shop in 1994 BMW and allegedly falsely re- dent which purportedly occurred on Newark, and intentionally drove it ported to the Newark Police Depart- October 5, 1998, in East Orange. into a 1993 Nissan in Newark so that ment that an automobile accident The indictment alleged that Boyer property damage insurance claims had occurred. Soares is currently a recruited Shaquan McLaurin, Kirk could be submitted to Liberty Mutual fugitive and his case is pending trial. McNeil, Alnicsa Franklin, Otis Chris- Insurance Company. In total, ap- State v. topher, Rodney Mayes, and proximately $18,263 in property Eric Boyer, et al. Raynelle Hamilton to claim that, on damage was paid on this alleged On May 19, 2003, 22 individuals October 5, 1998, they were passen- fraudulent insurance claim. The sec- were named in four State Grand Jury gers in a van driven by Boyer and ond indictment alleged that, between indictments charging conspiracy, that they were supposedly injured in October 6, 1998 and January 19, an accident which, in fact, never oc- 1999, Oliviera and Antunes staged curred. The indictment alleged that an accident involving a 1994 Honda these defendants were treated for Civic. The indictment further alleged their purported injuries and approxi- that Antunes reported the accident to mately $66,052 in PIP insurance the Newark Police Department and claims were submitted to Progres- submitted a false automobile acci- sive as a result. Progressive denied dent report to Liberty Mutual Insur- the claims. ance Company claiming property According to another one of the damage in the amount of $8,195. indictments, Boyer orchestrated a Oliviera pled guilty to theft by decep- staged accident on November 1, tion, and on December 12, 2003, was 1998, in West Orange in which a sentenced to two years probation and van allegedly driven by Tamika ordered to pay a criminal fine of

107 OIFP Criminal Case Descriptions – Insurance Fraud

Sutton collided with a vehicle driven by Valentino White. It is alleged that State v. the passengers in the van were Iris Salkauski, et al. Sakinah Hill, Shinaka Hill, Louis On January 13, 2003, a State McKenzie, Kevin Douglas, and Grand Jury returned ten separate in- Emilio Mayes, and the passengers dictments charging 48 persons with in White’s vehicle were Vanessa conspiracy, theft by deception, and Miller, Raphael McCray, and an- attempted theft by deception for their other person who was not identified alleged participation in a staged ac- in the indictment. It is also alleged cident ring. The indictments alleged that the occupants of both vehicles that the 48 defendants planned or were treated for purported injuries participated in at least ten “staged” sustained in the staged accident automobile accidents over a two and and subsequently submitted PIP in- one half year period from December surance claims to Progressive and 9, 1996 through May 27, 1998, in the State Farm. The PIP insurance Camden County area. As a result of claims submitted to both carriers to- the “staged” accident scheme, taled approximately $62,865, of Allstate Insurance Company re- which the carriers paid $5,389. ceived PIP claims totaling $567,940. Another one of the indictments The OIFP investigation deter- alleged that Boyer arranged a staged mined that the defendants would al- accident which occurred on Decem- legedly “stage” fake automobile acci- ber 1, 1998, in Irvington. According dents by purposely crashing cars to the indictment, Boyer arranged for into one another or into fixed objects. Tamika Sutton to report that she had The motor vehicle accidents would been driving a rented van which had be reported to area police depart- been struck by a hit and run vehicle. ments, principally the Camden and It is alleged that passengers in the Pennsauken Police Departments, af- van driven by Sutton were Sheri ter which the “victims” would seek Brown, Robert Henderson, Ona and obtain treatment for purported Jones, Ali Sawab, Shonique Carney, injuries sustained as a result of the and Sareesah Houston. As was al- “staged” accidents. Ultimately, leged in all of the other phony acci- fraudulent PIP claims were filed with dents, the indictment alleged that all Allstate Insurance Company for pay- of the occupants in the rented van ment or reimbursement of medical claimed they sustained injuries, were expenses and “pain and suffering” treated for the purported injuries, and costs. At least one “staged” accident submitted PIP insurance claims total- involved undercover law enforce- ing $75,460 to Alamo-National Union ment officers posing as participants Fire Insurance Company. in the illegal scheme. On September 15, 2003, McNeil The principal indictment identi- pled guilty to attempted theft by de- fied Iris Salkauski as the alleged ception and is scheduled to be sen- leader of the conspiracy and the co- tenced early in 2004. On November ordinator of each of the ten “staged” 10, 2003, McKenzie pled guilty to attempted theft by deception and is also scheduled to be sentenced early in 2004. All remaining defendants are pending trial.

108 accidents. It alleged that Salkauski or- surance fraud fine in the amount of spiracy, simulating a motor vehicle chestrated the “staged” accidents, re- $235,000. Several other defendants insurance card, and possession of cruited the participants for each of the pled guilty and received probationary CDS. On February 14, 2003, Tho- “staged” accidents, paid them for their dispositions while the remaining de- mas-Malik was sentenced to 364 participation in the “staged” accidents, fendants are pending trial. days in county jail as a condition of and directed them to obtain medical three years probation. care and legal services. Salkauski re- Fictitious Insurance mained a fugitive from the time of the Identification Cards State v. indictment until her arrest on March 5, Brett Denby 2003, when she was found cowering and Motor Vehicle On January 8, 2003, a in a bedroom closet inside a resi- Documents Cumberland County Grand Jury re- dence in Kissimmee, Florida. (Uninsured Motorists) turned an indictment charging Brett Salkauski was lodged in the Osceola Denby with simulating a motor ve- County Jail without bail until her extra- State v. hicle insurance identification card. dition to New Jersey. The indictment alleged that, on Jenette Thomas-Malik, et al. Hector Bonilla, one of the partici- June 7, 2002, Denby produced a An Essex County Grand Jury re- pants, pled guilty to conspiracy and, counterfeit motor vehicle insurance turned indictments against Jenette on June 20, 2003, was sentenced to identification card, purportedly is- Thomas-Malik and Yolanda Daniels four years in State prison to run con- sued by Merchants Mutual Insur- a/k/a Yolanda Adams, charging them current with a county jail sentence ance Company, to a person con- variously with conspiracy, theft by stemming from an unrelated matter. ducting a routine inspection of deception, simulating a motor ve- Restitution and civil insurance fraud Denby’s car at the Millville motor vehicle insurance identification card, fines were also imposed. David hicle inspection facility. The indict- forgery, and possession of a con- Gonzalez, another participant, pled ment also alleged that, on June 23, trolled dangerous substance (CDS). guilty to conspiracy and, on Septem- 2002, Denby displayed a purported The indictment alleged that Thomas- ber 19, 2003 was sentenced to three Merchants Mutual counterfeit motor Malik, Daniels, and another con- years probation conditioned upon vehicle insurance identification card spirator, Regina Bryan, fraudulently performing 150 hours of community to a New Jersey State Trooper dur- sold fictitious “insurance” in the form service and paying a $1,500 civil in- ing a traffic stop. Denby’s case is of phony insurance identification surance fraud fine. Ileana Gonzalez, pending trial. cards and phony insurance policy another participant, pled guilty to “declaration pages” to individuals, in- conspiracy and, on September 19, State v. cluding two undercover State Investi- 2003 was sentenced to two years John Galiazzi gators for $600. Kareem Young, a probation conditioned upon perform- On January 31, 2003, John co-conspirator of Thomas-Malik, ing 100 hours of community service. Galiazzi was sentenced to three Daniels, and Bryan, pled guilty to an Miguel Roman and Elba Soto, two years probation and ordered to Accusation charging him with con- other participants, pled guilty to con- serve 120 days of community ser- spiracy and theft by deception for his spiracy. On November 14, 2003, Ro- vice after he pled guilty to an Accu- role in the conspiracy. Young was man was sentenced to three years sation charging him with simulating sentenced to 27 days in jail as a con- probation conditioned upon perform- a motor vehicle insurance identifica- dition of three years probation, and ing 150 hours of community service tion card. Galiazzi admitted that he ordered to seek, obtain, and main- and ordered to pay a $1,500 civil in- produced and sold phony motor ve- tain employment. Regina Bryan pled surance fraud fine. On November hicle insurance identification cards guilty to an Accusation charging her 14, 2003, Soto was sentenced to two purportedly issued by Selective In- with conspiracy to commit theft by years probation conditioned upon deception and was sentenced to one paying a $1,500 civil insurance fraud year probation conditioned upon fine. Salkauski pled guilty to con- maintaining employment and conspiracy and on November 14, 2003, tinuing to attend drug rehabilitation. was sentenced to five years in State Thomas-Malik pled guilty to con- prison and ordered to pay a civil in-

109 OIFP Criminal Case Descriptions – Insurance Fraud

surance Company of America and Prison as the result of parole viola- the Barclay Insurance Company. He tions. On February 21, 2003, Casey also admitted presenting a fictitious was sentenced to six months in motor vehicle insurance identifica- State prison to run concurrently with tion card to law enforcement au- his parole violation prison sentence. thorities during a traffic stop. State v. State v. T.R. Lamont Hines As part of OIFP’s investigation On January 27, 2003, Lamont into the sale of fake motor vehicle Hines pled guilty to an Accusation documents, including fraudulently charging him with conspiracy to sell issued drivers’ licenses, T.R. pled simulated motor vehicle insurance guilty on May 5, 2003, to a one identification cards. Hines admitted count Essex County indictment that following his earlier arrest on which charged her with receiving unrelated charges during a motor stolen property. She admitted re- vehicle stop in South Plainfield, he ceiving a stolen 2000 Audi automo- had in his possession 13 blank bile. On the same date, she was ad- State Farm Insurance Company au- mitted into the PTI Program condi- tomobile insurance identification tioned upon completing 50 hours of cards. Hines also admitted that he community service. and another unidentified person were selling the blank identification State v. cards out of Hines’s car. Hines was Larry L. Casey sentenced on the same date to five On February 21, 2003, Larry L. years in State prison with 20 months Casey pled guilty to an Accusation parole ineligibility. charging him with simulating a motor vehicle insurance identification State v. card. Casey admitted that, on May Sonia Negron 4, 2002, he presented an altered On February 20, 2003, a automobile insurance identification Camden County Grand Jury returned card, purportedly issued by Pruden- an indictment charging Sonia Negron tial Insurance Company, to a Motor with simulating a motor vehicle insur- Vehicle Commission (MVC) inspec- ance identification card. According to tor while having his car inspected at the indictment, on July 30, 2002, she the Baker’s Basin inspection facility. presented a phony automobile insur- The Motor Vehicle Commission em- ance identification card purportedly ployee reported the matter to the issued by Progressive Northern In- State Police, who investigated the surance Company to a New Jersey case and referred it to OIFP for State Trooper, knowing that the card prosecution. On June 6, 1975, Casey had previously been convicted of murder and served 24 years in State prison. He is currently incarcerated at Bayside State

110 was a counterfeit and that she had no she was asked for proof of insurance mobile insurance identification card to automobile insurance. On December and presented the fictitious identifica- a Franklin Township police officer. On 9, 2003, Negron was admitted into the tion card. On March 10, 2003, Lasane August 5, 2003, Membreno-Dominque PTI Program conditioned upon per- pled guilty and, on April 14, 2003, she was admitted into the PTI Program forming 50 hours of was admitted into the PTI Program conditioned upon performing 50 hours community service. conditioned upon completing 50 hours of community service. of community service. State v. State v. Gerry Frederique State v. Jamel Laboo On April 14, 2003, Gerry Zoila M. Collao-Villegas A Hudson County Grand Jury Frederique was admitted into the PTI A Union County Grand Jury re- returned an indictment charging Program conditioned upon complet- turned an indictment charging Zoila Jamel Laboo with simulating a mo- ing 50 hours of community service M. Collao-Villegas with simulating a tor vehicle insurance identification and participating in drug and alcohol motor vehicle insurance identification card. According to the indictment, testing as directed by Probation. card. According to the indictment, while having his vehicle inspected Frederique was charged by an while having her vehicle inspected at at the Jersey City Motor Vehicle Essex County Grand Jury with simu- the Plainfield Motor Vehicle Commis- Commission inspection station, lating a motor vehicle insurance sion inspection facility, Collao- Laboo presented a phony insurance identification card. The indictment al- Villegas presented a phony insur- identification card, purportedly is- leged that on August 2, 2001, ance identification card, purportedly sued by Allstate Insurance Com- Frederique presented a phony motor issued by Allstate Insurance Com- pany, to the motor vehicle inspector. vehicle insurance identification card pany, to the motor vehicle inspector. On July 29, 2003, Laboo was admit- to an Irvington police officer, know- On November 7, 2003, Collao- ted into the PTI Program condi- ing that the insurance identification Villegas was admitted into the PTI tioned upon performing 25 hours of card, purportedly issued by the Colo- Program conditioned upon perform- community service. nial Penn Insurance Company, was ing 60 hours of community service. a fake. Frederique allegedly presented the card to the Irvington po- State v. lice officer when the police officer Luis A. Membreno-Dominque questioned him about an illegally A Somerset County Grand Jury parked 1999 Honda Accord. returned an indictment charging Luis A. Membreno-Dominque with simu- State v. lating a motor vehicle insurance Regina Lasane identification card. According to the Regina Lasane was charged by indictment, while attempting to get an Essex County Grand Jury with his vehicle released from the simulating a motor vehicle insurance Franklin Township Police Depart- identification card. Lasane presented ment impound lot, Membreno- a phony motor vehicle insurance Dominque presented a phony auto- identification card to an Irvington police officer, knowing that the insurance identification card, purportedly issued by the Allstate Insurance Company, was counterfeit. Lasane was trying to retrieve her impounded 1989 Honda from the Irvington Po- lice Department impound yard when

111 OIFP Criminal Case Descriptions – Insurance Fraud

State v. ance Company, gave him the blank in- State v. Janie A. Jenkins-Morrison surance identification cards for the Wanda Bryan A Mercer County Grand Jury re- purpose of selling them. Hopson and Wanda Bryan was charged by a turned an indictment charging Janie each subsequently pled Mercer County Grand Jury with Jenkins-Morrison with simulating a guilty to conspiracy. On September simulating a motor vehicle insurance motor vehicle insurance identifica- 12, 2003, Hopson was sentenced to identification card. According to the tion card. According to the indict- two years probation conditioned indictment, during a traffic stop in ment, on May 22, 2002, Jenkins- upon serving 364 days in county jail Hamilton Township, Bryan presented Morrison created two phony motor and ordered to pay a $750 criminal a phony insurance identification vehicle insurance identification fine and to perform 75 hours of com- card, purportedly issued by State cards, purportedly issued by A Clas- munity service. was sen- Farm Indemnity Company, to a sic Plan, Inc., and bearing the name tenced on the same date to one year Hamilton Township police officer. of an acquaintance, Eudean probation and ordered to pay a $500 Bryan was admitted into the PTI Pro- McMillan. One phony motor vehicle criminal fine and to perform 75 hours gram on June 3, 2003. insurance identification card pur- of community service. ported to provide insurance cover- State v. age for a 1985 Cadillac and the State v. Yvette R. Williams other for a 1987 Lynx. On July 28, Keisha Lashaye- On September 24, 2003, a 2003, Jenkins-Morrison pled guilty Dashawna Brown Cumberland County Grand Jury to simulating a motor vehicle insur- On April 7, 2003, Keisha charged Yvette R. Williams with ance identification card and was ad- Lashaye-Dashawna Brown pled simulating a motor vehicle insurance mitted into the PTI Program condi- guilty to an Accusation charging her identification card. According to the tioned upon performing 25 hours of with simulating a motor vehicle insur- indictment, Williams presented a community service. ance identification card. Brown ad- phony motor vehicle insurance iden- mitted that, while having her automo- tification card, purportedly issued by State v. bile inspected at the Millville Motor Liberty Mutual Insurance Company, Montez Hopson Vehicle Commission inspection sta- to a Millville Motor Vehicle Commis- and tion, she presented a phony automo- sion inspector, while having her ve- An Essex County Grand Jury re- bile insurance identification card, hicle inspected at the Millville inspec- turned an indictment charging purportedly issued by Newark Insur- tion station. On October 15, 2003, Montez Hopson and ance Company, to the motor vehicle Williams failed to appear at her pre- with conspiracy and simu- inspector. In May of 2003, Brown arraignment interview. A bench war- lating a motor vehicle insurance was admitted into the PTI Program rant was issued for her arrest. Will- identification card. According to the conditioned upon performing 20 iams’ case is pending trial. indictment, on July 11, 2001, follow- hours of community service. ing his involvement in a motor ve- State v. hicle accident, Hopson was arrested Jimmy Gurzkovic for operating an uninsured motor ve- An Essex County Grand Jury re- hicle while his driver’s license was turned an indictment charging Jimmy under suspension. At the time of his Gurzkovic with simulating a motor arrest, approximately 17 blank Lib- vehicle insurance identification card. erty Mutual Insurance Company in- According to the indictment, between surance identification cards were in May 16 and May 21, 2001, his possession. Also according to the Gurzkovic, who owned and operated indictment, Hopson’s girlfriend, F&G Auto Repair, sold two phony, in her capacity as blank automobile insurance identifi- an employee of Liberty Mutual Insur- cation cards to an undercover State Investigator. On April 8, 2003, Gurzkovic pled guilty to the indict-

112 ment. On July 18, 2003, Gurzkovic Shariff was sentenced to 18 months was sentenced to two years proba- probation and ordered to complete tion conditioned upon paying a $500 her college courses. criminal fine and continued cooperation with the investigation. State v. Lunic Adisson State v. On June 27, 2003, an Essex Emiled R. Herrera County Grand Jury returned an in- On July 2, 2003, a Union County dictment charging Lunic Adisson Grand Jury returned an indictment with two counts of simulating a motor charging Emiled Herrera with simu- vehicle insurance identification card. lating a motor vehicle insurance According to the indictment, Adisson identification card. According to the presented the fictitious insurance indictment, while having his 1995 identification card to an Irvington po- Toyota pick-up truck inspected at a lice officer to regain possession of Plainfield Motor Vehicle Commission her car, which had been impounded

facility, Herrera presented a phony au- by the Irvington Police Department. tomobile insurance identification On July 29, 2003, Adisson was again card, purportedly issued by New Jer- indicted for her role in a health care sey Manufacturers Insurance Com- claims fraud scam involving Dr. pany, to the motor vehicle inspector. LeClerc Adisson. Lunic Adisson’s Herrera’s case is pending trial. cases are pending trial.

State v. Tonya Shariff a/k/a Sharif Bayyinah On May 16, 2003, Tonya Shariff a/k/a Shariff Bayyinah pled guilty to an Accusation charging her with simulating a motor vehicle insurance identification card. Shariff admitted that she presented a phony automobile insurance identification card, purportedly issued by Security Insur- ance Company, to a Jersey City Mo- tor Vehicle Commission inspector while having her vehicle inspected.

113 OIFP Criminal Case Descriptions – Insurance Fraud

State v. State v. Paul J. Frye Juan G. Rivera On July 29, 2003, Paul J. Frye On August 8, 2003, Juan G. pled guilty to an Accusation charg- Rivera pled guilty to an Accusation ing him with simulating a motor ve- charging him with simulating a motor hicle insurance identification card. vehicle insurance identification card. Frye admitted that he presented a Rivera admitted that he presented a phony automobile insurance identi- phony insurance identification card, fication card, purportedly issued by purportedly issued by Palisades IFA Insurance Company, to a Motor Safety & Insurance Association, to Vehicle Commission inspector at an inspector at the Deptford Motor the Millville inspection station, Vehicle Commission inspection facil- while having his vehicle inspected. ity. On August 19, 2003, Rivera was On the same date, Frye was admit- admitted into the PTI Program, with ted into the PTI Program condi- the requirement that he provide tioned upon performing 50 hours of proof of valid automobile insurance. community service. State v. State v. Joel Jean-Pierre Samuel Rodriguez On August 21, 2003, Joel Jean- On July 29, 2003, a Cumberland Pierre pled guilty to an Accusation County Grand Jury returned an in- charging him with forgery. Jean- dictment charging Samuel Rodriguez Pierre admitted that he altered a with simulating a motor vehicle insur- cancellation letter from his automo- ance identification card. According to bile insurance carrier, NJ Cure Insur- the indictment, Rodriguez presented ance Company, to falsely reflect that a phony automobile insurance identi- he had valid automobile insurance fication card, purportedly issued by coverage, and submitted the letter to Allstate Insurance Company, to a the New Jersey Motor Vehicle Com- Motor Vehicle Commission inspector mission in order to show proof of at the Millville inspection station, coverage. On the same date, Jean- while having his vehicle inspected. Pierre was admitted into the PTI Pro- This case is pending trial. gram conditioned upon performing 25 hours of community service. State v. Nimer Elsamna State v. On August 20, 2003, an Essex Tyshon Phipps County Grand Jury returned an in- On November 19, 2003, an dictment charging Nimer Elsamna Essex County Grand Jury returned with forgery. According to the indict- an indictment charging Tyshon ment, Elsamna sold a fictitious Mo- Phipps with simulating a motor ve- tor Vehicle Commission temporary hicle insurance identification card. registration tag to an undercover According to the indictment, on April OIFP investigator. This case is pending trial.

