OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj

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OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj

  1. 1. A N N U A L R OFFICE OF E PINSURANCE FRAUD O PROSECUTOR R T 2000 Office of Insurance Fraud Prosecutor Division of Criminal Justice Department of Law and Public Safety
  2. 2. ANNUAL REPORT OF THE OFFICE OF INSURANCE FRAUD PROSECUTOR FOR CALENDAR YEAR 2000 (Pursuant to N.J.S.A. 17:33A-24d) Submitted March 1, 2001 John J. Farmer, Jr. Attorney General Kathryn Flicker John J. Smith, Jr.Director, Division of Criminal Justice Acting Insurance Fraud Prosecutor Prepared by: Office of Insurance Fraud Prosecutor Division of Criminal Justice Department of Law and Public Safety P.O. Box 094 Trenton, NJ 08625-0094 (609) 896-8888
  3. 3. ACKNOWLEDGMENTS The Acting Prosecutor would like to thank the following people for their contributions to thepreparation of the 2000 Annual Report: DAG Stephen D. Moore, Liaison to County Prosecutors Judy Burton, Administrative Assistant Paul Loriquet, OAG Public Information Officer Paula A. Carter, Senior Analyst Michelle M. Apgar, Acting Civil Supervisor John Butchko, Liaison to Industry Mitzi Gross, Senior Management Information Systems Technician SDAG John R. Krayniak ASDAG Scott Patterson DAG Jennifer Fradel Charles A. Janousek, Liaison to Professional Boards Annie Meredith, Special Projects Coordinator Sgt. Thomas A. Semon, New Jersey State Police Patricia G. Miller, Administrative Assistant Patricia Walinski, Managing Assistant Shari Grace, DCJ Media Coordinator SSI Craig Perrelli SSI Martin Schwartz SSI Joseph Buttich SSI Walter L. Braxton, III Lynn Wasserman, Secretarial Assistant Helen D. Hager, Secretarial Assistant Gloria D. Tennesen, Secretarial Assistant AMDCI Quinton W. Collins, Sr. DCI Jules Mateo Nora Schaffener, Office Manager The Acting Prosecutor would also like to thank all Deputy Attorneys General, StateInvestigators and support staff assigned to the OIFP for their outstanding work, dedication andprofessionalism during calendar year 2000. The number and significance of OIFP’s criminalprosecutions continue to draw national recognition. The continued quality of OIFP’s civilinvestigations and the amount of monies collected as insurance fraud fines pursuant to consentorders have served to define the credibility and excellence of OIFP. The commitment andprofessionalism of each person assigned to OIFP are hereby acknowledged with pride and gratitude. Finally, the Acting Prosecutor wishes to thank former Insurance Fraud Prosecutor EdwardM. Neafsey, and acknowledge his leadership and guidance which served to provide a solid basisupon which the Office of Insurance Fraud Prosecutor could achieve all that it has. i
  4. 4. PREFACE The Office of Insurance Fraud In accordance with the ReorganizationProsecutor (OIFP) was created pursuant to Plan, the Division of Insurance Fraudthe provisions of the Automobile Insurance Prevention in the Department of BankingCost Reduction Act (AICRA) P.L. 1998, c.21, and Insurance was transferred to, andon May 19, 1998. As observed by the officially became part of, the Office ofLegislature in the preamble to the Act, Insurance Fraud Prosecutor within thefraud, whether in the form of inappropriate Division of Criminal Justice, Department ofmedical treatments, inflated claims, staged Law and Public Safety, on August 24, 1998.accidents, falsification of records, or any Assistant Attorney General Edward Neafseyother form, must be uncovered and was sworn in as New Jersey’s firstvigorously prosecuted. According to the Insurance Fraud Prosecutor on October 28,Legislative statement accompanying the 1998. Upon the departure of InsuranceAct, OIFP was established to “provide for a Fraud Prosecutor Neafsey on July 1, 2000more effective investigation and prosecution to accept appointment as New Jersey’s firstof fraud than exists at the present time.” Inspector General, Assistant Attorney General John J. Smith, a career prosecutor As required by the Act, the OIFP was in the Division of Criminal Justice and theestablished in the Division of Criminal Office of Insurance Fraud Prosecutor, wasJustice in the Department of Law and appointed as Acting Insurance FraudPublic Safety under the direction of the Prosecutor.Insurance Fraud Prosecutor, who isappointed by the Governor, approved by the OIFP is charged under AICRA with theSenate, and subject to the supervision of investigation of all types of insurance fraud,the Attorney General. and serves as the focal point for criminal, civil and administrative investigations and In order to ensure the effective prosecutions of insurance and Medicaidcoordination of the anti-fraud efforts of fraud within New Jersey. OIFP is alsovarious state agencies charged with responsible for coordinating all insurancecombating insurance fraud, AICRA fraud programs and activities among staterequired, among other things, that certain and local departments and agencies tocivil enforcement functions of the Division ensure a well integrated, cohesive andof Insurance Fraud Prevention in the uniform statewide strategy for combatingDepartment of Banking and Insurance be insurance fraud. The following constitutestransferred to the Office of Insurance Fraud the second Annual Report of OIFP to theProsecutor pursuant to a plan of Governor and Legislature pursuant toreorganization (Reorganization Plan 0007- N.J.S.A. 17:33A-24d, which requires that98), which Governor Christine Todd OIFP annually provide a report of activitiesWhitman presented to the Legislature in conducted during the prior calendar year.June of 1998. ii
  5. 5. STATEMENT OF THE PROSECUTOR The Office of Insurance Fraud Prosecutor insurance fraud enforcement policy.(OIFP) has completed two full years ofoperation. Like the Division of Criminal Criminal investigations and prosecutionsJustice of which OIFP is part, OIFP has serve to deter all those who might be inclinedcontinued to establish itself as a leading law to engage in insurance fraud conduct. I amenforcement agency, accepting the most pleased to report that OIFP has once againdifficult and complex fraud matters for achieved some extraordinary criminal caseinvestigation and prosecution. In its first two results. Those results are highlighted in thisyears of operation, OIFP resolved many of report.those investigations with results extremelyfavorable to the State of New Jersey. I am also extremely pleased to report that the County Prosecutors’ Offices, which play It is my firm belief that the wisdom and an integral role in OIFP’s statewide strategy,foresight of the New Jersey Legislature in have in calendar year 2000, with thecrafting the Automobile Insurance Cost assistance of the Office of Insurance FraudReduction Act (AICRA) and creating the OIFP Prosecutor, both in terms of resources andhas made New Jersey a leader in insurance training, also achieved extraordinary criminalfraud detection, investigation and enforcement. case results. Some of those criminal caseNew Jersey has the benefit of having three results are also highlighted in this report.effective enforcement options available toaddress insurance fraud: criminal The very nature of many insurance fraudinvestigations and prosecutions; civil matters dictates that civil insurance fraudinvestigations and a statutory mechanism to investigations and the imposition of statutoryimpose civil insurance fraud fines; as well as insurance fraud fines are a vital component ofprofessional licensing and other administrative New Jersey’s insurance fraud enforcementsanctions. These three enforcement options options. While criminal investigation andprovide the corner stones for successful prosecution is the preferred legal remedy forinsurance fraud enforcement. many insurance fraud matters, it is not always the most appropriate legal remedy. Matters As mandated by the Automobile Insurance involving small amounts of money stolen orCost Reduction Act (AICRA), the OIFP has attempted to be stolen, as well as facts andsuccessfully assisted in coordinating the evidence which may not support the extremelyconduct of other New Jersey state departments high burden of proof required for criminaland agencies having responsibility for these convictions, are oftentimes best addressedthree enforcement options. Through thorough either through the imposition of a civilOIFP case investigations to fully develop the insurance fraud penalty with the consent offacts and the evidence, a well informed the subject of the civil fraud investigation, ordecision can be made as to whether or not to through civil litigation to impose a civilproceed with one, two or all three of the above insurance fraud penalty. I am pleased toenforcement options with respect to a given report that OIFP has achieved significant civilinsurance fraud matter. In this way, OIFP can insurance fraud case results and some ofsuccessfully select the most appropriate legal those results are also highlighted in thisremedy and develop a comprehensive statewide report. iii
  6. 6. It should be noted that OIFP has played a efforts have been featured in nationalsignificant role in the coordination of publications, its Public Awareness Mediaprofessional license sanctions, working closely Campaign has earned prestigious mediawith other state agencies having responsibility industry awards, and its staff have beenfor professional licensing matters. I am recognized for outstanding performance.therefore pleased to report the results ofprofessional licensing penalties and sanctions Finally, while it is appropriate to point outin this report. some of the successes and highlights of OIFP operations from the past year, I must also OIFP also continued to serve as a focal point out that insurance fraud is becoming nopoint for continued communications and easier to detect, investigate and prosecute.dialog with the insurance industry. Several The conduct of those who engage in fraud isworking groups were formed during calendar becoming increasingly more sophisticated.year 2000 consisting of representatives from Additionally, it is no easier prosecuting thesethe OIFP, other state agencies, and insurance often complex white collar criminal and civilcarriers to develop recommendations to cases in either criminal or civil courts whereimprove the flow of information required to crimes of violence and other cases frequentlysuccessfully investigate insurance fraud fill all too crowded court dockets, resulting inallegations and to improve the remedies the fact that insurance fraud cases may, atavailable to the State to address insurance times, be given less priority.fraud. Several of those recommendations areincluded at the conclusion of this report. Nevertheless, OIFP remains firmly committed and dedicated to advocating that In addition to civil and criminal case insurance fraud cases be addressed asinvestigations and prosecutions, AICRA significant civil and criminal cases, and thatimposed a host of other obligations upon OIFP. these cases yield results that continue to deterAmong those obligations is the responsibility to any person who would defraud the