114 30, 2003, during the course of a traffic Insurance Company, to an inspector State v. stop in Essex Fells, Phipps presented at the Deptford Motor Vehicle Com- Clarence E. Shambry, Sr. the police officer with a fraudulent au- mission inspection facility. On De- On November 13, 2003, a tomobile insurance identification card, cember 5, 2003, Cacciavillano was Camden County Grand Jury returned purportedly issued by Progressive In- admitted into the PTI Program. an indictment charging Clarence E. surance Company. This case is pend- Shambry, Sr., with simulating a mo- ing trial. State v. tor vehicle insurance identification Alfred J. Whittaker card. The indictment alleged that, on State v. On November 13, 2003, Alfred June 5, 2002, Shambry sold a ficti- Jose Ramon Bouson Whittaker pled guilty to an Accusa- tious motor vehicle insurance identi- On October 3, 2003, Jose tion charging him with simulating a fication card, purportedly issued by Ramon Bouson pled guilty to an Ac- motor vehicle insurance identification Allstate Insurance Company, to a cusation charging him with simulat- card. Whittaker admitted that on New Jersey State Trooper working in ing a motor vehicle insurance identi- February 25, 2003, following a motor an undercover capacity, knowing fication card. Bouson admitted that, vehicle accident in Lawrence Town- that the insurance identification card on March 23, 2001, while on proba- ship, he presented a false automo- was counterfeit. Shambry’s case is tion for an unrelated conviction, he bile insurance identification card to a pending trial. manufactured and sold a counterfeit Lawrence Township police officer. motor vehicle insurance identification On November 13, 2003, Whittaker State v. card to a person acting in an under- was admitted into the PTI Program John Solomon Riley cover capacity for OIFP. Bouson conditioned upon performing 50 On November 10, 2003, John awaits sentencing. hours of community service. Solomon Riley pled guilty to an Ac- cusation charging him with tamper- State v. State v. ing with public records or informa- Waddell A. Tidwell Marcy L. Moss tion. Riley admitted that, on May 11, On October 3, 2003, Waddell On November 18, 2003, Marcy 2003, during a traffic stop in Morris Tidwell pled guilty to an Accusation Moss pled guilty to an Accusation County, he presented a fraudulent charging him with simulating a mo- charging her with simulating a motor driver’s license in the name of Mat- tor vehicle insurance identification vehicle insurance identification card. thew Mercer to a Harding Township card. Tidwell admitted that he sold Moss admitted that on June 24, police officer, knowing that the fictitious insurance identification 2003, she produced and sold to an driver’s license was a fake. On De- cards to an undercover New Jersey undercover New Jersey State cember 22, 2003, Riley was sen- State Trooper on three occasions. Trooper, a false motor vehicle insur- tenced to 18 months probation con- Tidwell awaits sentencing. ance identification card, purportedly ditioned upon serving 30 days in issued by Liberty Mutual Insurance county jail. State v. Company, which purportedly re- James Cacciavillano flected insurance coverage for a On October 16, 2003, James 1984 Pontiac in the name of David Cacciavillano pled guilty to an Accu- Reed. Moss admitted that she knew sation charging him with simulating a the insurance identification card was motor vehicle insurance identification counterfeit. Moss awaits sentencing. card. Cacciavillano admitted that, on October 10, 2002, he presented a phony insurance identification card, purportedly issued by Penn National

115 OIFP Criminal Case Descriptions – Insurance Fraud

State v. State v. Jorge Luis Velasquez JoAnn Guzzi On December 12, 2003, Jorge On August 21, 2003, JoAnn Luis Velasquez pled guilty to an Ac- Guzzi pled guilty to an Accusation cusation charging him with simulat- charging her with official misconduct. ing a motor vehicle insurance identi- Guzzi admitted that, while an em- fication card. Velasquez admitted ployee of the Motor Vehicle Commis- that on June 5, 2002, during a traffic sion, on August 22, 2001, she manu- stop in South Plainfield, he pre- factured a duplicate automobile title sented the police officer with a application form in the name of Dian fraudulent motor vehicle insurance Douglas and signed Douglas’ name identification card, purportedly is- on the application without Douglas’ sued by the Liberty Mutual Insurance knowledge or authorization. Guzzi Company, knowing that the insur- admitted that she sold the duplicate ance identification card was counter- title to Ismael Ramos for approxi- feit. Velasquez awaits sentencing. mately $80 knowing that Ramos was not entitled to the duplicate automo- State v. bile title. Guzzi was terminated from Boyd Robinson her employment with the Motor Ve- A State Grand Jury returned an hicle Commission on June 25, 2003. indictment charging Boyd Robinson The investigation is continuing and with simulating a motor vehicle in- further charges are possible. On surance identification card, sale of a September 26, 2003, Guzzi was sen- simulated document, and forgery. tenced to three years probation. According to the indictment, between July of 2001 and August of State v. 2001, Robinson sold a fictitious au- Gina Guzzi tomobile insurance identification On September 15, 2003, Gina card, purportedly issued by State Guzzi pled guilty to an Accusation Farm Indemnity Company, a ficti- charging her with falsifying records. tious New Jersey driver’s license, Guzzi, who was an employee of the and three fictitious motor vehicle in- Vineland Motor Vehicle Commission spection stickers to an undercover office, admitted that on September OIFP investigator. OIFP’s investiga- 27, 2000, she falsified and provided tion into this matter began when it to another woman a duplicate auto- was contacted by the Irvington Po- mobile driver’s license in the name lice Department which had arrested of a third woman by filling in the a woman known as Snow Gossette driver’s license application form as if a/k/a Tykema Lewis, who had pre- she (Guzzi) was the third woman, sented a fictitious automobile insur- without the third woman’s knowledge ance identification card to an or permission. Guzzi admitted that Irvington police officer in order to she provided the fraudulent driver’s get her impounded vehicle re- license knowing that it was false. On leased. She identified Robinson as October 24, 2003, Guzzi was sen- the person who sold her the ficti- tenced to three years probation and tious identification card. On October was permanently barred from public 17, 2003, Robinson pled guilty to employment in New Jersey. sale of a simulated document. He is pending sentencing.

116 Health, Life, count to steal the money. Weinstein probation conditioned upon paying failed to appear in court and a bench restitution in the amount of $6,302 and Disability warrant was issued for his arrest on and ordered to pay a civil insurance Insurance Fraud February 25, 2003. fraud fine of $20,000. State v. State v. Health Care Provider Fraud Arthur Dinkel Lev Natovich, Boris Natovich Arthur Dinkel, a former psy- and Joseph Matriss State v. chologist who owned and operated On July 10, 2003, Lev Natovich Thomas Boselli two Paramus psychotherapy clinics, was charged by a State Grand Jury Thomas Boselli pled guilty to an pled guilty to an Accusation charg- with health care claims fraud, con- Accusation charging him with falsi- ing him with theft by deception. spiracy to commit health care claims fying records. Boselli admitted that, Dinkel admitted that, between Janu- fraud, conspiracy to commit theft by on January 24, 2001, he submitted ary of 1998 and March of 1999, he deception, unlawful practice of den- a claim form to Horizon Blue Cross/ submitted fraudulent billings to vari- tistry, theft by deception, and con- Blue Shield for providing chiroprac- ous insurance carriers. Dinkel’s spiracy to commit unlawful practice tic services as if he held a valid chi- fraudulent billings took the form of of dentistry. Also named in the indict- ropractic physician’s license when, overbilling for psychological ser- ment was Boris Natovich, Lev in fact, he did not. On January 3, vices rendered, falsely billing the Natovich’s father and the owner of 2003, Boselli was sentenced to two health insurance policies of certain United Dental Center. Boris Natovich years probation conditioned upon patients for psychological services was charged with one count of con- paying a $100,000 civil insurance rendered to others who were not spiracy to commit unlawful practice fraud fine and completing 100 hours covered, and billing for services pur- of dentistry. The final defendant of community service. portedly performed by a staff medi- named in the indictment was Dr. Jo- cal doctor on dates prior to the seph P. Matriss, a dentist licensed to State v. medical doctor’s employment and practice dentistry in New Jersey, who Martin Weinstein after his termination. In total, Dinkel performed dental services at United Dr. Martin Weinstein was in- was paid $45,281 by the various in- Dental Center. Matriss was charged dicted by a State Grand Jury and surance companies for these with health care claims fraud, con- charged with health care claims fraudulent billings. On April 4, 2003, spiracy to commit health care claims fraud, theft by deception and forgery. Dinkel was sentenced to two years fraud, conspiracy to commit theft by The indictment alleged that, between probation conditioned upon paying deception, and theft by deception. July of 1997 and January of 1999, full restitution. The indictment alleged that, be- Weinstein, a licensed podiatrist, tween September of 1999 and March fraudulently billed Horizon Blue State v. of 2002, Boris Natovich and Matriss Cross/Blue Shield approximately Roland Evans assisted Lev Natovich and another $285,000 for podiatric services he On March 11, 2003, Dr. Roland person who was previously charged, never rendered and for which he Evans pled guilty to an Accusation Vadim Lioubomoudrov, in providing was paid more than $200,000. charging him with health care claims dental treatment to patients of United Weinstein allegedly submitted the fraud. Evans admitted that, between Dental Center, including children, fraudulent claims by means of elec- January of 1996 and May of 2000, even though neither Lev Natovich tronic billing from his office to Hori- he submitted fraudulent bills to Aetna nor Lioubomoudrov were licensed to zon Blue Cross/Blue Shield and di- Life Insurance Company and Guard- practice dentistry in New Jersey. It is verted the insurance claim checks is- ian/PHS Health Plans for chiropractic also alleged that United Dental Cen- sued to the patients to a Post Office services he never rendered. Evans ter submitted fraudulent bills for den- box that he rented. It is alleged that fraudulently billed Aetna and Guard- tal services to Local 338 Fund, a la- Weinstein would forge the patients’ ian a total of $12,313, for which he bor union, and to Delta Dental Insur- names on the back of the checks was paid $6,302. On June 6, 2003, ance for dental treatments per- and deposit them into his own ac- Evans was sentenced to three years formed by persons who were not li-

117 OIFP Criminal Case Descriptions – Insurance Fraud

censed dentists. The indictment fur- Bergen County authorities pursuant ther alleged that the fraudulent bills to a bench warrant that had been is- were submitted to the insurance car- sued for his arrest on these charges. riers claiming that Matriss, who was On the same date, he pled guilty to licensed, was the treating dentist, theft by deception and was later sen- even though he had not treated tenced to two years probation and some of the patients. This case is ordered to pay restitution to the State pending trial. Health Benefits Program in the amount of $2,306, and a $2,500 civil State v. insurance fraud fine. Vadim Lioubomoudrov As part of the United Dental State v. Center investigation, on March 31, Barry Vogel 2003, Vadim Lioubomoudrov, a na- On June 12, 2003, a State tive of Russia, pled guilty to an Accu- Grand Jury returned an indictment sation charging him with the unlawful charging Barry M. Vogel, a former li- practice of dentistry. Lioubomoudrov censed neurologist, with health care admitted that, between November of claims fraud and theft by deception. 1997 and December of 1999, he pro- According to the indictment, between vided dental treatment to patients at July of 1997 and May of 1999, Vogel the United Dental Center located in submitted fraudulent bills totaling Wallington, even though he did not more than $54,000 to Prudential possess a license to practice den- Property and Casualty Insurance tistry in New Jersey. On May 9, Company of New Jersey, for diag- 2003, Lioubomoudrov was admitted nostic services he failed to render or into the PTI Program conditioned failed to render properly. It is alleged upon continued cooperation with that Vogel submitted fraudulent OIFP’s investigation into the United health insurance claims for electro- Dental Center. diagnostic tests, known as nerve conduction velocity (NCV) tests, per- State v. formed on patients who had alleg- Jerome Cochran edly been injured in automobile acci- Jerome Cochran was among ap- dents. It is also alleged that he proximately 200 defendants who fraudulently submitted the same di- were indicted or charged by way of agnostic test results for multiple pa- Accusation in a complex public cor- tients. Vogel’s case is pending trial. ruption health insurance fraud case involving a licensed psychologist, Carl Lichtman. Lichtman conspired with employees of several New Jer- sey school districts, including Cochran, and submitted false health insurance claims to more than 36 insurance carriers and health care plans in order to steal millions of dollars of health care insurance money. Lichtman was previously sentenced to State prison for his role in the conspiracy. On March 14, 2003, Jerome Cochran voluntarily surrendered to

118 State v. State v. State v. LeClerc Adisson Alan Ottenstein Alphonso Smith and Lunic Adisson On July 16, 2003, OIFP investi- and Daniel Catanzaro On July 29, 2003, a State Grand gators executed a search warrant at On December 17, 2003, a State Jury returned an indictment against the medical offices of Dr. Alan Grand Jury returned an indictment Dr. LeClerc Adisson, a licensed Ottenstein located in Lawrenceville charging Dr. Alphonso Smith and Dr. medical doctor, and his niece, Lunic and Hamilton Township, and a Daniel Catanzaro with health care Adisson, charging them with health records storage facility located in claims fraud, attempted theft by de- care claims fraud, theft by deception, Mount Holly. During the course of ception, and theft by deception. The misconduct by a corporate official, executing the search warrant, sev- indictment alleged that Smith, a li- and falsifying records. According to eral weapons, including a gun, am- censed medical doctor, and the indictment, between April of 1997 munition, a “stun gun” and other Catanzaro, a licensed chiropractor, and December of 2000, LeClerc weapons, as well as marijuana were operated a medical practice in Adisson concealed the fact that he found and seized. Ottenstein was Wayne known as Quality Care Phy- owned and had a “beneficial interest” charged with possession of mari- sicians. It is alleged that, between in two corporations, Dantor Medical juana with intent to distribute, pos- July of 1997 and March of 1999, the Supply and Clara Medical Services. session with intent to distribute within doctors submitted bills in the amount It is further alleged that, with the as- 1,000 feet of a school, as well as of $36,000 for anesthesia adminis- sistance of his niece, Lunic Adisson, with possession of prohibited weap- tered by needle injection when, in LeClerc Adisson, submitted bills to ons and devices (explosives), pos- fact, electrical stimulation therapy, various insurance companies for session of prohibited weapons and which did not involve injected anes- medical supplies and related ser- devices (stun gun), possession of thesia, were the medical service(s) vices purchased from Dantor and prohibited weapons and devices actually rendered to the patients. Clara Medical, knowing the insur- (ammunition), and unlawful posses- The indictment alleged that the false ance companies would not pay the sion of weapons (Oleoresin Capsi- claims were submitted to several in- bills if they had known he owned cum). On July 23, 2003, Ottenstein surance companies for both health Dantor and Clara Medical. The in- was arrested on the above refer- and automobile insurance, including dictment alleged that, in some in- enced charges and bail was set in Oxford Health Care, New Jersey stances, the bills were fraudulent be- the amount of $50,000. The Manufacturers Insurance Company, cause they were inflated or they Ottenstein case is pending grand United Health Care and Allstate In- were for equipment that was never jury presentation. surance Company. This case is provided to patients. In total, it is al- pending trial. leged that LeClerc and Lunic State v. Adisson fraudulently billed insurance Richard Finder False Health Care Claims carriers approximately $48,273, of On November 10, 2003, Richard which the Adissons were paid ap- Finder, a former licensed chiroprac- State v. Andrea Wahlig proximately $26,028. tor, pled guilty to an Accusation Andrea Wahlig was arrested by Lunic Adisson was also named charging him with health care claims OIFP investigators pursuant to a in an unrelated indictment charging fraud. Finder, who had operated the complaint and summons charging that, on December 13, 2002, in Family Chiropractic Clinic located in her with health care claims fraud for Irvington, she was in possession of Fort Lee, admitted that, from January submitting claims for prescription re- a fictitious insurance identification through August of 2000, he submit- imbursements to which she was not card. It is alleged in that indictment ted over $1,260 in fraudulent bills to entitled. Wahlig subsequently pled that she presented the fictitious in- the Cigna Insurance Company for guilty to an Accusation charging her surance identification card to an chiropractic treatments that he never with health care claims fraud. At the Irvington police officer to regain rendered. Finder awaits sentencing. guilty plea hearing, Wahlig stated possession of her car which had that she had been injured at work been impounded by the Irvington and had received workers’ compen- Police Department. Both cases are sation benefits from New Jersey pending trial.

119 OIFP Criminal Case Descriptions – Insurance Fraud

Manufacturers Insurance Company, rier for Coach USA/O.N.E., for per- which benefits paid for her medical sonal injuries and was paid approxi- treatment and prescription medica- mately $3,000 for this claim. Butler tions. Wahlig was also covered un- pled guilty to theft by deception and, der her husband’s prescription plan, on January 17, 2003, he was sen- which required a co-pay of $5 per tenced to three years probation con- filled prescription. Wahlig admitted ditioned upon paying $3,740 in resti- that, between 1997 and 2000, she tution to Sedwick Claims Services submitted false insurance claims to and Aetna/US HealthCare. New Jersey Manufacturers for full reimbursement of her prescription State v. Donald Robison medications, when, in fact, her On February 13, 2003, a Passaic husband’s prescription plan had paid County Grand Jury returned an infor the prescriptions, less the $5 co- dictment charging Donald Robison pay. Because she failed to disclose with health care claims fraud and her husband’s prescription coverage, theft by deception. According to the New Jersey Manufacturers paid indictment, Robison submitted three Wahlig a total of $11,771 represent- fraudulent health insurance claims to ing the full cost of 18 prescription AARP Health Care Options for treat- transactions, when Wahlig should ment he had not received at three have only been reimbursed for her Northern New Jersey hospitals. The co-payments for the prescriptions. indictment also alleged that Robison On January 10, 2003, Wahlig was knew that the claims were fraudulent sentenced to five years probation when he submitted them. Robison conditioned upon paying $11,681 in allegedly received a total of $2,880 restitution to New Jersey Manufac- as a result of these fraudulent sub- turers Insurance Company and or- missions. On March 13, 2003, dered to pay a $5,000 civil insurance Robison failed to appear to answer fraud fine. the charges and a bench warrant was issued for his arrest. Robison’s State v. case is pending trial. Brian Butler A State Grand Jury returned an State v. Patricia indictment charging Brian Butler with and Paul Sullivan health care claims fraud and theft by A State Grand Jury charged deception. According to the indict- Patricia and Paul Sullivan in connec- ment, Butler falsely claimed to have tion with the submission of fraudu- slipped and fallen while a passenger lent health care claims in two sepa- on a Coach USA/O.N.E. bus operat- rate indictments. The first indictment ing in Elizabeth and fraudulently sub- alleged that, between July 27, 2000 mitted an insurance claim to Aetna/ and November 2, 2000, Patricia U.S. HealthCare for injuries purport- Sullivan submitted fraudulent claims edly sustained in the bus accident. to MetLife Auto and Home Insurance Aetna paid the claim money directly Company in order to seek reim- to Butler’s medical service providers. bursement for prescriptions purport- The indictment also alleged that But- edly paid for by her, when, in fact, ler fraudulently submitted an insur- she was not entitled to reimburse- ance claim to ACE Property and Ca- ment for the cost of the prescriptions. sualty Company, the insurance car- The indictment also alleged that

120 Patricia Sullivan altered and/or falsified Robert J. Berman State v. prescription medication records in On May 20, 2003, Robert J. James Clark support of the fraudulent claims. She Berman pled guilty to an Accusation On July 16, 2003, a State Grand was charged in this indictment with charging him with theft by deception. Jury returned an indictment charging health care claims fraud, theft by de- Berman admitted that, between No- James Clark with two counts of theft ception, and destruction, falsification vember 1, 1999 and December 29, by deception and one count of health or alteration of records relating to 2000, he submitted approximately 56 care claims fraud. Clark was the medical care. health care reimbursement claims to president of Home Health Care Cen- In a second, separate indictment, Aetna Insurance Company. Of the ter, Inc., (HHC), located in Hoboken, Patricia was charged, along with her $8,222 in claims submitted, Aetna as well as the Director of the now de- husband Paul Sullivan, with con- paid Berman $3,082. Some of the funct Medical Care Management, spiracy, health care claims fraud, at- claims were false, including claims Inc., d/b/a Mile Square Medical tempted theft by deception, and de- for services purportedly rendered to Group, formerly located in struction, falsification or alteration of his daughter who was not entitled to Weehawken. HHC is a business that records relating to medical care. The health care coverage. Additionally, delivers prescription medications second indictment alleged that, be- Berman inflated the amount of cer- from pharmacies to persons’ homes tween December 17, 2001 and March tain claims in order to steal money and is not licensed to dispense or 5, 2002, Patricia Sullivan, in concert from Aetna Insurance. On July 24, otherwise sell prescription medica- with her husband, Paul Sullivan, con- 2003, Berman was sentenced to five tions. Mile Square Medical Group spired to defraud Blue Cross/Blue years probation conditioned upon was a medical facility staffed by vari- Shield by submitting fraudulent insur- paying $3,082 in restitution and a ous physicians. Clark, himself, was ance claims totaling over $75,000 for $2,500 civil insurance fraud fine. neither a medical service provider reimbursement for prescriptions they nor a licensed pharmacist. falsely claimed to have purchased State v. According to the indictment, be- from Marquet Pharmacy. According Ruth Schwartz tween December 1, 1996 and Sep- to the indictment, they falsified A State Grand Jury returned an tember 11, 1998, Clark misrepre- medical records and submitted indictment charging Ruth Schwartz sented to Horizon Blue Cross/Blue them to Blue Cross/Blue Shield in with health care claims fraud and Shield, third party claims administra- support of their phony claim. theft by deception. According to the tor for the New Jersey State Health Subsequently, Patricia Sullivan indictment, Schwartz submitted a Benefits Program, that HHC was li- pled guilty to health care claims number of legitimate prescriptions to censed to supply, dispense, and sell fraud, theft by deception, and at- several pharmacies, but intentionally prescription medications which were tempted theft by deception and Paul did not pick them up or pay for them. delivered to patients of Mile Square Sullivan pled guilty to conspiracy. On Schwartz submitted the prescriptions Medical Group. According to the in- May 30, 2003, Patricia Sullivan was because she knew she would re- dictment, Clark misrepresented to sentenced to four years in State ceive payment for the prescription Horizon that HHC was, therefore, prison and ordered to pay restitution drugs from Horizon Blue Cross/Blue entitled to payment or reimburse- in the amount of $18,578 to Blue Shield, administrator of her ment from the State Health Benefits Cross/Blue Shield and $14,258 to husband’s prescription plan through Plan for the cost of the medications. MetLife, as well as a $25,000 civil in- his employment as a union electri- The indictment further alleged that, surance fraud fine. On the same cian, even if she never picked them for many prescriptions HHC sold, it date, Paul Sullivan was entered into up. Schwartz was “reimbursed” grossly inflated the cost over the the PTI Program conditioned upon $19,569 by Horizon for the prescrip- usual and customary price for claims paying restitution to Blue Cross/Blue tions. Schwartz pled guilty to theft by which it submitted to the State Shield in the amount of $18,578 and deception and, on November 11, Health Benefits Program. The indict- a $25,000 civil insurance fraud fine. 2003, was sentenced to three years ment also alleged that Clark submit- State v. probation, and payment of restitution ted fraudulent health care reimburse- in the amount of $19,569 and a ment claims to Horizon Blue Cross/ $5,000 civil insurance fraud fine. Blue Shield and the State Health

121 OIFP Criminal Case Descriptions – Insurance Fraud

Benefits Program for prescription moves unwanted hair, and submitted medications that were neither dis- numerous fraudulent health insur- pensed nor delivered. ance claims to two insurance com- The State intends to prove that panies. It is alleged that Acquaire, Clark submitted as many as approxi- using the business name “High mately 400 fraudulent insurance Mountain Medical Center,” submitted claims for various medications, ap- fraudulent claims to United Health proximately 330 of which may have Group Insurance Company and been for medications that were never Aetna Insurance Company totaling dispensed and never delivered to the $908,843. The claims were alleged patients. The total amount of fraudu- to be fraudulent because Acquaire lent billings allegedly submitted by billed hair removal by means of elec- Clark to Horizon Blue Cross/Blue trolysis as though it was a reimburs- able medical surgical procedure known as a debridement which can only be done by, or under the supervision of, a properly licensed medical provider. Acquaire was not a licensed medical service provider, was allegedly not qualified to perform medical or surgical procedures, and would not have been authorized to bill the insurance companies for such procedures. Acquaire’s case is pending trial.

State v. Christine Schmidt and Peter Schmidt Shield and the State Health Benefits Christine Schmidt pled guilty to Program was in excess of $365,000, an Accusation charging her with of which Horizon paid more than forgery. Schmidt admitted she had $343,000. The fraudulent prescription knowledge of pharmacy procedures scheme allegedly involved at least and submitted nine forged prescrip- eight different patients. Clark’s case is tions to the De Rosa Pharmacy and pending trial. the Rossmore Pharmacy, both in Newark. On August 11, 2003, she State v. was sentenced to three years pro- Florence Acquaire bation. Peter Schmidt, Christine On October 30, 2003, a State Schmidt’s former husband, was ar- Grand Jury returned an indictment rested by OIFP investigators and charging Florence Acquaire with two charged with theft by deception and counts of health care claims fraud, forgery for forging blank prescription two counts of attempted theft by de- forms in the name of Dr. Ormond ception, and two counts of theft by Wilkie and submitting phony pre- deception. According to the indict- scription reimbursement claims of ment, between July of 1998 and April over $3,600 to Aetna Insurance. Pe- of 2001, Acquaire rendered services as an electrologist, a person who re-

122 ter Schmidt pled guilty to theft by de- Criminal Justice’s Social Security and ment, Dr. Kollmer submitted a waiver ception and forgery and, on May 30, Financial Crimes Units revealed that of life insurance premiums claim to 2003, was sentenced to three years Aggarwal’s purported disabilities were UnumProvident, falsely claiming that probation and payment of fraudulent and, during the time of the he was totally disabled from the restitution of $3,642 to Aetna purported disability, Aggarwal had practice of plastic surgery and was, Insurance Company. been involved as an owner/operator of therefore, entitled to have his life in- numerous businesses in the New Jer- surance premiums waived. By doing Fraudulent sey/New York area. On October 24, so, Kollmer allegedly stole life insur- 2003, Aggarwal was sentenced to four ance premium coverage worth Disability Claims years in State prison, ordered to pay $9,000. This case is pending trial. restitution in the amount of Kollmer also faces charges under a State v. $1,150,717 and pay a $15,000 civil in- prior indictment which charged him Dr. Ngan Hirai surance fraud fine. with the theft of more than $300,000 A State Grand Jury returned an of insurance monies from Sentry In- indictment charging Ngan Hirai, a State v. surance Company and American dentist licensed to practice in New Michael Cicconetti General Insurance Company for al- Jersey, with theft by deception for fil- On February 24, 2003, Michael legedly falsely claiming that he was ing a fraudulent disability claim. Ac- Cicconetti pled guilty to an Accusa- totally disabled from practicing as a cording to the indictment, Hirai con- tion charging him with theft by de- plastic surgeon when, in fact, he per- tinued to practice dentistry while she ception. In 1999, during the course formed dozens of surgical proce- falsely claimed to be disabled and of his employment at International- dures during the period of his collected total disability insurance Matex Tank Terminals located in claimed disability. payments of $155,399 pursuant to a Bayonne, Cicconetti suffered a work disability insurance policy issued related injury to his shoulder, pro- State v. through General American Insurance ceeded with a course of therapy, and Barbara D. Dickens Company. The insurance company collected disability insurance ben- On May 8, 2003, a State Grand terminated her benefits after deter- efits. Cicconetti admitted that, be- Jury returned an indictment charging mining that she had been practicing tween June 3, 1999 and September Barbara D. Dickens with theft by de- dentistry despite the purported dis- 7, 1999, while collecting approxi- ception and falsifying records. Ac- ability. On February 10, 2003, Hirai mately $4,216 in disability insurance cording to the indictment, between was admitted into the PTI Program benefits from his employer and Lib- April of 1997 and January of 1999, conditioned upon performing 50 erty Mutual Insurance Company, he Dickens represented to CIGNA In- hours of community service. was able to work and did actually surance Company that she was to- work at a hardware store, despite State v. tally disabled and, as a result, unable misrepresenting that his injury pre- to maintain employment. Pursuant to Surrinder Aggarwal vented him from working. Cicconetti a long-term disability insurance On January 31, 2003, Surrinder was sentenced on May 21, 2003, to policy, CIGNA paid Dickens a total of Aggarwal pled guilty to an Accusa- two years probation conditioned $25,305 in disability insurance ben- tion charging him with theft by de- upon paying restitution in the amount efits. The indictment alleged that dur- ception and falsifying or tampering of $4,216 and a civil insurance fraud ing the period in question, Dickens with records. Aggarwal admitted that, fine of $2,500. was, in fact, continuously employed between March 1, 1991 and May 31, and, therefore, ineligible to receive 2001, he fraudulently received dis- State v. W. disability insurance benefits. ability insurance benefits totaling Lance Kollmer Dickens’ case is pending trial. more than $1 million under both So- On March 26, 2003, a State cial Security and a private disability Grand Jury returned an indictment insurance policy underwritten by charging W. Lance Kollmer, a board- Northwestern Mutual. A joint investi- certified plastic surgeon, with theft by gation by OIFP and the Division of deception. According to the indict-

123 OIFP Criminal Case Descriptions – Insurance Fraud

State v. State v. Gerard M. Zaccardi Campbell Halleran A State Grand Jury returned an On December 2, 2003, a State indictment charging Gerard M. Grand Jury returned an indictment Zaccardi with theft by deception charging Campbell Halleran with and falsifying records. The indict- attempted theft by deception, ment alleged that Zaccardi fraudu- health care claims fraud, and falsi- lently applied for disability insur- fying records. According to the in- ance benefits with the Social Secu- dictment, on July 18, 2002, rity Administration (SSA) following Halleran, who was employed by a “slip and fall” at his place of em- Dick’s Sporting Goods, Inc., in ployment, after termination of tem- Moorestown, submitted a fraudu- porary benefits payments from lent workers’ compensation claim workers’ compensation. On the to his employer. Halleran allegedly SSA application, Zaccardi claimed claimed that he had injured his an inability to return to work and back the day before while moving function normally at home due to store inventory from the loading his purported disability. After con- dock to the interior of the store. ducting an investigation which in- The State intends to prove that, in cluded surveillance, authorities de- fact, another employee of Dick’s, termined that during this time pe- had moved the inventory, and that riod, Zaccardi was employed at an Halleran had not injured himself as auto body shop and did not appear he had claimed. The workers’ com- to be disabled. Zaccardi pled guilty pensation claim had been submit- to both counts of the indictment ted to the Chubb Group of Insur- and, on September 19, 2003, was ance Companies which denied the sentenced to five years probation claim and referred the matter to and ordered to pay restitution in the OIFP for further investigation. amount of $49,287. Halleran’s case is pending trial.

State v. State v. Jose Susana-Rosario Suzanne Shenk On October 1, 2003, a State On October 23, 2003, a Passaic Grand Jury charged Jose Susana- County Grand Jury returned an in- Rosario with theft by deception. Ac- dictment charging Suzanne Shenk cording to the indictment, between with theft by deception, forgery, and December of 2002 and February of falsifying documents. According to 2003, Susana-Rosario fraudulently the indictment, between February 1, received over $5,000 in workers’ 2002 and May 14, 2002, Shenk compensation benefits from Ameri- wrongfully collected disability insur- can Home Assurance Company ance payments from Aetna Insur- (AIG). It is alleged that Susana- ance Company by concealing the Rosario reported that he injured his fact that she was not disabled and back while performing his duties as was working at a physician’s office. an employee at Eastern Seaboard The indictment also alleged that Packaging in Edison when, in fact, Shenk forged a letter and falsified he sustained the injuries at home. another letter in support of her dis- Susana-Rosario’s case is ability claims to Aetna Insurance. pending trial. Shenk’s case is pending trial.

124 State v. Health Insurance Ralph D’Avanzo admitted that he was Albert H. Beebe Underwriting/Application wrongfully enrolled in Coverall’s group health insurance policy, that he was Albert H. Beebe was charged by Fraud a State Grand Jury indictment with not a full-time employee of Coverall, theft by deception and falsifying and was, in fact, residing in Florida. records. The indictment alleged that, State v. Ralph also admitted submitting between December 11, 1997 and Fred D’Avanzo $104,750 in insurance claims to Blue May 24, 1999, Beebe committed and Ralph D’Avanzo Cross/Blue Shield, of which Blue theft in connection with his receipt of On January 10, 2003, Fred and Cross/Blue Shield paid $53,178. insurance disability benefits when he Ralph D’Avanzo were each sen- knowingly failed to notify Hartford In- tenced to three years probation con- State v. surance Company that he had also ditioned upon completing 200 hours Barry W. Kallenberg begun to receive Social Security of community service, paying On December 19, 2003, Barry benefits. According to Beebe’s Hart- $10,765 in restitution to Horizon Blue Kallenberg pled guilty to an Accusa- ford disability insurance policy, his Cross/Blue Shield, and a $1,500 civil tion which charged him with theft by insurance disability benefits had to insurance fraud fine. Fred D’Avanzo deception. Kallenberg admitted that be “coordinated” with any disability had previously pled guilty to an Ac- he created a fictitious business, pur- benefits he also received from Social cusation charging him with theft by portedly a real estate management Security. Beebe’s Hartford insurance deception and falsifying or tampering business, in order to purchase disability benefits were to be reduced with records while his brother, Ralph group health insurance. On or about if he also received disability benefits D’Avanzo, had pled guilty to a sepa- February 21, 1999, Kallenberg ap- from the Social Security Administra- rate Accusation charging him with plied to Horizon Blue Cross/Blue tion. The indictment also alleged that theft by deception. Fred D’Avanzo Shield of New Jersey for a small in support of Beebe’s thefts, Beebe was the president of Coverall Staff employer health benefits policy in allegedly falsely answered “no” to Services, Inc., a temporary employ- order to obtain health coverage at a questions on a Hartford question- ment agency located in Linden. He lower premium employee group rate naire which asked whether he was admitted that, in October of 1995, for five people who were not entitled receiving, or expected to receive, he obtained health insurance by to the coverage because they were Social Security benefits. Beebe is al- means of a Small Group Health not bona fide employees of a bona leged to have wrongfully received Benefits Policy insurance contract fide business. The investigation re- over $29,000 in disability benefits. with Horizon Blue Cross/Blue Shield vealed that, between January of On January 24, 2003, Beebe was of New Jersey. The health insur- 1996 and January of 1999, health admitted into the PTI Program condi- ance policy required that employees insurance claims were submitted to tioned on paying restitution of ap- eligible for group health care ben- Horizon Blue Cross/Blue Shield on proximately $29,000. efits be permanent, full-time em- behalf of the purported employees ployees who work a minimum of 25 totaling $111,500. Kallenberg is hours per week for Coverall. Be- awaiting sentencing. tween September of 1997 and Octo- ber of 2000, Fred D’Avanzo wrongfully obtained health insurance for his brother, Ralph, and two other persons under that policy by signing a New Jersey Small Employer Certi- fication falsely claiming that his brother, Ralph, and the two other persons were full-time employees of Coverall and worked 40 hours or more per week when, in fact, they were not full-time employees.

125 OIFP Criminal Case Descriptions – Insurance Fraud

Phony “Slip and Fall” Claims Health Insurance Claims Involving Identity Fraud State v. Bruce Robert Tarlowe State v. Following a 12 day jury trial, Mynerva Jean Bruce Robert Tarlowe, a licensed in- On June 4, 2003, Mynerva Jean surance agent, was convicted of pled guilty to an Accusation charging health care claims fraud and at- her with theft by deception. Jean ad- tempted theft by deception for plan- mitted that she took the health insur- ning and staging a phony “slip and ance benefits card issued to her sis- fall” accident. The Union County jury ter, Wendy Jean, and sought treat- found Tarlowe guilty of falsely claim- ment from a doctor. Mynerva Jean ing that, on April 12, 1998, he admitted that she fraudulently used “slipped and fell” on a piece of let- the card to obtain health insurance tuce on the floor of the produce aisle coverage in her sister’s name on while shopping at the A&P Super- three separate dates between De- market in Union Township. Unaware cember 24, 2001, and January 15, that the phony “slip and fall” at the 2002. The treating medical service supermarket was recorded on video- provider submitted claims to State tape by a store camera, Tarlowe had Farm Insurance Company in the further claimed that he sustained se- amount of $1,415 and State Farm rious and permanent injuries and paid $877 for the treatments ren- was unable to work as a result of dered to Mynerva Jean while she these injuries. The jury also found was impersonating her sister. State that, between April 12, 1998 and Farm began the investigation when March 10, 1999, Tarlowe submitted Wendy Jean was questioned about 20 fraudulent health insurance some of the medical services pro- claims to the United States Life In- vided and she advised State Farm surance Company for medical bills that she never received those medi- totaling $5,730. As a result of these cal services. Mynerva Jean was ad- submissions, the United States Life mitted into the PTI Program on July Insurance Company paid out a total 24, 2003, conditioned upon perform- of $3,002 to the medical service pro- ing 60 hours of community service viders. Tarlowe had also filed a civil and paying a $4,000 civil insurance suit against A&P in August of 1998 fraud fine. which was dismissed by stipulation of the parties in January of 1999. On State v. February 14, 2003, Tarlowe was Norma Rivera sentenced to three years in State and Veronica Pantoja prison and payment of restitution in On January 30, 2003, Norma the amount of $2,724 and a $1,000 Rivera and her daughter, Veronica criminal fine. Pantoja, pled guilty to separate Ac- cusations charging them with theft by deception. Rivera and Pantoja admitted that, between November of 1999 and September of 2000, Pantoja assumed Rivera’s identity in order to obtain medical insurance to

126 cover dermatology treatments. State v. Insurance Related Norma Rivera, who was covered un- Michael Daye and Darryl Walker Tax Fraud der the State Health Benefits Plan On April 2, 2003, a Hudson through her husband, obtained a re- County Grand Jury returned an in- ferral for dermatology treatments State v. dictment charging Michael Daye Dr. Samuel Evenstein from her primary care physician and and Darryl Walker with theft by de- Dr. Samuel Evenstein pled guilty gave it to Pantoja, who assumed her ception. According to the indictment, to an Accusation charging him with mother’s identity to obtain insurance between June of 1999 and October three counts of failing to pay New coverage for the dermatology treat- of 1999, Daye assumed Walker’s Jersey gross income tax with intent ments. Aetna and Blue Cross/Blue identity in order to obtain medical to evade payment. A joint investiga- Shield paid out over $800 for office treatments at the Khaleidoscope tion between OIFP and the New Jer- visits and prescriptions. After their Health Care/Parkside Medical Cen- sey Division of Taxation determined pleas, Rivera and Pantoja were ad- ter under Walker’s Horizon Blue that Evenstein failed to report over mitted into the PTI Program condi- Cross/Blue Shield insurance cover- $500,000 in income in 1999 and tioned upon paying restitution in the age. Khaleidoscope submitted bills owed over $50,000 in New Jersey amount of $962 to the State Health to Horizon Blue Cross/Blue Shield State income taxes with respect to Benefits Plan and serving 50 hours for Daye’s treatment in the amount the unreported income. On January of community service. of $2,153, of which Horizon paid 24, 2003, Evenstein was admitted $1,564. Daye pled guilty to theft by into the PTI Program conditioned State v. deception and, on October 9, 2003, upon paying restitution in the amount Lenann L. Hill Daye was sentenced to two years of $71,748. On January 16, 2003, Lenann L. probation, ordered to pay $1,564 in Hill pled guilty to an Accusation restitution, and a $1,000 civil insur- charging her with identity theft. Hill ance fraud fine. The indictment as Life Insurance Fraud admitted that, on October 4, 1999, to Walker was dismissed on Octo- she went to the emergency room at ber 10, 2003. Walker was assessed State v. Wayne General Hospital and identi- a civil insurance fraud penalty Daouda Traore fied herself as the wife of Clark of $1,000. On October 31, 2003, Daouda Miller. At that time, Miller was em- Traore was sentenced to two years ployed by the County of Passaic and, probation with 38 days jail credit and as a county employee, he and his ordered to perform 75 hours of com- wife were entitled to health care cov- munity service after previously erage under an insurance policy is- pleading guilty to theft by deception sued by Passaic County and admin- in conjunction with a scam to file istered by Insurance Design Admin- phony life insurance claims. At his istrators. Hill, who had no insurance plea hearing, Traore admitted that, of her own, also admitted that, on between December 15, 2000 and October 5, 1999, using the name of December 5, 2001, he purchased or Miller’s wife, she had a surgical pro- increased the benefits for two life in- cedure done at Wayne General Hos- surance policies, one from AIG Life pital. The total cost of services paid Insurance Company and one from out by Insurance Design Administra- United Omaha Life Insurance Com- tors for Hill’s medical treatment was pany. Specifically, he admitted that, $2,430. On the day of her guilty plea, on December 15, 2000, he amended Hill was admitted into the PTI Pro- his life insurance policy with AIG Life gram conditioned upon paying resti- Insurance Company to include an tution in the amount of $2,430 to additional death benefit of $125,000 Passaic County. for a woman, Salimata Traore, who he falsely claimed was his wife. He

127 OIFP Criminal Case Descriptions – Insurance Fraud

also amended his AIG Life Insurance State v. Company policy to include additional Mr. N.A. and Mrs. N.A. death benefits of $50,000 for a boy, On February 7, 2003, OIFP In- Abdoulaye Traore, who he claimed vestigators arrested Mrs. N.A. and was his son. Additionally, Traore ad- charged her with attempted theft by mitted that, on December 26, 2000, deception. The investigation re- he purchased another accidental vealed that, between November of death life insurance policy from 1998 and June of 2002, Mrs. N.A. United of Omaha Life Insurance and her husband, Mr. N.A., whose Company in the amount of $200,000 full names are withheld for investiga- on the life of Salimata Traore, and in tive reasons, falsely applied for 11 the amount of $20,000 on the life of life insurance policies in the total ap- Abdoulaye Traore. Finally, Traore proximate amount of $5 million. admitted that, on December 27, Among the insurance companies vic- 2000, he purchased yet another timized by this scheme were Valley $12,000 life insurance policy for his Forge Life Insurance Company purported son, Abdoulaye Traore. (CNA), Provident Mutual Insurance Traore admitted that both his pur- Company, First Colony Insurance, ported wife and his purported son Banner Insurance, North American were fictitious persons, that he sub- Casualty, Great American Insurance, mitted false claims to the insurance and Equitable Insurance. The inves- companies that they had died acci- tigation further revealed that Mr. and dental deaths, and that the claims Mrs. N.A. submitted death claims to were submitted so that he could bilk the insurance companies falsely the insurance companies. Traore ad- claiming Mr. N.A. died in Damascus, mitted, in particular, that on January Syria. They also submitted a false 4, 2001, he submitted a phony claim death certificate in support of the with AIG claiming that both his pur- claims. When Mrs. N.A. was ar- ported wife and his purported son rested, her husband, Mr. N.A., re- were killed in an automobile accident mained a fugitive and was believed in Africa. In support of the claim, to be in Syria. On July 7, 2003, Mr. Traore also submitted phony hospital N.A. was arrested by OIFP investiga- records, death certificate forms, and tors on an outstanding warrant. police reports substantiating the au- On August 12, 2003, Mr. and Mrs. tomobile accident and the deaths of N.A. pled guilty, respectively, to two his purported wife and son. The total separate Accusations. The first Ac- amount of fictitious claims submitted cusation charged Mrs. N.A. with falsi- by Traore was $407,000. Both insur- fying records. Mr. N.A. was charged ance companies denied the claims. in the second Accusation with attempted theft by deception. On Octo- ber 24, 2003, Mr. N.A. was sentenced to five years probation and ordered to pay a $5,000 civil insurance fraud fine. On the same date, Mrs. N.A. was sentenced to five years probation and also ordered to pay a $5,000 civil insurance fraud fine. She was also assessed a $1,000 insurance surcharge.

128 State v. Insurance State v. Patricia West Douglas Ross Patricia West was charged in a Professional Fraud On January 24, 2003, Douglas State Grand Jury indictment with Ross, a licensed insurance agent two counts each of theft by decep- Insurance Agent Fraud and the owner and operator of Dou- tion and uttering a forged instru- glas W. Ross Associates, was in- ment. The indictment alleged that, State v. dicted by a State Grand Jury and in June of 1998, Patricia West Robert Massa, Massa charged with theft by failure to make fraudulently represented herself to and Miller Agency, Inc., required disposition of property re- be Christine Franklin, the benefi- and the Associated Programs ceived and simulating a motor ve- ciary of a life insurance policy on hicle insurance identification card. Agency, Inc. the life of Christine Franklin’s Douglas W. Ross Associates is a Robert Massa, a former Ocean daughter, Desiree Franklin, who commercial insurance brokerage County insurance agent, pled guilty had died in a motor vehicle accident company which obtains insurance to an Accusation which charged him on November 3, 1996. West alleg- coverage for its small business cli- with conspiracy and theft by decep- edly filed a fraudulent life insurance ents by borrowing the funds from tion. Massa was the former owner claim with the State of New Jersey premium financing companies and and operator of two defunct insur- Group Life Insurance Plan adminis- then forwarding them to insurance ance agencies known as the Massa tered by Prudential Life Insurance carriers for payment of the small and Miller Agency, Inc., and the As- Company, which issued a death businesses’ insurance premiums. sociated Programs Agency, Inc., benefits check in the name of Chris- According to the indictment, between both located in Lakewood. Both tine Franklin in the amount of February of 2001 and August of agencies also pled guilty to con- $49,263. West allegedly endorsed 2002, Ross fraudulently obtained spiracy and theft by deception in the check by forging Franklin’s over $121,000 in loans from AMGRO separate Accusations. Massa admit- name and deposited the check into Premium Financing Company alleg- ted that he conspired to fraudulently her own personal bank account. edly to finance several insurance obtain and cash checks totaling ap- The indictment also charged that policies. The indictment alleged that proximately $5.6 million from Na- West fraudulently represented her- Ross obtained the loans by providing tional Premium Plan, A1 Credit Cor- self to be Christine Franklin to the false documentation representing poration, and Agency Services, Inc., State of New Jersey Division of Pen- non-existent policies. insurance premium finance compa- sions and Benefits in order to collect The indictment further alleged nies which lend small businesses death claim benefits based on that Ross collected insurance pre- money to pay insurance premiums Desiree Franklin’s prior public em- mium payments from five commer- for business coverage. On January ployment. Prior to her death, Desiree cial clients but failed to remit the pre- 17, 2003, Massa was sentenced to Franklin had been employed by miums to the insurance carriers, and five years in State prison. In addition, Rutgers University and was entitled allegedly diverted the premium pay- Massa and his corporations, Massa to various State benefits, including ments to his own personal use. Ross and Miller Agency, Inc., and Associ- survivor benefits for a designated pled guilty to the charges in the in- ated Programs, Agency, Inc., were beneficiary. According to the indict- dictment and, on September 22, ordered to pay $844,000 in restitu- ment, West forged Christine 2003, he was sentenced to five tion. The corporations were each Franklin’s name on the death ben- years probation and ordered to pay sentenced to five years probation. efits check issued to Franklin in the $85,288 in restitution. Michael Miller and an attorney, amount of $1,285 and deposited the Stanley Gulkin, were previously sen- money in her personal bank account. tenced to State prison in connection On August 11, 2003, West was ad- with the scam. mitted into the PTI Program conditioned upon paying $49,263 in restitution to Prudential Life and performing 50 hours of community service.