insuranceeducate the public about insurance fraud. industry and the citizens of the State of NewOIFP continued its Public Awareness Media Jersey through false insurance claims andCampaign with radio and TV ads designed to similar schemes. As OIFP looks to the future,broadcast a message of deterrence. These ads I believe the coming year promises continuedfollowed those public awareness messages significant criminal and civil case resultsbroadcast during OIFP’s first year of based on investigations that were opened andoperations, which sought assistance from the worked during calendar year 2000.public to report suspected insurance fraud. This report will begin with a brief As noted in this report, OIFP’s summary of some of the insurance fraud caseaccomplishments over the past two years have highlights achieved by the Office of Insurancenot gone unnoticed. In the year 2000 OIFP’s Fraud Prosecutor during 2000. John J. Smith, AAG Acting Insurance Fraud Prosecutor iv
  7. 7. TABLE OF CONTENTSCRIMINAL CASE HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1INSURANCE FRAUD UNIT - CASE HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 HEALTH CARE CLAIMS FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Fraud by Licensed Professionals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 “Slip and Fall” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Phony Medical Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 AUTO INSURANCE FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 False Auto Theft Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Fake Property Damage Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Jump In Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 “Give-Up” Schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Staged Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Fake Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Using “Runners” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Phony Auto Insurance Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 PROPERTY INSURANCE FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 LIFE INSURANCE FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 INSURANCE AGENT FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 CONTRACTOR FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 PUBLIC ADJUSTER FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 LABOR FRAUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Unemployment Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Workers’ Compensation Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12MEDICAID FRAUD UNIT - CASE HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Medical Treatment Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Medicaid Laboratory Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Medicaid Drug Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
  8. 8. Medicaid Transportation Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14OIFP-CRIMINAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 INSURANCE FRAUD UNIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 MEDICAID FRAUD UNIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 CRIMINAL INVESTIGATION AND PROSECUTION STATISTICS . . . . . . . . . . . . . . . . . . . 21OIFP-CIVIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 CIVIL INVESTIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Referrals of Suspected Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Dispositions by Civil Investigators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Dispositions by Division of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 CIVIL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Division of Law Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Civil Investigations Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 OIFP CIVIL STATISTICS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28COORDINATION OF LAW ENFORCEMENT, GOVERNMENT AND INDUSTRY . . . . . . . . . . 29 COUNTY PROSECUTORS’ OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Training of County Prosecutor Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Funding of County Prosecutors’ Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Highlights of Insurance Fraud Investigations by Counties . . . . . . . . . . . . . . . . . 31 STATE POLICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Insurance Fraud Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Auto Theft Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 MUNICIPAL POLICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 OTHER LAW ENFORCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 GOVERNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
  9. 9. Coordination with New Jersey Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Liaison and Continuing Communications Group . . . . . . . . . . . . . . . . . . . 40 Department of Banking and Insurance (DOBI) . . . . . . . . . . . . . . . . . . . 42 Department of Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Division of Motor Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 INTERSTATE INSURANCE FRAUD COORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 National Association of Medicaid Fraud Control Units (NAMFCU) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Mid-Atlantic States Insurance Fraud Association . . . . . . . . . . . . . . . . . . . . . . . . 