129 OIFP Criminal Case Descriptions – Insurance Fraud

State v. used the money to pay his own per- Harry DelBosco sonal expenses instead of forward- On November 14, 2003, Harry ing it to the insurance carrier. DelBosco, a licensed insurance Barleycorn was arrested in Louisiana agent and former president of an in- in August of 2002 and extradited to surance agency known as Garden New Jersey the following month to State Brokers, Inc., was sentenced answer the charges in the indict- to five years in State prison and payment. Barleycorn pled guilty and, on ment of $887,000 in restitution after April 25, 2003, was sentenced to five pleading guilty to an Accusation years probation with credit for 249 charging him with theft by failure to days served in county jail and pay- make required disposition of prop- ment of $1,000 in restitution. erty received. Garden State Brokers, Inc., formerly doing business in East State v. Hanover, was an insurance agency Odell Coleman that also brokered insurance pre- On August 15, 2003, Odell mium financing loans for small busi- Coleman was sentenced to four nesses, mainly in the trucking indus- years in State prison and ordered to try. Following an extensive OIFP in- pay $101,657 in restitution to Allianz vestigation, DelBosco admitted that Life Insurance Company. Coleman, he stole at least $887,000 entrusted a Philadelphia resident who was an to him by several premium finance insurance agent licensed in New Jer- companies, including AFCO Credit sey, had previously pled guilty to an Corp., First Insurance Funding Cor- Accusation charging him with theft poration and AMGRO Premium Fi- by failure to make required disposi- nancing, Inc. The funds had been tion of property received and theft by given to DelBosco to be used for the deception. Coleman admitted that in financing of insurance premiums on his capacity as an insurance agent behalf of numerous commercial for Allianz Life Insurance Company insureds. Instead, DelBosco misap- of North America and LifeUSA Insur- propriated and converted the funds ance Company, he convinced a to his own use. Moorestown woman to purchase an annuity worth $100,000. Coleman State v. admitted that on August 16, 1999, he Robinson D. Barleycorn accepted a check from the woman in Robinson Barleycorn was the amount of $100,000. Instead of charged in a State Grand Jury indict- submitting the money to Allianz and ment with one count of theft by fail- LifeUSA for the annuity, Coleman ure to make required disposition of deposited the check into his own property received. The indictment al- bank account for his personal use. leged that, between June 1, 1994 and September 15, 1997, Barleycorn, while acting as an insurance agent for Capacity Marine In- surance Agency, received $321,000 in insurance premium payments from a Connecticut tugboat operator to purchase marine insurance for the corporation’s tugboat operation, but

130 State v. dictment, between January of 2000 draw $45,000 from another insured’s Farid S. Elgebaly and December of 2001, Span and annuity account held at UNA. On On May 27, 2003, Farid S. Kaplan stole approximately $20,000 September 2, 2003, Binczak pled Elgebaly pled guilty to all counts of by selling fictitious insurance policies guilty to theft by deception and is an indictment charging him with theft to insurance purchasers, collecting pending sentencing. by deception, misapplication of en- insurance premium monies from the trusted property, and simulating a purchasers, and failing to remit the State v. motor vehicle insurance identification monies to the insurance companies. Vito Grupposo card, and to an Accusation charging The indictment also alleged that, On May 30, 2002, armed with an ar- him with tampering with witnesses between February of 2002 and May rest warrant for Vito Grupposo and a and informants. A bench warrant for of 2002, Span distributed phony au- search warrant to search his busi- Elgebaly’s arrest was issued after he tomobile insurance identification ness premises located in failed to appear for sentencing. cards purportedly issued by the New Parsippany, Cedar Knolls and Wash- Elgebaly, a former licensed insur- Jersey Personal Automobile Insur- ington, New Jersey, OIFP investiga- ance producer who transacted busi- ance Plan (NJPAIP). It further al- tors seized the books and records of ness on behalf of the New Jersey leged that, in November of 2000, Grupposo’s insurance agency and Personal Automobile Insurance Plan Kaplan cashed a $4,000 check insurance premium finance busi- (PAIP), had accepted money from drawn on a closed account, knowing nesses. Grupposo, a licensed insur- various individuals for automobile in- that the bank would not honor the ance agent, was arrested and surance premiums but failed to remit check. Span pled guilty to theft by charged with three counts of theft by the money to PAIP or secure auto- deception and, on October 24, 2003, failure to make required disposition mobile insurance for the individuals he was sentenced to three years of insurance premiums obtained who paid the premium money. probation and ordered to pay restitu- from several of his insurance cus- Elgebaly also distributed fraudulent tion in the amount of $6,740. The tomers. Grupposo is alleged to have insurance identification cards to case as to Kaplan is pending trial. wrongfully engaged in insurance pre- some of his clients. Elgebaly’s insur- mium financing transactions and to ance producer’s license was revoked State v. have embezzled insurance premi- in February of 2001. Joseph Binczak ums entrusted to him by insureds. A State Grand Jury indicted Jo- Grupposo appeared before Judge State v. seph Binczak, an insurance agent Bozonelis and bail was set in the Stanley Span and Paul Kaplan licensed in New Jersey, for theft by amount of $100,000. The case is On July 17, 2003, Stanley Span deception and falsifying records. pending grand jury presentation. and Paul Kaplan were named in a According to the indictment, Binczak State Grand Jury indictment. Span was employed by the Ukranian Na- was charged with conspiracy, theft tional Association (UNA) as an in- by deception, theft by failure to make surance sales manager responsible required disposition of property re- for maintaining life insurance annu- ceived, and simulating a motor ve- ity accounts for members of UNA. hicle insurance identification card, The indictment alleged that, without while Kaplan was charged in the authorization, Binczak withdrew same indictment with conspiracy, over $600,000 from the annuity ac- theft by deception, theft by failure to counts of seven members of UNA make required disposition of prop- and converted the proceeds to his erty received, and issuing bad own use. Binczak also allegedly fal- checks. Both defendants are li- sified a letter dated September 14, censed insurance agents and were 2000, authorizing him to withdraw officers of the now defunct Span As- $30,000 from an insured’s annuity sociates Insurance Agency located account held at UNA, and another in Springfield. According to the in- document authorizing him to with-

131 OIFP Criminal Case Descriptions – Insurance Fraud

Insurance Carrier and been sentenced for, participating Employee Fraud in the scheme with Prata. Of the approximately 43 co-conspirators charged in the Prata scheme, eight State v. persons were sentenced to jail, and Carl Prata, et al. the sentences of the others defen- On August 25, 2003, Carl Prata dants included probation or admis- was sentenced to five years in State sion to the PTI Program contingent prison and ordered to pay $45,000 in upon paying restitution and civil in- restitution to Allmerica Insurance surance fraud penalties. Company and $5,000 in restitution to St. Paul Insurance Company after State v. pleading guilty to conspiracy and theft Mustafa Azme by deception. Prata, formerly em- On July 14, 2003, Prata co-con- ployed as an insurance claims ad- spirator, Mustafa Azme, was sentenced to five years in State prison. Azme had previously pled guilty to an Accusation charging him with conspiracy and theft by deception. Azme admitted that, between Janu- ary of 1998 and November of 2000, he conspired with others to defraud the Allmerica Insurance Company and the St. Paul Insurance Com- pany by claiming to have sustained bodily injuries in automobile accidents and fraudulently accepting insurance claim checks from the insurance companies for the claims. Azme accepted one settlement juster with the St. Paul Insurance check in the amount of $12,500 Company and the Allmerica Insurance from Allmerica and two settlement Company, had been indicted by a checks from the St. Paul Insurance State Grand Jury and charged with Company in the amounts of $10,000 conspiracy and theft by deception for and $38,000. As part of the con- allegedly issuing approximately 45 spiracy, Azme recruited nine per- fraudulent bodily injury automobile in- sons to receive fraudulent insurance surance settlement checks totaling claims checks. The nine persons re- some $533,000 to conspirators who cruited by Azme were issued nine were not entitled to them. Prata would insurance settlement checks total- access his company’s claims coming $113,500. Of the nine persons puter and issue insurance claims recruited by Azme, six have pled settlement checks for injuries purport- guilty to charges of conspiracy and/ edly sustained by people who had not or theft by deception, while charges actually been in automobile accidents. against the remaining three persons He would then accept part of the sto- are pending. Azme also paid restitu- len money as a kickback. In the tion of $51,750 prior to his sentencing. course of the investigation which spanned several years, a number of co-conspirators have pled guilty to,

132 State v. H.K. State v. proceeds, and return the balance of On January 31, 2003, H.K., an- Le T. Harlin the proceeds to her. Clements- other Prata co-conspirator, whose full On May 2, 2003, Le T. Harlin, a Wright’s case is pending trial. name has been withheld for investiga- claims specialist in the Mount Laurel As part of the investigation of tive reasons, was sentenced to five office of Ohio Casualty Insurance Linda Clements-Wright, on March years probation conditioned upon 178 Company, was sentenced to four 26, 2003, Neville, L. Holder, Lisa days in county jail, and payment of years in State prison and ordered to Givens, Lisa’s husband George Giv- restitution in the amount of $54,000 pay restitution to Ohio Casualty in ens, and Bruce Alston pled guilty to and a $10,000 civil insurance fraud the amount of $101,869. Harlin had separate Accusations charging them fine. H.K. had pled guilty to an Accu- pled guilty and admitted that, be- with conspiracy. On March 28, 2003, sation charging him with conspiracy, tween July 17, 2000 and March 27, Neville L. Holder’s son, Neville Louis theft by deception, and terroristic 2002, he stole numerous checks Holder, and Michael McCormick also threats for his role in accepting six of from third parties which were pay- pled guilty to separate Accusations the phony settlement checks in the able to Ohio Casualty, forged en- which also charged conspiracy. Each amount of $54,000. dorsements on the checks using an defendant admitted that between Ohio Casualty rubber stamp, and de- July of 1995 and June of 1998, they State v. posited the checks into his Com- accepted auto insurance related Carol Cappuccio merce Bank account. claim checks in various amounts On September 19, 2003, another from Clements-Wright, knowing that Prata co-defendant, Carol State v. they were not entitled to the money. Cappuccio, was sentenced to five Linda Clements-Wright, On May 19, 2003, Neville L. Holder years probation conditioned upon Neville L. Holder, Lisa Givens, and Neville Louis Holder were admit- serving 90 days in county jail, and George Givens, Bruce Alston, ted into the PTI Program. Neville L. ordered to pay $16,000 in restitution Neville Louis Holder, Holder was ordered to pay restitution in the amount of $1,646, and Neville as well as an $8,000 civil insurance Marsha Alston Walker fraud fine. Cappuccio had previously Louis Holder in the amount of pled guilty to an indictment charging and Michael McCormick $6,354. On September 12, 2003, her with conspiracy and theft by de- On May 22, 2003, Linda McCormick was sentenced to two ception. Cappuccio was recruited by Clements-Wright, an Allstate Insur- years probation and ordered to pay Mustafa Azme and accepted a ance Company Insurance Claims $11,342 in restitution. On October fraudulently obtained settlement Process Specialist working out of 24, 2003, Alston was sentenced to check issued by Allmerica Insurance Allstate Market Claims offices in three years probation conditioned Company in the amount of $16,000 Mount Laurel and Moorestown, was upon the payment of $8,825 in resti- for a purported accident in which she charged by a State Grand Jury with tution. On October 31, 2003, Lisa was not involved. Cappuccio depos- conspiracy, theft by unlawful taking, Givens was sentenced to three years ited the settlement check into her and money laundering. According to probation conditioned on paying bank account and kept $4,000 after the indictment, between April of 1995 $11,298 in restitution and also pay- giving $12,000 to Azme. Cappuccio and September of 1998, Clements- ing a $15,000 civil insurance fraud also recruited three other persons to Wright, in her capacity as a Claims fine. On October 31, 2003, George participate in the conspiracy. Those Processing Specialist for Allstate In- Givens was also sentenced to three three received settlement checks to- surance Company, issued approxi- years probation conditioned upon taling $23,500 and have also pled mately 150 Allstate insurance claim paying restitution in the amount of guilty to theft by deception for their checks totaling approximately $14,674 and a $15,000 civil insur- roles in the conspiracy. $594,369 to 11 persons she was ac- ance fraud fine. quainted with, but who were not entitled to the insurance claim money. It is alleged that Clements-Wright conspired with her acquaintances to cash the checks, keep 10% of the

133 OIFP Criminal Case Descriptions – Insurance Fraud

after keeping $800 for herself, she turned over the balance of the proceeds to Williams. She was admitted into the PTI Program subject to making restitution, maintaining gainful employment, and cooperating in OIFP’s prosecution of Williams.

Public Insurance Adjuster Fraud

State v. Marc Rossi, Otis Boone, Michael Winberg and Marc Graziano On November 10, 2003, Marc Rossi, the alleged leader of an “arson for hire” ring, pled guilty to charges of arson, conspiracy to commit arson, bribery, theft, and theft by deception. In pleading guilty to the charges, Rossi admitted that he conspired with other co-conspirators to damage or set fire to various properties so that he could solicit the victims as clients for his public adjusting business, Rossi Adjustment Services. In particular, Rossi admitted his role in six arsons involving two commercial properties and four residential properties. Rossi is pending sentencing. Rossi’s other co-conspirators State v. have previously pled guilty. On De- cember 12, 2003, Otis Boone, an Jemal Williams employee of Rossi Adjustment Ser- On November 21, 2003, Jemal vices, was sentenced to four years in Williams was sentenced to three State prison for participating in the years probation and payment of setting of the arson fires as part of $3,982 in restitution for fraudulently the Rossi conspiracy. On October issuing insurance claims checks 31, 2003, Michael Winberg, also a while working as a claims represen- licensed public adjuster, was sen- tative for Great West Life and Annu- tenced for aggravated arson to five ity Insurance Company. Williams admitted at his prior guilty plea hearing that he had issued six fraudulent checks totaling $7,415 to Letticia Waymer. Waymer pled guilty to the conspiracy in 2002, explaining that,

134 years in State prison, payment of State v. allegedly, the previous damage had $102,000 in restitution and a $5,000 Oscar Medina not been repaired by T&K Kitchens civil insurance fraud fine. On March On March 6, 2003, OIFP investi- and the invoice did not accurately re- 21, 2003, Marc Graziano, former gators arrested Oscar Medina, an in- flect the repairs done. It was further owner of Graziano Florist, was sen- surance claims adjuster employed at alleged that Taintor submitted the tenced for theft by deception and Liberty Mutual Insurance Company, forged invoice to obtain a larger conspiracy to five years probation and charged him with theft by decep- commission in his capacity as the and payment of $26,468 in restitution. Medina allegedly contacted in- public insurance adjuster represent- tion and a $2,500 civil insurance surance claimants involved in auto- ing the insured in settling the insur- fraud fine. mobile accidents and advised them ance claim. On June 5, 2003, Taintor that they would be able to obtain a was admitted into the PTI Program State v. larger claim settlement by paying conditioned upon completing 100 William Kiernan, Jr. him a fee rather than hiring an attor- hours of community service and pay- Related to the Rossi investiga- ney. The arrest warrant alleged that ing restitution to his client, Curtis tion and the Jeffrey Nemes investi- Medina stole $5,500 by falsely creat- Boykins, in the amount of $3,743. gation (set forth elsewhere in this ing the impression that, as a Liberty Report), on December 17, 2003, Mutual Group Claims Adjuster, he Insurance Premium Fraud William Kiernan, Jr., Chief of was entitled to 15% of the claimants’ Hamilton Township Enterprise Fire bodily injury insurance settlement State v. Company, pled guilty to an Accusa- money. This case is pending grand tion charging obstructing the adminis- jury presentation. Philip A. McKeaney tration of law. Kiernan admitted pro- On November 17, 2003, Philip viding false statements to law en- State v. McKeaney pled guilty to theft by fail- forcement authorities during the William R. Taintor, III ure to make required disposition of course of an investigation into alle- William R. Taintor, III, a licensed property received and to a related gations that Rossi and Nemes were public insurance adjuster, was but separate charge of misapplication paying bribes and soliciting fire charged in two separate State Grand of entrusted property. A State Grand chiefs to allow fires to burn longer Jury indictments. The first indictment Jury had previously charged and do more damage so that the charged Taintor with theft by failure McKeaney, the operator of Haddon amount of insurance claims would to make required disposition of prop- National Companies, Inc., (HNC), be higher, thus allowing both erty and alleged that, in September with financial facilitation of criminal Nemes and Rossi to reap greater fi- of 2001, Taintor received an insur- activity (money laundering), theft by nancial benefits. Nemes would ben- ance claim settlement check in the failure to make required disposition efit because his home repair con- amount of $3,743 on behalf of an in- of property received, and theft by de- tracting business, Nemes Enter- sured and kept the proceeds for him- ception. HNC was a corporation that prises, would potentially receive self. The second indictment charged served as a third party health insur- larger contracts, and Rossi’s public Taintor with attempted theft by de- ance administrator. Third party adjusting insurance business would ception and forgery. According to health insurance administrators re- be awarded larger fees based on that indictment, Taintor submitted a ceive money to pay claims from em- higher insurance claims. Kiernan’s forged invoice to Omaha Property ployers, corporations, and some- sentencing is scheduled for and Casualty Insurance Company times government entities which self- early 2004. bearing the purported signature of fund and self-insure the health insur- another insured that Taintor repre- ance plans that provide health ben- sented in order to inflate a property efits to their employees. HNC, as a damage claim. The allegedly phony third party administrator, was under invoice, dated October 10, 1995, contract to receive money from its purported that T&K Kitchens had self-insured clients for health insur- previously repaired damage to the ance benefits, deposit that money, property located in Avalon. However, and pay the health insurance claims of its clients as they were submitted.

135 OIFP Criminal Case Descriptions – Insurance Fraud

HNC would earn a fee for health insur- Contractor’s Fraud ance claims paid. In some cases, HNC also received money from its State v. clients to purchase special re-insur- Jeffrey Nemes ance policies to provide health insur- On February 19, 2003, following ance coverage. a five week jury trial in Mercer According to the indictment, County Superior Court, Jeffrey McKeaney stole in excess of $1 mil- Nemes was found guilty of theft by lion from nine clients, which should failure to make required disposition have been used to pay health insur- of property. While employed as a ance claims or purchase re-insur- Hamilton Township police officer, ance policies. Some of the stolen Nemes, owner of Nemes Enter- money was used to pay McKeaney’s prises, Inc., a home repair contract- personal debts and expenses, and ing business, took insurance claims some of it was transferred to another money totaling approximately business, Cambria Corporation, in $122,000 from both commercial and which McKeaney had an interest. residential property owners purport- The indictment also specifically al- edly to make repairs on their proper- leged that McKeaney committed the ties through his home repair con- crime of money laundering by trans- tracting business but failed to com- ferring approximately $494,188 from plete the repairs to the properties or his company, HNC, which money return the money. On May 30, 2003, should have been used to pay health Nemes was sentenced to seven care claims or procure health insur- years in State prison and ordered to ance policies for clients, to Cambria pay a total of $130,833 in restitution. Corporation, a business in which Nemes’ conviction is presently McKeaney had an interest. on appeal. McKeaney is scheduled to be More recently, on December 18, sentenced in 2004. 2003, a State Grand Jury returned State v. another indictment against Nemes Nunzio Tartaglio charging him with bribery in official and political matters. This indictment On August 27, 2003, Nunzio charged Nemes with offering two Tartaglio pled guilty to an Accusation bribes to local fire chiefs allegedly to charging him with theft by failure to enhance property damage in the make required disposition of prop- course of extinguishing fires. The erty received and was admitted into first bribe allegedly occurred on April the PTI Program conditioned upon 22, 1998, when Nemes is alleged to paying $9,000 in restitution. Tartaglia, a former insurance agent for the Nettis Insurance Agency, admitted that he collected life insurance premium payments from insurance purchasers and failed to remit the premium payments to the insurance carriers. He also admitted that auto- matic policy loans were initiated on the policies without the owners’ knowledge or consent so he could steal the loan proceeds.

136 have offered cash to the Fire Chief of upon paying $200 in restitution to insurance claim following a burglary at the Rusling Hose Fire Company. The the State of New Jersey. his home on December 10, 2001. second bribe is alleged to have occurred following a conspiracy in which State v. Nemes and Marc Rossi, the former Property Related Steven Budge, John Budge owner of Rossi Adjustment Services, Insurance Fraud and Frank Land a public insurance claims adjusting On February 26, 2003, a State business, agreed to offer a bribe to False Homeowners Grand Jury returned an indictment Fire Chief William Kiernan, Jr., of the Insurance Claims charging Steven Budge, a Public Enterprise Fire Company located in Insurance Claims Adjuster; his brother, Hamilton Township, New Jersey. The John Budge; and their uncle, Frank State intends to prove at trial that State v. Land, with attempted theft by cash bribes were offered to the Chiefs Tracy D. Childress deception. According to the so that they would allow additional Tracy D. Childress, a Newark indictment, on or about December 12, damage to be done to buildings by police officer, was charged by an 2000, a house owned by Frank Land permitting fires to burn longer while Essex County Grand Jury in 2002 was damaged as a result of winds that supposedly working to extinguish with attempted theft by deception caused a large tree limb to fall on the those fires. Nemes is pending trial relating to a false insurance claim roof. It is alleged in the indictment that with respect to the charges under this for a laptop computer allegedly sto- Steven Budge, John Budge, and Frank latter indictment. len from his home. According to the Land inflicted additional damage to the indictment, Childress submitted a roof in order to inflate the homeowner’s Insurance false receipt to his insurance com- insurance claim to Liberty Mutual Inspection Fraud pany, purporting to substantiate the Insurance Company. The State purchase of a computer costing in intends to prove that Steven Budge excess of $7,282. Childress alleg- submitted an appraisal to repair the State v. edly submitted the receipt to Cigna roof to Liberty Mutual which was Waleed Itani Insurance Company as support for inflated by approximately $60,000. Waleed Itani pled guilty to an Ac- a homeowner’s insurance claim in Liberty Mutual, suspecting fraud, cusation charging him with commer- which he claimed that a burglary oc- denied the claim, and referred the case cial bribery. In February 2000, Itani curred at his residence and that to OIFP for further investigation. The was employed at George’s Shell, a some of his personal property was cases are pending trial. service station in Hackensack, which stolen, including the computer. On was also an authorized CARCO in- March 3, 2003, Childress was ad- State v. surance inspection facility. CARCO mitted into the PTI Program condi- Lisa Mulrooney is an independent vendor for the au- tioned upon completing 50 hours of On May 22, 2003, Lisa Mulrooney tomobile insurance industry which community service. pled guilty to an Accusation charging contracts with service stations to in- her with attempted theft by deception. spect used automobiles to assess State v. Mulrooney admitted that on October 1, their condition for the purpose of cal- Robert Stevens 2001, she altered a $126 invoice culating insurance coverage and pre- On March 14, 2003, Robert issued by Aqua Pure, Inc., a company miums. Itani admitted that as an Stevens was sentenced for forgery which delivered water to Mulrooney’s agent of CARCO, he accepted $200 to two years probation conditioned residence, to read $3,316. She to falsify a CARCO inspection report upon paying a $1,000 civil insurance submitted the altered invoice to State to indicate that a 1995 Toyota Co- fraud fine and a $350 criminal fine. Farm in support of a property damage rolla contained a stereo AM/FM ra- Stevens admitted that he submitted claim after fuel oil leaked from an dio with tape deck, compact disc a forged receipt from Eagle Golf underground tank on her property and player, and alarm system. On Feb- Works in the amount of $1,004 to contaminated her water supply. On ruary 28, 2003, Itani was admitted AAA Mid-Atlantic Insurance Com- August 22, 2003, Mulrooney was into the PTI Program conditioned pany, in support of a homeowner’s admitted into the PTI Program with the

137 OIFP Criminal Case Descriptions – Insurance Fraud

conditions that she perform 60 hours of Fraudulent community service and pay a $5,000 Property Claims civil insurance fraud fine. State v. State v. David Rozjabek Solomon Bouzaglou, On December 4, 2003, a Joseph Benlolo and Effy Harari Middlesex County Grand Jury returned On March 12, 2003, Solomon an indictment against David Rozjabek, Bouzaglou and Joseph Benlolo pled charging him with attempted theft by guilty to separate Accusations charging deception. According to the each of them with conspiracy and indictment, on May 24, 2002, an attempted theft by deception. automobile accident occurred near Bouzaglou and Benlolo admitted that, Rozjabek’s home which caused minor between September of 1997 and May damage to his landscaping. The of 1998, they conspired with others, indictment alleged that Rozjabek including a public insurance adjuster, submitted a property damage to intentionally cause water damage to insurance claim to his homeowner’s costume jewelry stored in a warehouse insurance carrier, Allstate Insurance located in Irvington, which was Company, using a phony invoice in the insured by Fireman’s Fund Insurance amount of $1,250 in support of his Company for $1 million. The claim. According to the indictment, the defendants admitted that they actual damage to Rozjabek’s property submitted an insurance claim to was estimated at $125. Rozabek’s Fireman’s Fund for approximately case is pending in trial. $973,638, knowing that the jewelry had intentionally been damaged. State v. Fireman’s Fund, suspecting the claim Carmina Vicidomini was fraudulent, denied the claim and Carmina Vicidomini pled guilty to referred the matter to OIFP for further an Accusation charging her with investigation. Sentencing is scheduled attempted theft by deception and, on for early 2004. September 12, 2003, was admitted into As part of the OIFP investigation the PTI Program conditioned upon into the Bouzaglou and Benlolo false paying a $2,000 civil insurance fraud claims, Effy Harari pled guilty to an fine and performing 50 hours of Accusation charging him with community service. Vicidomini conspiracy. Harari admitted that he admitted that, on July 17, 2002, she gave Benlolo $12,000 to finance the filed a fraudulent property loss claim scheme. Harari was, in turn, promised with her homeowner’s insurance, a portion of the insurance proceeds. Selective Insurance Company, On October 10, 2003, Harari was claiming that jewelry valued at admitted into the PTI Program $4,980 had been lost. The conditioned upon performing 50 hours investigation revealed that, in July of of community service. He was also 2000, Vicidomini had filed an ordered to pay a $5,000 civil insurance insurance claim for the loss of the fraud fine. same jewelry under her automobile policy but it was not covered.

138 State v. Mitchell Markowitz, numerous international flights. Three State v. Sol Zaltz, Yehudah Berger, travel insurance companies, World Eric Rosenblatt Sam Nisser and David Nisser Access Service Corporation/Access On October 1, 2003, Eric On June 20, 2003, as part of the America, Travel Insured Interna- Rosenblatt was sentenced to five Bouzaglou and Benlolo investigation, tional, Inc., and Travel Guard Inter- years probation conditioned on Mitchell Markowitz, Sol Zaltz, national, paid R.K. a total of $15,636 paying a $5,000 civil insurance fraud Yehudah Berger, Sam Nisser, and before suspecting that the claims fine and performing 30 days of David Nisser were charged in a were fraudulent. R.K. also admitted community service after pleading State Grand Jury indictment with that she used the letterhead and sig- guilty to theft by deception. In May of conspiracy and attempted theft by nature of an Alitalia Airlines em- 2001, Rosenblatt had submitted a deception. According to the indict- ployee to create a letter which falsely claim to Jewelers Mutual Insurance ment, between January of 1998 and indicated that Alitalia was unable to alleging that he lost a one-carat January of 1999, the defendants locate R.K.’s missing luggage and diamond ring valued at approximately conspired to purchase 20,000 pieces would forward a settlement check to $5,700. An investigation by Jewelers of inexpensive costume jewelry, pro- R.K. for the maximum amount of the Mutual revealed that previously, in duce phony receipts, store the jew- airline’s liability. As part of her par- November of 2000, Rosenblatt had elry in a warehouse, and purposely ticipation in the PTI Program, R.K. reported the same diamond ring lost damage the jewelry in order to col- was required to cooperate with the to State Farm Insurance Company, lect on the insurance policy. The State in other investigations, pay a which had paid him $4,664. Irvington warehouse was insured by $5,000 civil insurance fraud fine, and Rosenblatt failed to disclose the prior Fireman’s Fund Insurance Company pay $10,447 in restitution to World State Farm claim on the Jewelers for $1 million. According to the indict- Access Service Corp., $2,170 in res- Mutual application for insurance. ment, Markowitz, a licensed public titution to Travel Insured Interna- Jewelers Mutual denied Rosenblatt’s insurance adjuster, submitted an in- tional, as well as $3,019 in restitution May 2001 claim and referred the flated insurance claim in the amount to Travel Guard International. matter to OIFP for investigation. of $973,638 to Fireman’s Fund. The cases as to these five defendants State v. Phony are pending trial. Daniel Chace Certificates/Letters On September 2, 2003, Daniel State v. R. K. Chace was admitted into the PTI of Insurance On July 17, 2003, R.K., whose Program conditioned on performing full name must be withheld for inves- 30 hours of community service after State v. tigative reasons, was admitted into pleading guilty to attempted theft. William Burgermaster the PTI Program after being charged Chace, who was an operations engi- William Burgermaster pled by way of an Accusation on April 30, neer at the World Trade Center, ad- guilty to an Accusation charging him 2003, with theft by deception, at- mitted that, in April of 2002, he sub- with forgery. He admitted that, as an tempted theft by deception, and forg- mitted a fraudulent property loss employee of Shading Systems, Inc., ery. The Accusation charged that, claim to Ohio Casualty Insurance during a routine insurance audit of between March of 1993 and May of Group for the loss of what he workers’ compensation insurance 2001, R.K. submitted phony insur- claimed were his personal hand coverage, he provided the auditors ance claims for lost luggage and tools, power tools, and clothing due with a forged Certificate of Liability. their contents under various travel/ to the terrorist attacks at the World The certificate was purportedly is- baggage insurance policies following Trade Center on September 11, sued by the Waldorf Insurance 2001. Chace claimed the value of Agency and purported to reflect the property loss at $5,824. The proof of workers’ compensation in- tools and uniforms, however, were surance, when, in fact, Shading not Chace’s personal property but Systems, Inc.’s Certificate of Liabil- were, in fact, supplied by his em- ity Insurance had been canceled ployer. Consequently, he was not, due to non-payment. Under State entitled to file the claim.

139 OIFP Criminal Case Descriptions – Insurance Fraud

law, workers’ compensation insur- State v. ance is mandatory. On May 14, William Mulholland 2003, Burgermaster was admitted William Mulholland, the operator into the PTI Program conditioned of a small independent trucking com- upon completing 50 hours of pany known as Bilco Transport, pled community service. guilty to an Accusation which charged him with forgery. Mulholland State v. admitted that, on March 4, 2002, in Mark DiTaranto order to enter into a business agree- On September 26, 2003, Mark ment with Furniture King Stores, he DiTaranto was sentenced to three produced a forged letter purportedly years probation and ordered to per- from State Farm Insurance Com- form 50 hours of community service pany, stating that Bilco Transport after pleading guilty to forgery by ut- maintained a general liability insur- tering. DiTaranto had presented a ance policy with State Farm, that forged Certificate of Liability Insur- Furniture King Stores was added to ance, purportedly issued by the Gen- the policy as an additional insured, eral Agents Insurance Company, to and that Furniture King Stores was a homeowner in order to perform covered for losses of up to $500,000. construction work at the Mulholland’s company, Bilco Trans- homeowner’s residence. port, did not, in fact, maintain a gen- State v. eral liability insurance policy with Douglas Pelikan State Farm. On May 5, 2003, Douglas Pelikan pled guilty to an Mulholland was admitted into the PTI Accusation which charged him with Program conditioned upon complet- forgery. He admitted that, in June of ing 75 hours of community service. 2002, he presented a fraudulent Cer- tificate of Liability Insurance, purport- State v. edly issued by Nottingham Insurance Anthony Spano and Financial Service, to a client On June 13, 2003, Anthony who had hired Pelikan for a con- Spano was sentenced to two years struction project. Contractors are of- probation conditioned upon paying ten required to present Certificates of $307 in restitution and $5,000 in Insurance substantiating liability and civil insurance fraud fines after workers’ compensation insurance, pleading guilty to committing theft among others, before beginning con- by deception. Spano admitted that, struction work. Pelikan admitted that between July 13, 1999 and March 1, he altered the Certificate of Liability 2000, while working as a massage to reflect current coverage because therapist at the Circle of Health his liability insurance policy with Clinic, Inc., in Hillsdale, he fraudu- Nottingham had previously been lently submitted insurance claims to canceled. On October 31, 2003, Chubb Insurance for approximately Pelikan was admitted into the 29 massage therapy sessions in PTI Program. excess of $5,000.

140 Criminal Cases Investigated in 2003 by Fraud or Provider Type - Staged Thefts/Give Up Schemes 118 - Fraudulent Insurance Cards 76 - Other 54 - Miscellaneous 55 - Health Care/PIP/BI 38 - False Documents 32 - False Claims 34 - Agent Fraud 25 - Property 13 - Staged Accidents 30 - Fraudulent Drivers Licenses 26 - False Claims 12 - False Documents 17 - Premium Theft 11 - Homeowners Insurance 10

Property & Casualty 158 Auto Fraud 393 Medicaid 161

Health & Life 306

- Medical Support Other 27 - Pharmacy 24 - Transportation 21 - Facility Other 20 - Practitioners 18 - Health Care Claims Fraud 131 - Program Other 15 - Disability Insurance/ - Clinic 9 - Workers Compensation 62 - Facility/Institution 8 - Other 59 - Patient Abuse 7 - False Claims 15 - Laboratory 6 - Misappropriation/Embezzlement 13 - Home Health 6 - Application Fraud 10 - Life Insurance 9 - Premium Fraud 7

141 OIFP Criminal Case Descriptions – Medicaid Fraud

State v. State v. Azam Khan, et al. Seymour H. Blau Azam Khan, owner of S Brothers Seymour H. Blau, a former li- Pharmacy, pled guilty on August 9, censed podiatrist, pled guilty on Octo- 2002, to health care claims fraud, ad- ber 15, 2002, to Medicaid fraud and mitting that his pharmacy defrauded was sentenced on July 15, 2003 to one the Medicaid Program of more than year probation conditioned upon pay- $290,000 for medications that were ing $5,819 in restitution to the Medicaid never dispensed or dispensed to per- Program. Between September 1998 sons using another person’s Medicaid and April 2001, Blau wrote and submit- recipient number. In some instances, ted approximately 150 prescriptions for phony bills were submitted to Medicaid both legend drugs and controlled dan- for medications prescribed for Medic- gerous substances (CDS) in the aid recipients who had died years ear- names of four former patients of his lier. Khan is scheduled to be sentenced who were enrolled in the Medicaid Pro- in early 2004. Milton Barasch, the gram. The former patients never re- Pharmacist-in-charge of S Brothers ceived the drugs. Blau personally ob- Pharmacy, also pled guilty to health tained the drugs from the pharmacies. care claims fraud on May 19, 2003 and The fraudulently prescribed drugs, to- is scheduled to be sentenced in early taling over $6,000, were billed to the 2004. Co-defendant Dr. Axat Jani, also Medicaid Program. charged in the S Brothers Pharmacy scheme, pled guilty on January 7, 2003 State v. to health care claims fraud. Jani admit- Bennie M. Martin ted that he had written phony prescrip- and Recovery Services, Inc. tions in the names of Medicaid recipi- Bennie M. Martin, a licensed prof- ents who had visited his clinic located essional substance abuse counselor in Newark. He further admitted that he and Recovery Services, Inc., a Medic- had provided the prescriptions, along aid provider authorized to provide drug with the Medicaid beneficiary num- and alcohol counseling services, were bers, to co-defendants Shahid indicted on January 13, 2003 by a Khawaja and Milton Barasch for a fee. State Grand Jury. The indictment Jani is scheduled to be sentenced in charged Martin with health care claims early 2004. The case against Shahid fraud, Medicaid fraud and corporate Khawaja is pending trial. These mat- misconduct. According to the indict- ters will be referred to the Profes- ment, between February 2001 and sional Licensing Boards for Medicine September 2002, Martin fraudulently and Pharmacy for appropriate action obtained the names and Medicaid re- with respect to the professional li- cipient numbers of Medicaid recipients censes held by the defendants. who were not counseled at Recovery Services, Inc. Using the recipients’ names and numbers, Martin allegedly billed the Medicaid Program falsely

142 claiming that he had provided the coun- Hopes submitted fraudulent bills to the seling services to those Medicaid re- Medicaid Program for non-existent cipients. Allegedly, Martin and Recov- counseling sessions. On December 5, ery Services, Inc. fraudulently sub- 2003, Traynor was sentenced to three mitted claims to Medicaid totaling years probation conditioned upon per- over $504,000 for counseling ses- forming 150 hours of community ser- sions that never took place. The case vice. He was also debarred from par- is pending trial. ticipating in the Medicaid Program for a period of five years. State v. Cristino Morales State v. and Maria Carmen Cruz Akbar Oliver, et al. A State Grand Jury returned an in- A State Grand Jury returned indictment charging Cristino Morales and dictments charging Ifeanyi Akemelu, Maria Carmen Cruz with health care Kattia Bermudez, Rayonne Clark, Vic- claims fraud and Medicaid Fraud. Ac- tor Cordero, Lenora Grant, Iris Sabree cording to the indictment, between May and Akbar Oliver variously with mul- 1999 and October 1999, Morales and tiple counts of Medicaid fraud. The in- Cruz, the owner/operators of the New dictments alleged that the seven de- Hopes of New Jersey Clinic in fendants, who were employees of Camden, billed Medicaid more than Maximus, Inc., a company contracted $13,000 for mental health counseling by the State to assist with the task of and psychological services which were enrolling eligible persons into the New not rendered or not rendered as billed. Jersey Family Care Program, fraudu- Cruz pled guilty to Medicaid fraud and lently obtained benefits from the New on December 5, 2003, was sentenced Jersey Family Care Program. The Pro- to three years probation conditioned gram provides health insurance ben- upon performing 150 hours of commu- efits to the “working poor,” people who nity service. She was also debarred work and earn too much money for from participating in the Medicaid Pro- Medicaid coverage, but not enough gram for a period of five years. Morales money for privately purchased health pled guilty to health care claims fraud insurance. According to the indict- and is scheduled to be sentenced in ments, the defendants obtained ben- early 2004. efits by providing false information about income or dependents on their State v. applications for the Program. The in- Patrick Traynor dictments also alleged that Akemelu As part of the OIFP Medicaid and Oliver assisted others in preparing Fraud Section’s investigation into the false applications for the Program. New Hopes of New Jersey Clinic, Rayonne Clark pled guilty to Medicaid Patrick Traynor, Program Director of fraud and on February 21, 2003, Clark New Hopes of New Jersey, pled guilty was sentenced to two years probation to an Accusation charging him with conditioned upon completing 100 Medicaid fraud. Traynor admitted that hours community service and paying a between March 1999 and June 1999, $250 fine. The cases against the six at the direction of the owners of New remaining defendants resulted in Pre- Hopes, he prepared patient progress Trial Intervention (PTI) or other proba- notes for counseling sessions which tionary dispositions. never occurred. As a result, New

143 OIFP Criminal Case Descriptions – Medicaid Fraud

State v. State v. Paul Steffens Nino Paradiso, Paul Steffens pled guilty to Medic- Singac Pharmacy, et al. aid fraud and, on February 21, 2003, he On June 13, 2003, a State Grand was sentenced to three years probation. Jury returned an indictment charging Steffens was also barred from partici- Nino Paradiso, a licensed pharmacist, pating as a provider in the Medicaid and corporate defendant, Singac Phar- Program. Steffens and the corporate macy, which Paradiso owned and op- entity known as Hudson Behavioral erated, with health care claims fraud Treatment Center had been charged by and Medicaid fraud. Paradiso was also a State Grand Jury with theft by decep- charged with misconduct by a corpo- tion, misconduct by a corporate official rate official. According to the indict- and Medicaid fraud. The indictment al- ment, between February 2001 and Au- leged that as the Executive Director of gust 2001, Paradiso, through Singac Hudson Behavioral Treatment Center, Pharmacy, and Kenneth Horwitz, an- an outpatient drug and alcohol treat- other licensed pharmacist, submitted ment center managed by Facilities Man- approximately103 fictitious prescription agement Associates Inc. (FMA), drug claims to the Medicaid Program Steffens submitted claims to the Medic- for eight Medicaid recipients. Horwitz aid Program for group therapy services was employed as a licensed pharma- that were not provided. cist at the Medical Treatment Center located at 935 Allwood Road in Clifton. State v. The indictment further alleged that the Howard Williams, III fictitious claims were submitted based On December 23, 2002, Howard upon prescriptions that Horwitz admit- Williams, III pled guilty to an Accusation ted he forged. The eight Medicaid re- charging him with health care claims cipients were unaware of the fictitious fraud. Williams admitted that between prescriptions and fraudulent claims. Al- March 2000 and February 2002, he ob- though no medicines were dispensed, tained and filled phony prescriptions for Medicaid was billed approximately non-narcotic drugs, including Diflucan, $35,012. Paradiso and Singac Phar- Viracept and Epivir, fraudulently using macy are pending trial. the names of Medicaid recipients. The investigation revealed that the Medicaid State v. Program was billed approximately Kenneth Horwitz $75,388 for the phony prescriptions filled On April 10, 2003, Kenneth by Williams. When Williams was ar- Horwitz pled guilty to an Accusation rested by officers of the West New York which charged him with Medicaid Police Department, he was found to have fraud. Horwitz admitted that between in his possession a small amount of February 2001 and August 2001, he heroin, as well as Diflucan, Viracept, and and a co-conspirator, Nino Paradiso, Epivir. On October 24, 2003, Williams submitted approximately 103 fictitious was sentenced to four years State prison prescription drug claims to the Medic- and ordered to pay restitution to the Med- aid Program for eight Medicaid recipi- icaid Program in the amount of $75,388. ents. The fictitious claims were submitted based upon prescriptions that Horwitz admitted he forged. The eight Medicaid recipients were unaware of the fictitious prescriptions and fraudulent claims. Although no medicines

144 were dispensed to them, Medicaid was community service and cooperation billed approximately $35,012. Horwitz is with the State in the continuing investi- awaiting sentencing. gation of this matter. State v. State v. Manuprasad Parikh Harvey Lee Bellamy On November 12, 2003, and Bernice Bellamy Manuprasad Parikh, the owner of Irv- A State Grand Jury returned an in- ing Pharmacy, pled guilty to an Accu- dictment charging Harvey Lee Bellamy sation charging him with Medicaid and Bernice Bellamy with health care fraud. Parikh, through Irving Pharmacy, claims fraud and Medicaid fraud. fraudulently billed the Medicaid Pro- Harvey Lee Bellamy was the corporate gram for expensive prescriptions, president of H&B Medical Transporta- namely, Serostim, used in HIV treat- tion Services, Inc., (H&B), a mobility as- ment. The prescription drugs, valued at sistance patient transportation service approximately $180,000, were never which provides transportation to Medic- dispensed to Medicaid recipients. The aid patients to and from their medical matter was referred to the Board of treatment appointments. Bernice Pharmacy for appropriate action with Bellamy, his wife, was in charge of the respect to Parikh’s license. Parikh is billing for H&B. According to the indict- scheduled for sentencing in early 2004. ment, Harvey and Bernice Bellamy, through H&B, a licensed Medicaid pro- State v. vider, fraudulently billed the Medicaid Eliezer Martinez, et al. Program for the use of extra crew A State Grand Jury returned an in- members who purportedly provided as- dictment charging Eliezer Martinez, sistance to Medicaid recipients during Olga Marquez, Olga the vehicle transports. At trial, the State Bonett, Juanita Melendez, Jose intends to prove that the extra crew Jimenez, Bartolo Moreno and Luz members were not provided during the Senquiz with health care claims fraud transports and the Bellamys fraudu- and Medicaid fraud. Martinez owned lently billed Medicaid for transportation and operated Hispanic Counseling and services rendered to approximately 14 Family Services of New Jersey, Inc., a Medicaid patients in the approximate drug and alcohol counseling center. amount of $22,860. On February 3, According to the indictment, Martinez, 2003, a bench warrant for Harvey Marquez, Bonett, Melendez, Bellamy was issued as a result of his Jimenez, Moreno and Senquiz, all non-appearance at a scheduled status counselors at the center, submitted conference. fraudulent health care claims to the Medicaid Program seeking reimburse- State v. ment for medical services provided to Michael Stavitski, et al. Medicaid recipients, when, in fact, the On November, 10, 2003, Michael health care services had not been pro- Stavitski, Wall Pharmacy, Avon Phar- vided. Jimenez, Bonett, Senquiz and macy and Belmar Pharmacy pled guilty Melendez pled guilty to health care to health care claims fraud. Stavitski’s claims fraud and are awaiting sentenc- sentencing is scheduled in early 2004. ing. On July 25, 2003, Marquez was ac- A State Grand Jury indictment had cepted into the Camden County Pre- charged Stavitski, a licensed pharma- Trial Intervention (PTI) Program condi- cist and the operator of four pharmacy tioned upon completion of 50 hours of corporations located in Monmouth

145 OIFP Criminal Case Descriptions – Medicaid Fraud

County, with health care claims fraud, Stavitski, a pharmacist separately incorporate misconduct and Medicaid dicted by the State Grand Jury along fraud. Three of the four pharmacy cor- with Belmar Hometown Pharmacy, porations were also charged with Avon Pharmacy and Wall Pharmacy. health care claims fraud and Medicaid It was alleged that Bukowiec was be- fraud. The pharmacies charged were ing paid “off the books” by Stavitski Jr. Mick, Inc. d/b/a Belmar Hometown and that income was not reported by Pharmacy, 911 Main Street, Belmar, Bukowiec to the New Jersey Medicaid New Jersey; Stavco, Inc., d/b/a Avon program or on his taxes. On June 30, Pharmacy, 300 Main Street, Avon, 2003, the Bukowiecs were admitted New Jersey; and Winky, Inc., d/b/a into the PTI Program conditioned Wall Pharmacy, 2510 Belmar Blvd., upon John paying $7,181 restitution, Wall, New Jersey. These pharmacies Kathleen paying $5,195 restitution, operated as retail walk-in pharmacies and both performing 75 hours of and also filled prescriptions for resi- community service. dents of approximately 30 nursing home and assisted living facilities, as State v. well as provided services to Medicaid Stephen Poggioli and private insurance recipients. Ac- As part of the OIFP’s investigation cording to the indictment, between into the Stavitski matter, Stephen May 1996 and February 2002, Poggioli pled guilty to an Accusation Stavitski and the three pharmacies charging him with Medicaid fraud. submitted numerous claims for pay- Poggioli admitted that between May ment which reflected that medications 1999 and February 2002, he provided or refills of medications were provided kickbacks in the form of cash and to Medicaid and privately insured pa- over-the-counter medicine to approxi- tients when, in fact, such medications mately 15 nursing home and assisted were never provided. Additionally, in living facilities. These kickbacks were many instances, Stavitski allegedly provided in exchange for the facilities’ billed for providing medications that agreement to exclusively use pharma- were never prescribed by physicians. cies owned by Michael Stavitski to provide medications for the facilities’ State v. Medicaid patients. On October 24, John and Kathleen Bukowiec 2003, Poggioli was sentenced to John and Kathleen Bukowiec three years probation. were indicted by a State Grand Jury for Medicaid fraud and filing a fraudu- State v. lent New Jersey income tax form. The Rx2000 Pharmacy indictment alleged that between Feb- On May 7, 2003, Rx2000 Phar- ruary 2000 and May 2002, John and macy, a Medicaid provider, pled guilty Kathleen Bukowiec, husband and to an Accusation charging Medicaid wife, falsely under-reported their in- fraud. Rx 2000 Pharmacy admitted that come on applications for Medicaid between January 1999 and July 1999, benefits and misrepresented their it submitted bills totaling approximately earnings on State income tax returns. $18,506 to the Medicaid Program for Additionally, John Bukowiec allegedly prescription drugs which the pharmacy applied for and received unemploy- never provided to Medicaid recipients. ment benefits while employed. The pharmacy was ordered to pay According to the indictment, John $22,289 in restitution to the Medicaid Bukowiec was employed by Michael Program and to pay a $1,000 fine.

146 State v. State prison. He was also ordered to I&I Invalid Coach, pay $450,000 restitution to the Medic- Imad Elbashir, aid Program, and a $15,000 criminal and Imadelin A. Khair fine. The Judge also ordered Faenza’s pharmacy license suspended for one On May 22, 2003, Imad Elbashir, year and barred him from participating Imadelin Khair and a corporate defen- in the Medicaid Program for a period of dant, I&I Invalid Coach, pled guilty to five years. health care claims fraud. The defendants had been charged with con- State v. spiracy, health care claims fraud, theft Michael Pacheco by deception, Medicaid fraud and cor- As part of the investigation into porate misconduct. I&I, an invalid the McDermott Pharmacy matter, on coach provider owned by defendants, July 18, 2003, Michael Pacheco pled Imad Elbashir and Imadelin Khair, pro- guilty to an Accusation charging him vided non-emergency medical trans- with Medicaid fraud. Pacheco admit- portation to Medicaid recipients. I&I in- ted that between January 1998 and flated mileage, submitted false claims July 1999, as an employee of to the Medicaid Program and received McDermott Pharmacy, he assisted $90,000 more than it was entitled to for Matthew Faenza, a licensed pharma- services rendered. In addition, the de- cist who owned and operated the fendants paid cash kickbacks to sev- pharmacy, with billing the Medicaid eral Medicaid recipients in exchange Program for dispensing drugs to Med- for their continued patronage. On Sep- icaid patients when, in fact, no drugs tember 12, 2003, Khair was sentenced were dispensed. The drug most com- to three years State prison. Khair and monly involved in the phony Medicaid the corporation were ordered to pay transactions was Serostim, an expen- $103,235 restitution and the corpora- sive drug used to treat persons in- tion was dissolved and ordered to re- fected with HIV. Pacheco also admit- frain from doing business in the State ted that, at Faenza’s direction, he paid of New Jersey. Elbashir is scheduled “runners” for prescriptions when for sentencing in early 2004. Faenza was not at the pharmacy. State v. Faenza then billed Medicaid for those Matthew Faenza prescriptions. On September 19, 2003, Pacheco was sentenced to On June 4, 2003, Matthew Faenza three years probation. He has also pled guilty to an Accusation which been suspended from participating in charged him with health care claims the Medicaid Program for five years. fraud. Faenza, a licensed pharmacist who owned and operated McDermott State v. Pharmacy located at 433 Union Av- Kwadwo Oei Agyemang enue, Paterson, admitted billing the and Victory Pharmacy, Inc. Medicaid Program for dispensing drugs A State Grand Jury returned an in- to Medicaid patients when, in fact, no dictment charging Kwadwo Oei drugs were dispensed. The drug most Agyemang, a pharmacist licensed in commonly involved in the phony Med- New Jersey, with health care claims icaid transactions was Serostim, an ex- fraud, Medicaid fraud and corporate pensive drug used to treat persons in- misconduct. Victory Pharmacy, a cor- fected with HIV. On October 17, 2003, poration owned and operated by Faenza was sentenced to three years

147 OIFP Criminal Case Descriptions – Medicaid Fraud

Agyemang, was also charged in the in- from the trust account of nursing home dictment with health care claims fraud residents and used it to pay corporate and Medicaid fraud. The indictment al- expenses. Meadowview Nursing Cen- leged that between November 2001 ter was a Medicaid provider of long and June 2002, Agyemang, through term care services to Medicaid recipi- Victory Pharmacy, Inc., submitted in ents. Meadowview received payments excess of $27,000 in fraudulent bills to from the Medicaid Program and Social the Medicaid Program for legend drugs Security on behalf of the nursing home which were never dispensed. The false residents. The nursing home, in turn, claims were allegedly submitted on be- was required by law to place $35 to half of investigators from OIFP who $40 of these payments into a Personal were working undercover and who Needs Account (PNA) each month for were posing as Medicaid recipients. each resident’s personal use. The in- Agyemang pled guilty to health care dictment alleged that Tarkas diverted claims fraud and on September 19, over $100,000 from the PNA accounts 2003, he was sentenced to two years and used it to pay the expenses of the probation conditioned upon paying nursing home which was experiencing $54,000 in restitution and penalties. financial difficulties. The case against Tarkas and Pro- State v. gressive is pending trial. Angela Fusco Angela Fusco pled guilty to an Ac- State v. cusation charging her with one count of Jennifer Kim Medicaid fraud. Fusco admitted that Jennifer Kim, the owner/pharma- between February 2002 and November cist of the now defunct Medicine 2002, she used her Medicaid Managed Shoppe pharmacy located in Arlington, Care Organization cards to pay for New Jersey, pled guilty to an Accusa- controlled dangerous substances tion which charged her with third de- (CDS) for which she did not have valid gree Medicaid fraud. Kim admitted that prescriptions. On September 15, 2003, between March and August 2001, she Fusco was sentenced to three years submitted bills to the Medicaid Pro- probation conditioned upon paying res- gram for prescription medicines for titution in the amount of $502. Medicaid patients that pertained to conditions and illnesses that the pa- State v. tients did not suffer and for prescrip- Surbhi Tarkas tions not prescribed by physicians. As and Progressive Health Care much as $16,000 may have been of Hudson County, Inc. billed to the Medicaid Program in this On September 19, 2003, a State manner, and the total fraud to the Med- Grand Jury returned an indictment icaid Program may have been as high charging Surbhi Tarkas and Progres- as $35,000. On December 5, 2003, sive Health Care of Hudson County, Kim was sentenced to one year of pro- Inc., with theft by failure to make re- bation. As a condition of probation, she quired disposition. According to the in- was ordered to pay a $1,000 criminal dictment, between June 2000 and fine. She is suspended from participat- January 2001, Tarkas, in her capacity ing in the Medicaid Program for five as the owner/operator of Meadowview years and her pharmacist’s license Nursing Center, which was owned by was suspended for one year. Progressive Health Care of Hudson County, Inc., diverted over $100,000

148 State v. Douglas Tyer On December 10, 2003, Douglas Tyer pled guilty to two separate Accu- sations. The first Accusation charged him with Medicaid fraud and the second with receiving stolen property. Tyer admitted that he obtained stolen Med- icaid recipient cards which entitled him to medical benefits, including prescription drugs, paid for by the Medicaid Program. He also admitted that he obtained stolen written prescriptions, purportedly issued by doctors for various narcotic medicines, so that he could obtain narcotic drugs for personal use not related to medical treatment. Tyer was previously arrested and convicted for similar conduct. Tyer is scheduled to be sentenced in early 2004. State v. Steven Aberbach On December 19, 2003, Steven Aberbach pled guilty to an Accusation charging him with health care claims fraud. Aberbach, a licensed pharmacist and owner/pharmacist of Springfield Pharmacy located at 234 Mountain Av- enue in Springfield, admitted that between August 2001 and June 2003, he filled legitimate prescriptions for medicines on doctors’ orders for a Medicaid patient, then added several false prescriptions for the same patient so that he could fraudulently bill the Medicaid Program. Aberbach is scheduled to be sentenced in early 2004.

149 2003 Medicaid Civil Case Settlements

cose monitor system. The State of New Jersey recovered $293,282 in restitution and penalties as a result of this settlement agreement. Abbott Laboratories, Inc. A settlement agreement was reached between Abbott Laboratories, the New Jersey Medicaid Program and the National Association of Medicaid Fraud Control Units. Abbott paid kickbacks, which are unlawful under the Medicaid fraud statute, to durable medical equipment suppliers and nursing homes in exchange for the suppliers and homes ordering Abbott products. Abbott supplied enteral feeding products which were billed to the Med- icaid Program. The State of New Jer- sey recovered $936,206 in restitution Medicaid Section Chief John Krayniak Pfizer, Inc. and penalties as a result of this settle- meets with members of his staff to ment agreement. review an investigation. The New Jersey Medicaid Pro- gram and the National Association of GlaxoSmithKline, Inc. Medicaid Fraud Control Units reached a settlement agreement with Pfizer, The New Jersey Medicaid Pro- Inc., maker of Lipitor, an anti-choles- gram and the National Association of terol medication. Pfizer violated the Medicaid Fraud Control Units reached federal Medicaid drug rebate statute a settlement agreement with by failing to accurately report statuto- GlaxoSmithKline, Inc., maker of rily mandated “best price” information Flonase, a nasal spray, and Paxil, on the drug. an anti-depressant medication. As part of the settlement, New Jer- GlaxoSmithKline violated the fed- sey recovered $1,250,626 in restitution, eral Medicaid drug rebate statute by penalties and interest. failing to accurately report statutorily mandated “best price” information on the Lifescan, Inc. drugs. This action decreased the rebate amount owed to the State. As part of The New Jersey Medicaid Program the settlement, New Jersey recovered and the National Association of Medic- $2,376,534 in restitution and penalties. aid Fraud Control Units reached a settlement agreement with Lifescan, Inc. Lifescan manufactures and sells blood glucose monitors and test strips. Lifescan violated Food and Drug Ad- ministration (FDA) statutes by marketing an adulterated and misbranded medical device, the Sure Step blood glu-

150 151 County Prosecutors’ Offices Criminal Case Summaries

Atlantic County Snively had conspired with four others, Steven Berenato, Lauren Hyson, Phillip Prosecutor’s Office Ford and William O’Mally, to commit the fraud. Snively’s car was ultimately State v. found burned and dumped in sand pits Robert Stanton located in Hammonton, New Jersey. After pleading guilty on June 28, His co-conspirators also pled guilty to 2002, to charges of theft by deception, charges of conspiracy to commit arson conspiracy and falsification of records, and received sentences ranging from Robert Stanton was sentenced to two two to five years of probation. years probation and ordered to make restitution to the First Trenton Indem- State v. nity Insurance Company. Stanton had Richard White falsely reported his car stolen on May On September 26, 2003, Richard 19, 1999, and filed a fraudulent insur- White was charged with theft by de- ance claim with First Trenton. The ception for allegedly failing to report in- fraud was discovered after the alleg- come to the New Jersey State Pharma- edly stolen vehicle was involved in an ceutical Assistance to the Aged and automobile accident in Philadelphia, Disabled (PAAD) Program. According Pennsylvania. First Trenton’s examina- to PAAD, White allegedly received over tion of the vehicle revealed that both $45,000 in benefits to which he was the ignition key and the remote were not entitled because he failed to report with the vehicle at the time of the acci- income from a tenant of a rental prop- dent and that there had been no dam- erty he owned. age to the steering column or forced State v. entry to the vehicle. Stanton admitted that he had given the vehicle to a fe- Frank Martini male named “Dasia” so that she could On August 11, 2003, Frank Mar- dispose of it for him. Dasia was later tini was charged with attempted theft identified as Linda Hick-Jones who, af- for allegedly falsely reporting that he ter being charged in June of 2001, had been robbed at the Tropicana failed to appear in court and became a Hotel and Casino on July 7, 2003. Af- fugitive from justice. She was finally ar- ter conducting an initial investigation rested on May 22, 2003 and pled guilty of Martini’s claim, the Tropicana re- to conspiracy on July 28, 2003. ferred the matter to the County Prosecutor’s Office. State v. Charles Snively On March 7, 2003, Charles Snively was sentenced to three years of probation and payment of restitution to the Prudential Insurance Company after pleading guilty to burning his car to collect on his insurance policy. Snively had reported his car stolen in Novem- ber of 2002 and filed a claim with Pru- dential. Investigation triggered by a tip from a concerned citizen revealed that

152 Bergen County State v. Joann McGrady Prosecutor’s Office a/k/a Joanne Schmidt On December 20, 2002, Joann State v. McGrady, otherwise known as Joanne Michael Hlavaty Schmidt, pled guilty to insurance fraud On September 29, 2003, Michael in a scheme to divert Medicare pay- Hlavaty pled guilty to attempted theft ments from Dr. Manoucher Katebian to by deception for falsely reporting that her own bank account. On March 7, his 1994 Acura Integra had been stolen 2003, Joann McGrady was sentenced from the Loews Movie Theater in to serve five years in New Jersey State Ridgefield Park, New Jersey. The prison, where she currently resides. charges emanated from a cooperative investigation between Ridgefield Park Police Department and the Bergen Burlington County County Prosecutor’s Insurance Fraud Prosecutor’s Office Squad. Hlavaty is awaiting sentencing. State v. State v. Daniel Henriques, Jerri L. Green On August 11, 2003, Jerri L. Green Helder Bronco, pled guilty to health care claims fraud and Tomasco Piccirillo for using her Horizon/Mercy prescrip- On April 28, 2003, Daniel tion card to fraudulently pay for pre- Henriques and Helder Bronco pled scription drugs for which she had sub- guilty to theft by deception for defraud- mitted a phony script. ing G.E. Auto Insurance of $70,000. Tomasco Piccirillo had reported that his State v. 2001 Mercedes Benz SL500 was sto- Cheryl Anderson-Morris len from Fairview, New Jersey, when, On July 8, 2003, Cheryl Anderson- in actuality, Henriques and Bronco had Morris was indicted for attempted theft taken the vehicle with Piccirillo’s knowl- by deception for allegedly filing a edge. This joint investigation between fraudulent insurance claim with New the Bergen County Sheriff’s Depart- Jersey Manufacturers Insurance Com- ment and the Bergen County pany for the theft of her 1998 Prosecutor’s Office ultimately resulted Oldsmobile Intrigue on January 4, in the apprehension of both Bronco 2003. Anderson-Morris reported to po- and Henriques for their roles in the pur- lice that she had parked her car on ported motor vehicle theft. Piccirillo, January 3, 2003 and that the last time who was also charged, did not plead she saw the vehicle was the following guilty and is pending trial. day on January 4, 2003. The State intends to prove at trial that the vehicle was torched with an accelerant in Philadelphia on January 3, 2003, prior to the time that Anderson-Morris claims to have last seen her car.

153 County Prosecutors’ Offices Criminal Case Summaries

State v. Both defendants testified in an Examina- Patrick Nelson tion Under Oath (EUO), a proceeding a/k/a Michael Nelson sometimes required by insurance com- On July 22, 2003, Patrick Nelson panies to obtain claimants’ facts under was sentenced to two years probation oath. At the EUO, Garlin Holmes contin- conditioned upon serving 180 days in ued his impersonation. Despite his ear- the county jail for committing health lier insistence that he was someone care claims fraud and obtaining con- other than himself, Garlin Holmes ulti- trolled dangerous substances by fraud. mately was sentenced to three years Nelson fraudulently obtained prescrip- probation and 150 hours of community tion drugs from pharmacies and paid service on a conviction for conspiracy, for them by using other people’s while his mother, Karen Holmes, was names and prescription cards. admitted into the PTI Program. The insurer, First Trenton, had denied the claim after an investigation by its Spe- Camden County cial Investigation Unit (SIU). Prosecutor’s Office State v. Natalee Jackson State v. and Kenneth Jackson Jeffrey Riendeau On September 17, 2003, Natalee On January 17, 2003, Jeffrey Jackson and her husband, Kenneth Riendeau of Blackwood, New Jersey, Jackson, entered guilty pleas in a case was sentenced on charges of at- involving the theft of $320,000 in insur- tempted theft by deception for having ance proceeds from Mrs. Jackson’s his 2000 Toyota Tacoma burned in or- former employer, Pennsauken MRI. der to collect on his insurance policy. Natalee Jackson had been employed in He was sentenced to five years proba- the billing department of Pennsauken tion conditioned upon serving 364 MRI from July of 2001 through Febru- days in the county jail’s work release ary of 2003, when a local attorney noti- program. Because he was caught be- fied Pennsauken MRI that a check writ- fore receiving payment on his claim to ten to the company for services rendered Allstate, Riendeau was not required to had been deposited into the wrong ac- make restitution, but he was required count. After a joint investigation by the to continue making his car payments Pennsauken Police Department and the to Toyota Financial. Both of his co- Camden County Prosecutor’s Insurance defendants were previously sentenced Fraud Unit, it was determined that addi- to serve three years in State prison. tional insurance checks drafted to State v. Pennsauken MRI, and totaling approxi- Garlin Holmes mately $320,000, had been deposited by and Karen Holmes Mrs. Jackson into the business account of Family Auto & Truck Parts, Inc., a On September 8, 2003, Garlin business run by Mrs. Jackson and her Holmes and his mother, Karen Holmes, husband, Kenneth. Commerce Bank, pled guilty after being indicted in a which was required to reimburse scheme in which Garlin pretended to Pennsauken MRI for most of the stolen be someone else in order to obtain in- funds, had sustained substantial losses surance coverage, and then used that as a result of the theft committed by the identity to report a 2001 SUV as stolen. Jacksons. Natalee Jackson’s plea

154 agreement includes a six year prison State v. term. Her husband Kenneth, who also Ed Camp pled guilty in the theft scheme, admit- On July 1, 2003, Ed Camp was in- ted to taking $46,000 of the stolen dicted on charges of theft by deception funds for his own use, and is expected and filing a false police report for alleg- to receive a term of probation. Both edly damaging his own motorcycle in Jacksons will also be required to order to collect insurance proceeds un- make restitution to Pennsauken MRI der his policy. Before he was charged, and Commerce Bank. he had collected over $5,800 from his State v. insurance company. Thomas Bell State v. On September 24, 2003, Thomas John McHugh Bell pled guilty to identity theft for ob- On October 19, 2002, John taining treatment at various State and McHugh was charged with theft by de- local medical facilities using the name ception and filing a false police report and birthdate of an acquaintance so for falsely reporting his boat stolen in that Medicaid would pay for his Cape May County while he stored it at treatment. The total theft exceeded the house of a friend in Pennsylvania. $13,000. In accordance with his plea On May 8, 2003, he was sentenced to agreement, Bell has agreed to serve a five years probation and required to term of 364 days in the county jail as a make restitution in the amount condition of probation and to make of $23,695. restitution to, and sign civil judgments in favor of, the two medical providers which were denied Medicaid Essex County reimbursement when Bell’s scam Prosecutor’s Office was uncovered. State v. Cape May County Enma Lopez, Prosecutor’s Office Vincente Condor, Juan Mazorra, and Marco Sanchez State v. On October 28, 2003, an Essex County Grand Jury returned an indict- Michael Quinn ment charging Enma Lopez, Vincente On April 8, 2003, Michael Quinn, Condor, Juan Mazorra, and Marco president of Quinn–Woodbine, Inc., was Sanchez with arson for hire, aggra- indicted on two counts of theft by decep- vated arson, conspiracy, and at- tion for allegedly taking deductions tempted theft by deception. The from employees each week for health charges stem from the June 14, 2003 insurance and using the funds to sat- arrest of Juan Mazorra and Marcos isfy other obligations of his business, Sanchez as they allegedly attempted which left the employees without health to burn a 1999 Toyota Corolla belong- insurance from August of 2000 to ing to Enma Lopez in the City of New- February of 2001. ark. At trial, the State intends to prove the involvement of Lopez in the scheme. Lopez is also alleged to have made a false claim against State Farm Insurance Company.

155 County Prosecutors’ Offices Criminal Case Summaries

State v. claim with her carrier, State Farm Insur- Santos Roman ance Company, gave a statement im- and Syhan Roman plicating herself and a second indi- On June 6, 2003, Santos Roman vidual. The State intends to prove that was sentenced to a three year prison the fire was deliberately set to the inte- term for his role in burning a 2000 rior of the car and to rely upon the co- Toyota Camry leased by his co-defen- operation of Lizardi to secure an indict- dant, Syhan Roman. Both were in- ment of the other individual. dicted on December 17, 2002 on charges of aggravated arson, con- Gloucester County spiracy, and theft by deception from Liberty Mutual Insurance Company in Prosecutor’s Office connection with the burning of the car. Syhan Roman was admitted into PTI State v. on May 5, 2003 in consideration for her Michael Ruggiero cooperation in the investigation. On April 17, 2003, Michael Ruggiero was indicted for attempted State v. theft by deception and perjury for al- Raffaele Arcidiacono, legedly falsely reporting his 1994 Ximena Arcidiacono, Cadillac as having been stolen from a Samuel Gonzalez shopping center parking lot in Wash- and Ronny Ortiz ington Township, New Jersey. The in- On March 18, 2003, Raffaele vestigation revealed that the vehicle Arcidiacono, Ximena Arcidiacono, had been set ablaze in Philadelphia Samuel Gonzalez, and Ronny Ortiz an hour before Ruggiero claimed to were indicted on charges of arson for have parked it in New Jersey, and that hire, aggravated arson, conspiracy, the GM Vehicle Anti-Theft System, in- and theft by deception from State Farm cluding the ignition, had not been de- Insurance Company for torching a feated. Ruggiero subsequently was 2001 Chrysler LHS on September 9, accepted into the PTI Program and 2002 in the City of East Orange. The agreed to pay a civil fine. vehicle was originally reported stolen State v. out of Kearny, New Jersey. Samuel Gonzalez pled guilty and was sen- Marcial Harrigan tenced on October 3, 2003 to serve On November 7, 2003, Marcial three years in State prison. Raffaele Harrigan was sentenced to a jail term Arcidiacono, Ximena Arcidiacono, and of nine months for knowingly displaying Ronny Ortiz were accepted into PTI for a fraudulent insurance identification their cooperation in the case. card to a police officer during a police stop on Valentine’s Day. State v. Sonia Lizardi On April 15, 2003, Sonia Lizardi was indicted on charges of aggravated arson, conspiracy, and theft by deception. Lizardi allegedly falsely reported her 2000 Ford Focus stolen in Newark, New Jersey. The car was subsequently found burned. Lizardi, who made a

156 Hudson County theft for the fraudulent disposal of a 2001 Acura Integra. The vehicle was recovered Prosecutor’s Office completely stripped and destroyed several days before it was falsely reported State v. stolen. Father and son were admitted Oscar Acosta, Reynaldo Ayala, into PTI on June 23, 2003 and ordered to Victor Hernandez, Jose Acosta, reimburse $16,984 to the American Julio Madera and Angel Ciprian Honda On May 27, 2003, Oscar Acosta Finance Company. and Reynaldo Ayala pled guilty to con- State v. spiracy to commit health care claims Jose Ramirez fraud. Oscar Acosta is presently serving time for another crime and has not and Heriberto Eric Rodriguez yet been sentenced. Reynaldo Ayala On May 14, 2003, Jose Ramirez was sentenced to five years probation pled guilty to attempted theft by decep- and ordered to pay restitution of tion, and on May 22, 2003, Heriberto $7,398. On September 5, 2003, Victor Eric Rodriguez pled guilty to con- Hernandez pled guilty to health care spiracy to commit theft by deception. claims fraud and was sentenced to five The alleged theft was reported when years probation and ordered to pay the vehicle was already in a police im- $11,452 in restitution. Finally, on Sep- pound lot following the issuance of traf- tember 11, 2003, Jose Acosta pled fic summonses to a third party opera- guilty to health care claims fraud and tor, who was unable to produce owner- was sentenced to five years probation ship or insurance documents when and ordered to pay $5,122 in restitu- stopped by police. The attempted fraud tion. Arrest warrants have been issued was discovered by North Bergen police for two other defendants who fled to when they checked their databases for the Dominican Republic. any recent police contact involving the vehicle after receiving the stolen ve- State v. hicle report. The insurance claim was Kevin Dillon denied because the vehicle was Kevin Dillon pled guilty to forgery “recovered.” Both defendants were ad- on June 11, 2003 and was sentenced mitted into PTI on September 10, to five years probation and ordered to 2003. A third party is expected to be pay restitution of $16,141 to the State arrested shortly for his participation in of New Jersey. Dillon admitted that he the conspiracy. stole blank prescription pads from a State v. doctor’s office and forged them to obtain medication through Medicaid for Isaac Polan and Lidia Velez his own personal use over a two On September 16, 2003, Isaac year period. Polan and Lidia Velez pled guilty to Ac- cusations charging theft by deception State v. for fraudulently attempting to avoid Eduard Draude, Jr. monthly lease payments. Polan re- and Eduard Draude, Sr. ported Velez’ 2002 Toyota Avalon, On April 22, 2003, Eduard Draude, which had been torched in New York Jr., pled guilty to theft by deception, City twelve hours before, as stolen and his father, Eduard Draude, Sr., from a K-Mart parking lot in North pled guilty to conspiracy to commit Bergen around noon the following day.

157 County Prosecutors’ Offices Criminal Case Summaries

Defendants are scheduled to be and sell them to customers. As a first sentenced shortly and to be ordered to time offender, Farraj would have nor- pay restitution of $30,648 to the mally qualified for entry into the PTI Pro- insurance company. gram but was excluded because of the ongoing nature of his offense. Mercer County Prosecutor’s Office Monmouth County Prosecutor’s Office State v. Anthony Klimeczak State v. On May 9, 2003, Anthony Stephen Penalver Klimeczak was indicted and charged and Faith Penalver with attempted theft by deception for On September 5, 2003, Stephen allegedly submitting three suspicious Penalver was sentenced to serve a to- insurance claims to the Harleysville In- tal of 11 years in State prison following surance Company totalling over his conviction after a May trial for ar- $50,000. Klimeczak would allegedly son and theft in connection with set- rent vehicles from various rental agen- ting his mother’s home on fire to col- cies, exchange them for crack cocaine, lect insurance proceeds. For her part report them as stolen, and file phony in the scheme, Penalver’s mother, insurance claims. Harleysville referred Faith Penalver, was sentenced to the case to the Mercer County serve four years in State prison on ar- Prosecutor’s Insurance Fraud Unit be- son and theft charges. cause of the number of similar claims it received from Klimeczak in so short a time. The Unit located an associate of Morris County Klimeczak who allegedly witnessed Prosecutor’s Office some of the transactions. State v. State v. Paul Wichman, M.D. Ibrahim Farraj On October 24, 2003, Paul On June 23, 2003, Ibrahim Farraj Wichman, M.D., an internist, was sen- was sentenced to two years probation, tenced to serve a 45 day jail sentence payment of $300 in restitution, and fifty in the Sheriff’s Labor Assistance Pro- hours of community service after gram (SLAP), payment of a $5,000 pleading guilty to the sale of five fine, reimbursement of $600 in restitu- fraudulent insurance identification tion to Aetna Insurance Company, and cards to a confidential informant and a six-month suspension of driving an undercover Mercer County privileges. Wichman pled guilty to ob- Prosecutor’s Office Detective. The ar- taining hydrocodone syrup, a Sched- rest of the defendant came after a six ule III controlled dangerous sub- month investigation into simulated instance, for his personal use by using surance cards displayed by various someone else’s name. drivers to police officers in the Trenton area. When not making sandwiches at a deli owned by his family in Trenton, Farraj would type out insurance cards on a typewriter in the back of the deli

158 State v. edly fraudulently filing for, and obtain- Muhammet Erdoganoglu ing, unemployment insurance ben- On September 12, 2003, efits. Kelly had also previously been Muhammet Erdoganoglu, a Turkish indicted for the theft of Randolph alien illegally in the United States, was Township school funds. sentenced on a charge of theft by de- State v. ception to 30 days in jail and eighteen months probation for purchasing the Suzanne Elsmore identity of another person to fraudu- On February 4, 2003, Suzanne lently obtain a New Jersey driver’s li- Elsmore was indicted for theft and cense and automobile insurance in the health care claims fraud. The indict- other person’s name. The prosecution ment alleges that Elsmore fraudulently was the product of an investigation by obtained Medicaid benefits in excess the Allstate Insurance Company. of $3,000. State v. Ocean County Wanda Reeves and Clifton Baskerville Prosecutor’s Office On September 23, 2003, Wanda Reeves and her boyfriend, Clifton State v. Baskerville, were indicted for forgery, Yong Jin Kim conspiracy and the theft of over On October 3, 2003, Yong Jin Kim $118,000, for their respective roles in a was sentenced to serve a term of 364 scheme in which Reeves, a former em- days in the Ocean County Jail and ployee of an insurance brokerage, al- agreed to pay a civil fine in the amount legedly had settlement checks mailed of $100,000 after pleading guilty to to herself and Baskerville from claims health care claims fraud for running an she fabricated. illegal acupuncture practice for several years in Toms River, New Jersey, with- State v. out holding the requisite license and Linda Toth despite the issuance of a civil injunc- On November 14, 2003, Linda tion barring him from conducting such Toth, a former employee of a medical a practice without a license. Kim’s con- group, was sentenced on two counts of tinuing practice of acupuncture was in- embezzling for funneling over $18,000 vestigated by undercover investigators in insurance payments, issued to the from the Ocean County Prosecutor’s medical group, into her own account. Office and OIFP. His conviction for Toth’s sentence requires her to serve health care claims fraud was based 45 days in the Sheriff’s Labor Assis- upon his billing of various insurance tance Program (SLAP), two years pro- companies for services which, without bation and make full restitution. an acupuncture license, he was not permitted to provide or bill. State v. Katherine Kelly State v. On September 10, 2003, Michelle Zalta, et al. Katherine Kelly was indicted for the The intentional arson of a leased crime of “Insurance Fraud” under the 1998 Honda on April 8, 2002 in South statute enacted in June of 2003, as Toms River resulted in the indictment well as on charges of theft, for alleg- of nine individuals for their alleged participation in a scheme to destroy the

159 County Prosecutors’ Offices Criminal Case Summaries

car and file an insurance claim so that well as insurance fraud charges in Min- the lessee, Michelle Zalta, could avoid nesota where Demartini allegedly lied penalty payments for excess mileage about his ownership of the plane on an under the expiring lease. The fraud insurance application. scheme was doomed from the start, however, when the car was discovered Passaic County on fire in the South Toms River area at the same time that Zalta was falsely re- Prosecutor’s Office porting to police in Eatontown that her car had just been stolen from the State v. Eatontown Mall. Zalta eventually con- Charles Nisivoccia, D.C., fessed to her involvement in the and Craig Klein, D.C. scheme as did the other participants. On May 1, 2003, chiropractors, Zalta was sentenced to serve a term of Charles Nisivoccia and Craig Klein, probation and make full restitution, partners in a Clifton Chiropractic Office, while others in the scheme received pled guilty to using a “runner” and en- sentences ranging from probation and tered the county’s PTI Program. The entry into the PTI Program to the imposi- guilty pleas resulted from a six month tion of substantial jail terms. investigation in 2001 when, over a four month period, the chiropractors paid a State v. confidential informant $900 for each of Rick Demartini five patients who were referred to their On August 14, 2003, a 1967 Cessna office. Nisivoccia and Klein also agreed 182 was stolen from the Lakewood Mu- to each pay a civil fine of $25,000. nicipal Airport. After a multiagency investigation involving the Ocean County State v. Prosecutor’s Office, the Lakewood Po- Timothy Seiger lice Department, the Federal Aviation On August 11, 2003, Timothy Administration, the Federal Bureau of In- Seiger pled guilty to an Accusation vestigation, the Royal Canadian charging him with theft by deception. Mounted Police, and several out-of- On March 3, 2003, Seiger reported his state police departments, tracked the 1999 Ford Mustang stolen to the plane through Ontario, Canada, the Totowa police. Seiger told the Totowa plane was recovered on September 12, police that he had driven his car to 2003 at the Springfield Municipal Airport work at 6:15 in the morning and dis- in Minnesota. Rick Demartini was covered it missing after work at ap- charged in Minnesota with theft and re- proximately 4:30 p.m. The Paterson ceiving stolen property, and is also likely Fire Department, however, had recov- to face theft charges in New Jersey, as ered the vehicle the day before, on Sunday, after the car had been involved in a fire. In his plea, Seiger admitted that the car had not been stolen. Seiger was admitted into the PTI Program and agreed to pay $11,695 to the Onyx Acceptance Corporation.

160 State v. Perez “jumped” into the parked vehicle Diana Heinzelman claiming they were injured in the acci- On March 11, 2003, Diana dent, and subsequently sought treat- Heinzelman was indicted on charges of ment for their “injuries.” On September theft by deception and false swearing. 8, 2003, Luz and Vinicio Vargas pled On June 18, 2002, Heinzelman re- guilty to the health care claims fraud ported her leased 1999 Toyota Rav4 and theft by deception charges. Both stolen to the Paterson police. The ve- were accepted into PTI. A bench war- hicle was recovered eight days later in rant was issued for Rafael Perez. New York City. Investigation of Heinzelman’s insurance claim revealed Salem County that Heinzelman lied about the mileage on the vehicle and failed to report prior Prosecutor’s Office damage to the vehicle. On May 5, 2003, Heinzelman pled guilty to theft State v. by deception, entered the PTI Program Rachel Cantie and agreed to pay $6,620 in restitution On October 1, 2003, Rachel Cantie to Toyota Motor Credit. was charged with forgery, fraud and the falsification of records for allegedly State v. stealing the identity of another woman Rafael Perez, Luz Vargas by fraudulently obtaining the other and Vinicio Vargas woman’s name, Social Security num- On June 3, 2003, Rafael Perez, ber, date of birth and birth certificate Luz Vargas, and Vinicio Vargas were without the other woman’s knowledge indicted on charges of health care or consent. Cantie perfected the iden- claims fraud and theft by deception tity theft by allegedly using the stolen stemming from a car accident that information to obtain a New Jersey occurred in Passaic on June 23, driver’s license with her own photo at 2001. The accident involved two ve- the local office of the Division of Motor hicles, including one which was Vehicles in Bridgeton, Cumberland parked and unoccupied. Before the County. Cantie then allegedly used the police responded, the Vargases and stolen identity to open a bank account in the victim’s name in a neighboring county in March of 2002. Further investigation revealed that Cantie had also apparently opened numerous other bank accounts throughout New Jersey and Delaware in the victim’s name. As a consequence, the victim’s credit was destroyed and she was unable to obtain an apartment, employment, automobile insurance or cell phone service. Cantie is now a fugitive from justice.

161 County Prosecutors’ Offices Criminal Case Summaries

State v. Sussex County Russell Daniel, Andrea Richardson, Elnora Townsend, Prosecutor’s Office Martha Brown, et al. In the summer of 2002, the Salem State v. County Prosecutor’s Office and the Brian Bailey Carney’s Point Police Department con- On March 28, 2003, Brian Bailey ducted a joint investigation resulting in was sentenced to 270 days in the the charging of eleven individuals in Sussex County Jail, in addition to a conjunction with alleged schemes to two year loss of his New Jersey produce, sell or possess fraudulent or driver’s license for forgery, imperson- fictitious insurance identification cards. ation and tampering with public As a result, Andrea Richardson was records. Bailey stole the identity of a sentenced to 23 days in county jail and dead man and obtained a fraudulent two years probation; and Russell New Jersey driver’s license and com- Daniel pled guilty and is awaiting mercial insurance from Harleysville In- sentencing. Two other individuals, surance Company. In the short term, Elnora Townsend and Martha Brown, Bailey was able to save $1,500 in pre- were admitted into PTI. Two miums by using the fraudulent identity. others, Mary Daniel and Dawud State v. Rakeem, have been scheduled for status conferences. Julius Accardi On May 5, 2003, Julius Accardi pled guilty to theft by deception and Somerset County was admitted into PTI for filing an in- Prosecutor’s Office flated burglary claim with Homeowners Insurance Company in the amount of State v. $2,309. Accardi also provided the insurance carrier with restitution and a Richard Chang letter of apology. In September of 2003, Richard Chang, a collections coordinator in the State v. finance department of the corporate Anthony DeFelice owner of Arbor Glen Retirement Com- On June 6, 2003, Anthony munity, was sentenced to serve five DeFelice was indicted for theft by de- years in State prison and to pay ception and forgery. DeFelice received $142,000 in restitution on charges of a check in the amount of $1,805 from theft by deception for stealing 40 Penn National Insurance Company to checks totaling $206,000 paid by the make repairs to the vehicle he leased residents of the community and their from GMAC but allegedly forged the insurance companies. signature of GMAC and cashed the check instead.

162 State v. State v. Jessica Caiola David and Wayne Pohida On July 14, 2003, Jessica Caiola On October 21, 2003, David and was enrolled in PTI on charges of Wayne Pohida were each charged theft by deception, theft of services with 17 counts of showing or display- and issuing a bad check. Caiola al- ing a simulated motor vehicle insur- legedly contacted her former ance identification card. The Pohidas employer’s insurance company and allegedly presented the cards to the added her personal vehicle to the Linden City Clerk as proof of insurance fleet insurance policy. She agreed to for 17 taxi cabs owned by Tri-County pay restitution and serve 120 hours Transportation t/a Linden Yellow Cab, of community service. which had previously been impounded by police because they had no State v. insurance coverage. Maynor Rosario and Lynn Rosario State v. On September 23, 2003, Maynor Roy Marroquin Rosario pled guilty to conspiracy and and Manuel Ramirez theft by deception for the reported theft On September 19, 2003, Roy of his wife’s 2000 Jeep Cherokee from Marroquin of Plainfield was sentenced the Rockaway Mall. He and his wife al- to 180 days in the Union County Jail on legedly conspired with two other individu- charges of second degree arson for als to cover up the insurance fraud. His participating in the burning of an wife, Lynn Rosario, was enrolled in PTI employee’s 2002 Ford Mustang. on the charges and both agreed to make Marroquin was also placed on three restitution in the amount of $948 to New years probation and ordered to pay his Jersey Manufacturers Insurance Com- pro-rata share of $13,350 in restitution pany, which had repaired the vehicle and to State Farm Insurance Company. Co- placed it in its fleet of vehicles. defendant and owner of the car, Manuel Ramirez, did not appear at Union County sentencing and a bench warrant was Prosecutor’s Office issued for his arrest.

State v. Cheri Jolley On October 2, 2003, a search warrant was executed at United Risk Man- agement Insurance Agency in Eliza- beth, and its office manager, Cheri Jolley, was charged with theft by failure to make required disposition of property received. Jolley allegedly took over $45,000 from at least eight different businesses seeking insurance coverage for their fleet vehicles, provided them with temporary insurance cards, but failed to ever place the coverage with an insurance carrier.

163 OIFP Civil Investigations and Actions

In the Matter of Vincent Maione On June 9, 2003, Vincent Maione executed a Consent Order in the amount of $5,000 for his part in a “runners” scheme. Maione bribed Jersey City Police Department employees to provide him with accident reports to enable “runners” to solicit accident victims for treatment at the Downtown Chiropractic Facility. Maione and others participating in the scheme were prosecuted by the Hudson County Prosecutor’s Office. Fraudulent Automobile “Give-Up” Claims

Members of an OIFP Civil Auto Fraud In the Matter of Auto Insurance Fraud Squad John B. Fagan discuss an investigation. On January 14, 2003, John P. Criminal Use of “Runners” Fagan executed two Consent Orders totaling $8,000 for his part in an “owner give-up” scheme. Fagan, who was a police officer in the West Orange Police Department at the time of the offense, filed a false police report dated June 24, 1999, with the Wayne Police Department. Fagan also filed an Affidavit of Theft with his insurance company, New Jersey Manufacturers, containing false and misleading information. Although Fagan claimed that his vehicle had been stolen, Fagan voluntarily relinquished the car to other persons as part of a scheme to obtain payment from the insurer. Fagan pled guilty to criminal charges stemming from OIFP’s undercover investigation.

164 In the Matter of In the Matter of Johnny Christian Emily Nieves On January 24, 2003, Johnny On November 7, 2003, Emily Christian executed a Consent Order Nieves executed a Consent Order requiring him to pay $5,000 for falsely requiring her to pay $5,000 stemming reporting his vehicle stolen. Christian from her involvement in the staged reported his 2000 Nissan Pathfinder accident scheme described in the stolen to the New York City Police 68th Widania Montenez case. Nieves Precinct on June 27, 2001. Christian submitted a fraudulent personal injury reported that his vehicle was parked at claim. She was admitted into PTI. 368 74th Street when it was stolen. The New York City Bureau of Fire Licensed Insurance Investigation, however, had recovered the vehicle burned on June 24, 2001. Provider Fraud Christian knowingly submitted his false and misleading statement on an Affidavit In the Matter of of Theft to Allstate Insurance Company. Ronald Vaughn On April 22, 2003, Ronald Vaughn, Staged Accidents a licensed insurance producer, executed a $5,000 Consent Order. In the Matter of Vaughn prepared forged documents Widania A. Montenez which he presented to Conseco Life Insurance Company in order to obtain On June 19, 2003, Widania A. an insurance policy for an individual. Montenez executed a $5,000 Consent Vaughn forged the individual’s Order for participating in a staged signature on five documents which accident scheme. As a result of this made the policy effective without the scheme, 28 persons were indicted on insured having been notified about the charges that they “set-up” more than adjusted premium. 90 “staged” automobile accidents which resulted in 24 insurance companies paying more than $2 million Fraudulent in fraudulent automobile accident and Claim Checks personal injury claims. Montenez pled guilty to theft by deception and is awaiting sentencing. In the Matter of Christopher Nangano In the Matter of On January 10, 2003, Christopher Humberto Diaz Nangano executed a Consent Order in On May 31, 2003, Humberto Diaz which he agreed to pay $14,500. executed a Consent Order for $5,000 Nangano was involved in a large- resulting from his involvement in the scale, multiple defendant conspiracy to staged accident scheme described in the defraud two insurance companies out Widania Montenez case. Diaz submitted of more than $600,000. The false personal injury claims to Allstate mastermind of the scheme, Carl Prata, Insurance Company. Diaz pled guilty to of West Orange, New Jersey, was theft by deception and was sentenced to sentenced to five years in State prison one year probation, payment of $5,859 for his role in devising and in restitution and a $200 fine.

165 OIFP Civil Investigations and Actions

implementing the scheme. Prata Health, Life, concocted a scheme to access and manipulate insurance company and Disability Fraud computer systems to process and issue fraudulent claim checks to Provider Fraud persons who were not entitled to them. The OIFP investigation determined In the Matter of that, over a three year period from Thomas S. Boselli 1998 to 2000, Prata created fraudulent On January 16, 2003, Thomas S. computer files listing 45 individuals as Boselli executed a Consent Order in having been involved in automobile which he is required to pay $100,000. accidents. As a result, the carriers’ Boselli had been practicing chiropractic computer systems processed and medicine for 16 years without a license. issued more than 50 fraudulent auto Between 1995 and 2001, he submitted insurance claim checks. Nangano 1,870 claims for 56 patients totaling received three fraudulent checks from more than $125,000. Boselli was paid by Allmerica Insurance Company and the carriers in excess of $54,000. Boselli Saint Paul Insurance. Nangano also fraudulently signed all the claim forms as solicited four others to receive a licensed chiropractor. fraudulent checks. In the Matter of In the Matter of Timothy Hanjian Yong Jin Kim On March 25, 2003, Timothy On August 12, 2003, Yong Jin Kim Hanjian executed a Consent Order executed a Consent Order requiring for $10,000. Hanjian was involved in him to pay $100,000 for practicing the Carl Prata scheme to receive acupuncture without a license. On July fraudulent checks described in the 14, 1997, Kim forged the signature of Christopher Nangano case. Hanjian his father, Ki Min Kim, who had died in received a check from the Allmerica October of 1995, in order to renew his Insurance Company and solicited father’s license to practice five others to receive fraudulent acupuncture. Kim submitted claims to checks as well. insurance carriers using the name and license number of his deceased father. In the Matter of Kim was prosecuted for health care Glenn Sisti claims fraud by the Ocean County On January 10, 2003, Glenn Sisti Prosecutor’s Office. executed a Consent Order requiring him to pay $9,500 for his participation In the Matter of in the Carl Prata scheme described in Robert Napoliello, D.M.D. the Christopher Nangano case. Sisti On April 8, 2003, Dr. Robert received a fraudulent check from the Napoliello executed a $5,000 Consent Allmerica Insurance Company. Order for billing for services not rendered. Napoliello, a dentist, initiated but did not complete the work on a patient. Napoliello entered into a $1,500 Administrative Consent Order with the Dental Board and paid $1,500 in restitution to HCA Insurance Company.

166 In the Matter of Myrna L. Soriano On September 26, 2003, Dr. Myrna Soriano executed a Consent Order for $14,000 for submitting claims for treatment she rendered to her own son. Soriano altered the claims documents, replacing her name with the name of another physician. Soriano also entered into a $10,000 administrative Consent Order with the Enforcement Bureau of the New Jersey Division of Consumer Affairs for her actions. In the Matter of Anthony Spano On July 7, 2003, Anthony Spano, a physical therapist for Circle of Health Clinic located in Hillside, New Jersey, executed a Consent Order for $5,000 for knowingly submitting fraudulent health care claims bearing dates between August 31, 1999, and March 1, 2000, to Chubb & Son. The claims In the Matter of Civil Investigators with the OIFP contained false and misleading Monica L. Cooper Property and Casualty Squad information, specifically billing for ten On March 26, 2003, Monica L. dates of service, when, in fact, the conduct a case review meeting. Cooper executed a $5,000 Consent services were never rendered. Order for forging prescriptions for the controlled substances, Oxycontin and False Health Care Claims Percocet, and presenting them to CVS Pharmacy. CVS unwittingly submitted In the Matter of the forged prescriptions for Patricia and Paul Sullivan reimbursement to Oxford Health Plans On June 9, 2003, Paul and Patricia under Cooper’s prescription drug Sullivan executed a Consent Order to benefits. Cooper had previously been pay $25,000 stemming from their convicted of obtaining a controlled participation in three schemes to defraud dangerous substance by fraud. both MetLife Insurance Company and Blue Cross/Blue Shield out of $48,380. The three schemes included altering co-pays on prescription receipts, seeking reimbursement for full costs when costs were not actually incurred, and seeking reimbursement for full costs of drugs when the drugs were never actually dispensed.

167 OIFP Civil Investigations and Actions

In the Matter of Life Insurance Cassandra Hankins and Jay Earl Hankins Fraud On June 9, 2003, Cassandra and Jay Earl Hankins executed Consent In the Matter of Orders in the amount of $5,000 each for Peter Pascarella, Jr. filing false insurance claims. Jay Earl On February 4, 2003, Peter Hankins took his ex-wife Paulette’s Pascarella, Jr., executed a $12,500 insurance card and gave it to his fiancee, Consent Order. Pascarella, who was Cassandra Hankins, who presented the owner of Associated Consulting herself as Paulette Hankins, in order to Group, filed several fictitious life obtain an abortion and dental work. Four insurance applications with the phony claims were submitted to MetLife Equitable Life Insurance Company. Insurance Company totaling $1,596. In the Matter of Fraudulent L.C. Thomas On February 4, 2003, L.C. Disability Claims Thomas executed a $5,000 Consent Order for his role in fraudulently In the Matter of obtaining more than $1.2 million in life John W. Currie insurance policies and attempting to On June 19, 2003, John W. Currie collect the benefits. executed a Consent Order to pay Thomas, a New Jersey licensed $10,000 for repeatedly misrepresenting insurance agent formerly doing his inability to work. As a result of the business in Teaneck, admitted that he misrepresentations, Currie received assisted William Conyers, a licensed $38,169 in disability benefits to which funeral director who owned and he was not entitled. Surveillance and operated the Conyers Funeral Home in employment verification by Unum Hackensack, and Conyers’ wife, Mollie, Provident revealed that Currie was, in vice-president of Conyers Funeral Home, fact, employed full time. Currie’s claim in falsifying several life insurance was closed and Currie reimbursed the applications submitted to the American carrier for the full amount of benefits he National Insurance Company and the wrongfully obtained. Lincoln Benefit Life Insurance Company to obtain life insurance policies. By concealing the fact that the insured persons had pre-existing medical conditions such as the AIDS virus, Thomas and the Conyerses intentionally deceived the insurance companies into issuing life insurance policies that the companies would not ordinarily have issued given the medical conditions of the persons whose lives were insured. In addition, Thomas and the Conyerses falsified the life insurance applications by naming persons, including members of the Conyers family, as beneficiaries when they had no insurable interest in the lives of the insured persons.

168 L.C. Thomas was convicted of False Commercial attempted theft by deception and was sentenced to probation with 500 hours of Claims community service. The Conyerses were convicted of various offenses following a In the Matter of jury trial in Bergen County. William Julio N. Funicello Conyers was sentenced to 11 years in On February 4, 2003, Julio N. State prison and fined $10,000. Mollie Funicello executed a Consent Order for Conyers was sentenced to two years $7,500 for knowingly conspiring with probation conditioned upon serving 364 Jonathan Doscher to deliberately submit days in the county jail. William Conyers false statements to the Ramsey Police was referred to the licensing board for Department concerning the purported appropriate licensing sanctions. theft of $13,000 cash from his place of business on April 10, 2001. Property Subsequently, a claim was presented to Selective Way Insurance, in an attempt and Casualty Fraud to collect monies for this purported theft.

False Homeowners Claims In the Matter of Vincent Zappulla On May 21, 2003, Vincent In the Matter of Zappulla executed a Consent Order Peter Mangiola for $5,000 for knowingly providing On July 23, 2003, Peter Mangiola false and misleading information to executed a Consent Order requiring him State Farm Insurance Company. to pay $10,000 for submitting false Zappulla directed a contractor to draft receipts in two homeowners claims. a letter to State Farm stating that the Mangiola submitted two false receipts total cost of restoration to a business, from Bertolino’s Pharmacy as part of his Laundry Time Incorporated, as a claims. On the first claim submitted to result of fire damage was $52,385. General Accident Insurance Company, The cost of the restoration was Mangiola was paid $9,769. On his actually substantially less. second claim to Hanover Insurance Company, Mangiola attempted to receive $12,358.

169 OIFP Civil Litigation

State v. David Wiseman The State was awarded Summary Judgment on December 2, 2003 against David Wiseman for two violations of the Fraud Act stemming from a stolen jewelry claim against his homeowners insurance policy. Wiseman had falsely reported that he was with his fiancée in Minnesota when the jewelry was stolen and denied to his insurance carrier that his fiancée had also filed a claim against, and had received payment from, her own renter’s insurance policy for the jewelry. Wiseman had previously entered into a Consent Order with OIFP in connection with a separate health insurance matter. The court awarded the State a $25,000 civil penalty and $23,899 in fees and costs. State v. Division of Law Deputy Attorneys State v. Lee Lilly General discuss trial strategy for Winnie Cook an OIFP case. The State’s motion for Summary The State’s motion for Summary Judgment against Lee Lilly for making Judgment against Winnie Cook was multiple false statements related to his granted on June 20, 2003 in the sum of fraudulent automobile theft claim was $61,300. Cook had totaled her automo- granted on September 12, 2003. The bile in October of 1998, but was not in- court’s award included the requirement sured at the time. Subsequently, in De- that Lilly pay the State $15,000 in civil cember of 1998, she applied for auto- penalties and $3,288 in fees and costs. mobile insurance without having notified the insurance carrier that her vehicle had previously been destroyed in an accident. In January, 1999, Cook filed a fraudulent automobile theft claim with her insurance company. The Judgment against Cook was based upon the multiple false statements Cook made in support of her fraudulent claim.

170 In the Matter of Myrna Soriano, M.D. Myrna Soriano, M.D., entered into a Consent Order on September 26, 2003 with the State in which she agreed to pay a $14,000 civil penalty. Soriano also agreed to pay $10,000 and costs to the New Jersey Board of Medical Examiners in this matter. Soriano treated her hemophiliac son and submitted claims to her health insurance carrier, which claims falsely represented that other doctors had rendered the services to her child. Soriano concealed her own involvement in the treatment of her son because she knew that the insurance carrier would not reimburse her for services she provided to an immediate family member. Soriano also paid $3,865 in restitution to the insurance carrier.

171 Professional Licensing Proceedings

Medical prescribing of Serostim and Medicaid billings of over $2 million. The suspension has been stayed. In the Matter of Ervin Lepko, M.D. In the Matter of On March 7, 2003, the New Jersey Sanford Weinger, D.P.M. Medical Board suspended the medical On October 16, 2003, the New license of Ervin Lepko, M.D. for one Jersey Medical Board indefinitely sus- year based upon his plea of guilty to pended the podiatric license of committing health care fraud. Sanford Weinger, D.P.M. for billing insurance companies for eight years In the Matter of during which he did not possess a Kenneth Zahl, M.D. current podiatric license. On April 11, 2003, the New Jersey Medical Board revoked the medical In the Matter of license of Kenneth Zahl, M.D. for Jonathan Siegel, D.P.M. fraudulent billing and collecting disabil- On December 2, 2003, the New ity insurance benefits while still work- Jersey Medical Board revoked the po- ing. The action has been stayed diatric license of Jonathan Siegel, pending appeal. D.P.M. nunc pro tunc to February 24, 1999, after being convicted of commit- In the Matter of ting insurance fraud. Alan Ottenstein, M.D. On August 13, 2003, the New Jer- sey Medical Board temporarily sus- Chiropractic pended the medical license of Alan Ottenstein, M.D. in part for alleged pos- In the Matter of session of explosives, a stun gun, Daniel Catanzaro, D.C. loaded hand guns and more than a On January 30, 2003, the New Jer- pound of marijuana in his office. sey Chiropractic Board suspended the In the Matter of license of Daniel Catanzaro, D.C. for five years, with the first three years ac- Irvin Gerson, M.D. tive, for fraudulent insurance billing. On September 19, 2003, the New Jersey Medical Board permitted the In the Matter of permanent retirement of the medical li- Nicholas Rosania, D.C. cense of Irvin Gerson, M.D. for billing On June 19, 2003, the New Jer- insurance companies for sey Chiropractic Board suspended the neurodiagnostic tests performed by un- license of Nicholas Rosania, D.C. for licensed individuals. five years based upon his criminal In the Matter of convictions for conspiracy, official misconduct and bribery in an insurance Chidi Anukwuem, M.D. fraud scheme. On September 22, 2003, the New Jersey Medical Board suspended the license of Chidi Anukwuem, M.D. for six months based upon his excessive

172 In the Matter of In the Matter of Samuel Evenstein, D.C. Glen Poller, D.C. On September 18, 2003, the New On October 1, 2003, the New Jer- Jersey Chiropractic Board suspended sey Chiropractic Board suspended the the license of Samuel Evenstein, D.C. license of Glen Poller, D.C. for two for three years, with the first six months years based upon a criminal convic- active, based upon his conviction for tion for violating the State’s statute failing to pay New Jersey gross income which proscribes the hiring of “run- tax for three years. ners” to obtain patients. The suspen- In the Matter of sion was stayed. Roland Evans, D.C. On September 18, 2003, the New Jersey Chiropractic Board suspended the license of Roland Evans, D.C. for two years, with the first year active, for his criminal conviction of health care claims fraud. 2003 Statistics Voluntary Suspension Revocation Surrender Reprimand Total

Accountancy 1 0 0 0 1

Chiropractic 6 0 0 1 7

Dental 2 1 0 0 3

Medical 4 2003 4statistics1 2 11

Nursing 0 0 0 1 1

Pharmacy 1 2 0 0 3

Total 14 7 1 4 26

173 Professional Licensing Proceedings

Dental Nursing

In the Matter of In the Matter of John McIntyre, D.D.S. Diane Supino, R.N. On February 19, 2003, the New On March 28, 2003, the New Jer- Jersey Dental Board accepted the sur- sey Board of Nursing reprimanded render, with prejudice, of the license Diane Supino, R.N. for her having of John McIntyre, D.D.S. for his con- knowingly provided false and mislead- tinued practice of dentistry and billing ing information in support of the for services rendered during a period staged theft of her vehicle. of suspension. In the Matter of Pharmacy Ralph Sharow, D.M.D. On February 19, 2003, the New In the Matter of Jersey Dental Board revoked the li- Manuprasad Parikh, R.P. cense of Ralph Sharow, D.M.D. upon On December 1, 2003, the New his guilty plea to committing health Jersey Board of Pharmacy accepted care fraud and income tax evasion. the surrender of the license of Manuprasad Parikh, R.P. to be In the Matter of deemed a revocation, based on his Michael Tsimis criminal conviction for Medicaid fraud. On September 12, 2003, the New Jersey Dental Board suspended the license of Michael Tsimis, D.M.D. for two years, with the suspension stayed, for double billing insurance carriers for the same services on the same dates.

174 175 Closing the Loopholes on Fraud: OIFP’s Recommendations for Legislative and Regulatory Reform

176 Closing The Loopholes On Fraud OIFP’s Recommendations For Legislative and Regulatory Reform

Pursuant to N.J.S.A. 17:33A-24, tiple public adjusters who arrive at their the Office of the Insurance Fraud Pros- homes within hours of this catastrophic ecutor (OIFP) is required to evaluate event, sometimes before the fire is even and formulate proposals for legislative, fully extinguished. Because most of administrative and judicial initiatives to these insureds have never before been strengthen insurance fraud enforce- the victim of a fire, they are often un- ment. OIFP staff are vigilant throughout aware of their rights under their the year in identifying possible vulner- homeowners or renters insurance policy. abilities and weaknesses in New Consequently, insureds whose homes Jersey’s insurance system, and in find- have burned have often fallen prey to ing ways to address them. Many of the overzealous public insurance adjusters recommendations made by OIFP in who, for a fee based upon the percent- prior Annual Reports have become law age of recovery, represent insureds with by the adoption of regulations, or the respect to their claims under their insur- enactment of legislation, responsive to ance policies. Many public adjusters these recommendations. OIFP’s recom- charge exorbitant rates of up to 40 per- mendations for 2004 are as follows: cent of the insured’s recovery. Because of the aggressive tactics employed by Regulation of many public adjusters, which includes contacting victims when they are most Public Adjusters vulnerable in the immediate hours following their loss, many victims recover far Statement of the Problem: less under their insurance policies than Insureds who are fire victims are often they should because they have entered overwhelmed by solicitation from mul- into contracts with public adjusters be-

177 Closing the Loopholes on Fraud: OIFP’s Recommendations for Legislative and Regulatory Reform

fore they have had an opportunity to a municipality to remove a vehicle which confer with others and to consider all of appears to be abandoned, but, is, in their options. Although public adjusters fact, the subject of a theft. The “Fair Au- are currently prohibited under N.J.S.A. tomobile Insurance Reform Act of 1990” 17:22B-13 from contacting an insured had previously authorized the Commis- between the hours of 6:00 p.m. and 8:00 sioner of the Department of Banking and a.m. within the first 24 hours after the oc- Insurance to establish a towing and stor- currence of a loss, experience has dem- age fee schedule to address the prob- onstrated that this limitation should be lem of fraud and related abuses by tow- toughened. ing operators, particularly as it related to those costs incurred in the context of a Proposed Solution: covered loss. That fee schedule, how- In order to protect vulnerable insureds ever, was not supported by sufficient from the aggressive tactics of some penalties to prevent the charging of un- overzealous public adjusters, it is sug- necessary or exorbitant fees by towing gested that N.J.S.A.17:22B-13 be operators, and permitted towing opera- amended to provide that public adjust- tors to bill for other services not encom- ers be precluded from contacting passed within the fee schedule. insureds within 48 hours after they sus- The Act was repealed in 1997 in tain a loss compensable under an in- conjunction with legislation that pro- surance policy. vided municipalities with greater authority to regulate towing and storage Regulation of bills. Under N.J.S.A. 40:48-2.54, mu- Towing Companies nicipalities which require the towing and storage of motor vehicles without the consent of their owners are re- Statement of the Problem: quired to adopt a “model schedule” of Some unscrupulous towing companies towing and related storage fees based artificially inflate fees for the towing and upon the “usual, customary and rea- storing of automobiles which have been sonable” prevailing rates. Under involved in accidents or which have been N.J.S.A. 40:48-2.49, other municipali- towed and stored after retrieval as aban- ties may adopt such a schedule. None- doned or stolen property. In the absence theless, insurers and owners are of a local municipal ordinance, or a con- sometimes billed exorbitant “adminis- tractual fee schedule entered into be- trative” and other fees, not addressed tween a towing operator and a munici- within such schedules. Such fees are pality, insurance companies, municipali- even imposed in connection with obtain- ties and car owners may be charged ex- ing access to inspect a vehicle which is cessive sums of money for the services being stored. provided by some towing operators. The problem is exacerbated when a towing Proposed Solution: company, which maintains a storage In order to prevent unscrupulous towing yard, fails to take adequate steps to as- companies from charging excessive and certain and/or notify the owner of the ve- exorbitant fees in connection with a cov- hicle of the storage charges which are ered loss, it is recommended that legis- being incurred, or, in some cases, that it lation be enacted similar to the repealed is even storing the vehicle. Such a sce- Act, authorizing the Commissioner of nario may occur in a case where the the Department of Banking and Insur- towing operator has been requested by ance or other appropriate agency head

178 to promulgate a schedule of appropriate insurance fraud by submitting bills in towing and storage fees applicable to connection with such services, particu- automobiles which have been damaged larly those practicing or purporting to in accidents, or which have been recov- practice in the medical or allied medical ered after being stolen. Such legislation professions. There is, however, no corre- should provide greater detail with respect sponding criminal provision in the law to the types of charges which towing op- addressing the unauthorized practice of erators may charge, not only to munici- chiropractic or psychotherapy, both of palities, but also to insurers and own- which practices also frequently give rise ers, as well as stronger penalties for to the fraudulent billing of insurance those towing operators who violate the companies. fee schedule. It should also require the towing or storage yard owner to Proposed Solution: promptly take reasonable measures to In order to achieve consistency and de- identify and notify the owner and insurer terrence, it is recommended that legisla- of the vehicle of its location and any tion be enacted to criminalize the unlaw- towing and storage fees that have ac- ful practice of chiropractic and psycho- crued, or are accruing. The legislation therapy in the same manner that stat- should not, however, repeal or otherwise utes have been enacted which make it a limit the current law which provides mu- crime of the third degree to engage in nicipalities with authority to regulate tow- the unlawful practice of certain other pro- ing and storage fees as they relate to fessions, such as medicine, dentistry costs incurred by those municipalities and law. which have chosen to enact ordinances providing for such regulation. Unlawful Transaction of the Business of Insurance Unauthorized Practice by Unlicensed Persons of Chiropractic or Psychotherapy Statement of the Problem: Persons who are not licensed as either Statement of the Problem: insurance agents or insurance brokers It is a crime in New Jersey for a person, sometimes hold themselves out as li- who is not properly licensed, to practice censed or otherwise authorized insur- or purport to practice medicine, podiatry, ance agents or brokers in order to en- surgery, dentistry, or law. N.J.S.A. gage in the business of selling insur- 2C:21-20; N.J.S.A. 2C:21-30; N.J.S.A. ance. In some cases, the person has 2C:21-22; N.J.S.A. 2C:21-31. These pro- never been licensed nor received any visions apply equally to persons who training qualifying that person to provide may have once been licensed to provide guidance in obtaining appropriate insur- such services but whose license has ance coverage, while, in other cases, been suspended, revoked or surren- the person has once held a license, but dered, as well as to persons who do not has lost it involuntarily through suspen- possess the requisite expertise or train- sion or revocation. Such persons create ing while holding themselves out as li- a substantial risk of harm to those with censed professionals. Investigative ex- whom they deal because they are un- perience has shown that persons who qualified to provide appropriate guidance provide such services without being and advice, because they may be un- properly licensed also frequently commit able to “place” the insurance they pur-

179 Closing the Loopholes on Fraud: OIFP’s Recommendations for Legislative and Regulatory Reform

port to be selling, or because they may Transfers.of.Title.to simply steal premium payments from prospective insureds without making any Stolen.Vehicles attempt to obtain the anticipated insurance coverage. In some cases, those Statement of the Problem: holding themselves out as agents or bro- Whenever title to a vehicle is obtained kers even resort to issuing counterfeit in- through the Motor Vehicle Commission surance cards and insurance policies to (MVC), there is no mechanism to deter- perfect their scams. While such conduct mine whether the vehicle which is the is currently banned pursuant to the pro- subject of the title request is a vehicle visions of N.J.S.A. 17:17-12, which de- which has been reported as stolen and fines such conduct as constituting a entered into law enforcement’s NCIC “misdemeanor,” an outdated term for database. Without such a mechanism, conduct which is now the equivalent of a it is sometimes possible for a person fourth degree crime under New Jersey’s who has stolen a vehicle to obtain a fa- criminal code, it is not part of New cially valid title to that Jersey’s criminal code nor consistent vehicle, despite the fact that the with the grading of similar crimes per- vehicle has been reported stolen to taining to various types of activity by unlaw enforcement authorities. licensed persons. Such crimes are currently crimes of the third degree under Proposed Solution: the penal code. Further, it is not suffi- In order to prevent the unwitting transfer ciently clear that such conduct is proof title to a stolen vehicle, it is recom- scribed pursuant to the provisions of the mended that at the time of issuance of a Fraud Act, which allows for the imposi- title to any vehicle, the Motor Vehicle tion of civil fines for conduct which vio- Commission be provided with a means lates that Act. to determine if the vehicle has been reported as stolen to any law enforcement Proposed Solution: authorities, whether by providing limited In order to achieve consistency and access to the NCIC database, by ex- deterrence, it is suggested that legisla- tracting data from the NCIC database in tion be enacted to make it a crime of such a manner as to make it readily ac- the third degree under N.J.S.A. 2C:21- cessible to MVC officials, or by such 35 for any person to engage in the un- other means as may be practicable. lawful transaction of the business of insurance when not properly licensed to do so by the New Jersey Department of Banking and Insurance. As a corol- lary, the current provision banning such conduct under N.J.S.A. 17:17-12 should be repealed. It is further suggested that the Insurance Fraud Prevention Act be amended so as to include the defined conduct as a violation thereof, thereby also subjecting such a person to the imposition of substantial civil fines.

180 Revision.of.Statute Reverse.Rate.Evasion Making.It.a.Crime Statement of the Problem: to.Use.“Runners” In order to obtain lower insurance premiums, persons residing in New Jersey, in Statement of the Problem: a practice commonly known as “reverse Investigative experience has demon- rate evasion,” often obtain their automo- strated that many fraudulent insurance bile insurance in an adjacent state, de- claims, particularly those relating to au- spite the fact that their vehicles are prin- tomobiles, are driven by the conduct of cipally garaged and used in New Jersey. “runners.” “Runners” are persons who While this form of “application fraud” or procure patients or clients for licensed “premium fraud” is actually committed in medical and legal service providers in the adjacent state when the insurance is return for money so that those provid- applied for, and while the insurance ers can seek benefits under an insur- companies which are victimized by this ance contract. In New Jersey, the Leg- type of fraud may not transact business islature enacted the “Criminal Use of in New Jersey, New Jersey residents are Runners” statute to proscribe such put at risk because the out-of-state conduct. Experience has shown, how- insurance policies may provide less ever, that the use of the statute to com- coverage than that mandated in New bat insurance fraud would be en- Jersey, and because the out-of-state hanced if the underlying policy reasons insurance policies may be voided supporting the statute were published when the insurance carriers discover as legislative findings and declarations. the underlying application fraud. It is also inherently unfair and violative of Proposed Solution: good public policy to allow residents of For the sake of expediency, it is recom- New Jersey to fraudulently obtain mended that the Legislature enact re- out-of-state insurance coverage at medial legislation setting forth explicit lower rates than their law-abiding legislative findings and declarations neighbors in New Jersey. clearly enumerating the policy reasons that support the “Criminal Use of Run- Proposed Solution: ners” statute. Such legislative findings In order to achieve equity and protect and declarations will underscore the the law abiding citizens of New Jersey, rationale behind the enactment of the legislation should be enacted to amend statute and its application to conduct the Insurance Fraud Prevention Act to defined therein, even in the absence of make the practice of “reverse rate eva- underlying insurance fraud. sion” a violation of the Act, thereby subjecting violators to the imposition of substantial civil fines.

181 Closing the Loopholes on Fraud: OIFP’s Recommendations for Legislative and Regulatory Reform

Health Care Claim licensee in whose name, or under whose supervision, the services were provided. Form Revisions The certification should specify that the responsible provider has reviewed the Statement of the Problem: claim form and that it is accurate, com- Medical providers and those in the allied plete and truthful with respect to all infor- medical professions are often able to mation contained therein. avoid civil or criminal responsibility for submitting fraudulent health care claims Stricter Regulation of because of the vague and imprecise manner in which the claim forms are the Diagnostic composed. Because claim forms are of- Imaging Industry ten prepared by employees of the provider, or by an independent business Statement of the Problem: contracted by the provider, it is often dif- Because of its relatively weak regula- ficult, if not impossible, to hold the pro- tory framework with respect to the vider responsible when the claim forms regulation of diagnostic imaging facili- contain false, misleading or incomplete ties, New Jersey is a particularly invit- information. Further, the forms are fre- ing target for unscrupulous operators. quently inadequate to elicit information as Currently, any private citizen, regard- to the overall context of treatment within less of experience in the medical or al- which the billed service was rendered, lied medical professions, may own a whether the billed service was properly diagnostic imaging facility subject only coded and whether the billed service was to the condition that the facility is affili- rendered by, or under the supervision of, ated with a licensed medical provider. a duly licensed professional. Although prospective owners are re- Proposed Solution: quired to reveal any prior criminal con- In order to ensure greater accountabil- victions when making application to the ity, health insurance claim forms, Department of Health, the Department whether paper or electronic, should be lacks the authority to conduct the nec- designed so as to require the inclusion essary criminal background checks to of information specifically identifying the verify the veracity of the information type of procedures, medical services provided by the applicant. Further, a and medical supplies provided, as well prior criminal conviction does not nec- as the amounts actually paid by the pa- essarily, in and of itself, disqualify a tient. Forms should also elicit information identifying any person in the provider’s office providing the services billed, including the professional license number and taxpayer identification number (TIN) associated with the licensed medical provider and with any persons or entities identified as having provided any of the services set forth in the claim forms. The forms should also incorporate a certification specifically affixing personal legal responsibility for the accu- racy of the claim with the professional

182 person from owning a diagnostic imaging facility. Because diagnostic imaging is frequently prescribed for those claiming to have been injured in an automobile accident, diagnostic imaging facilities are often associated with treatment mills, and are often looked to as a source of reports to corroborate questionable or fabricated claims of injury. Proposed Solution: In order to better assess the qualifica- tions of persons applying for ownership of diagnostic imaging facilities, it is recommended that legislation be enacted requiring criminal background checks of all such applicants, providing the resources to conduct such background checks, and prohibiting the granting of a license to any person who has been convicted of a crime which appears in- compatible with the traits of trustworthi- ness, honesty and obedience to law and order.

183