43 State Fraud Directors’ Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 INSURANCE INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43OIFP TRAINING INITIATIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Basic Course for Civil Investigators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Advanced Insurance Fraud Investigations Training Program (AIFITP) . . . . . . . . . . . . . . 46 Basic Insurance Fraud Training Program (BIFTP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Other OIFP In-Service Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Roll Call Training Videos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Regional Law Enforcement Coordination Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Offices of the County Prosecutor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Insurance Industry Professionals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48OIFP SYSTEMS DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Case Management and Tracking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 All Claims Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48PUBLIC AWARENESS ENDEAVORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49PUBLIC RECOGNITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50RECOMMENDATIONS PURSUANT TO N.J.S.A. 17:33A-24 . . . . . . . . . . . . . . . . . . . . . . . . 52A P P E N D I X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
  10. 10. CRIMINAL CASE HIGHLIGHTS O IFP o pe n e d 519 cri mi n al sentences obtained also required 110 yearsinvestigations of 746 subjects allegedly of probation, $1,130,630 in restitution, andinvolved in insurance or Medicaid fraud and $403,350 in criminal and civil penalties.obtained 75 convictions in the year 2000. The following case summaries demonstrateOIFP prosecutors also obtained sentences the continuing progress of OIFP’s efforts tofor 45 defendants. As the chart below investigate and prosecute insurance fraudreflects, 19 defendants were sentenced to in its second full year of operation.more than 34 years of incarceration. The Name of Defendant Date of Jail Time Type of Insurance Fraud Sentencing Spencer, Kevin 1/7/00 3 years Theft (false health care claims) Romero, Abigail 1/28/00 3 years Agent (bribery police accident reports) Baker, Sheree 2/25/00 30 days Theft (false health care claims) Anthony, Mark 5/9/00 5 years Medicaid fraud (false rx) Butler, Elaugh 6/23/00 3 years Theft (false health care claims) Lester, Lucy 6/30/00 4 years Theft (false health care claims) Newman, Willie 6/30/00 90 days VOP, conspiracy, theft, false health care claims Ivashenko, Alexander 7/7/00 180 days Theft (false health care claims) Hernandez, Fabian 7/7/00 4 years Possession of stolen cars used in phony insurance claims McDaniel, Darlene 7/28/00 180 days Theft (health care claims money from provider) Rampersad, Vernon 8/4/00 180 days Medicaid-inflating patient transportation mileage charges Alvarez, Samuel 10/6/00 94 days False PIP insurance claim Usarzewicz, Steven 11/3/00 3 years Agent fraud Milman, Boris 11/13/00 60 days Medicaid fraud (false transportation claims) Soyfer, Alexander 11/13/00 60 days Medicaid fraud (false transportation claims) Schultz, Anthony 12/1/00 364 days Added name to police report to make false insurance claim Carmona, Yolanda 12/1/00 162 days Medicaid, unlicensed practice of medicine, endangering welfare of a child 7Murry, Tommie 1/5/01 3 years Medicaid fraud (false drug and counseling claims) 7Fagan, John 1/12/01 3 years Writing a false police report for a stolen vehicle TOTAL 34 YEARS - 10 months 7As reflected above, the Murry and Fagan sentences were not imposed until after January 1, 2001. It is anticipated that these two sentences will also be reported in the 2001 Annual Report, however they are included here in as much as both Murry and Fagan entered guilty pleas as part of significant OIFP prosecutions during 2000. 1
  11. 11. INSURANCE FRAUD UNIT - CASE HIGHLIGHTS HEALTH CARE CLAIMS FRAUD by deception and official misconduct. She was sentenced to three years state prisonFraud by Licensed Professionals and ordered to make restitution to the StateState v. Carl Lichtman, et al. As OIFP Health Benefits Program. Sheree Baker, apreviously reported, one of the largest lower level conspirator, was sentenced to 30insurance fraud cases in the State’s history days in the Bergen County Jail, restitutioncontinued to advance significantly during of $2,950 and insurance fraud fines in thethe past year. Carl Lichtman, a former amount of $2,500. Willie Newman waslicensed psychologist, conspired with nearly sentenced to 90 days in the Bergen County200 people to defraud the State Health Jail for violating probation based on hisBenefits Plan and approximately 35 other conspiracy with Dr. Lichtman. By the closeinsurance carriers or health care plans out of 2000, approximately 190 individuals hadof more than $3.5 million for no show been prosecuted for involvement in thetreatments for “neurotic depression.” Lichtman conspiracy. Cases against theLichtman pocketed the money he received remaining co-defendants are pending infor the bogus treatments and then kicked court.back 25 percent to those persons who hadprovided their insurance information to him State v. Alexander Ivashenko On July 7,to submit the fictitious claims. Lichtman 2000, Alexander Ivashenko, a formerlywas able to steal millions from the carriers licensed physical therapist and Chiefbecause he started a referral system in Operating Officer for a string of physicalorder to recruit new “patients” so he could therapy offices in New York and northeastfraudulently bill their carriers. Lichtman New Jersey, was sentenced for theft in hiswould typically pay $750 to a “recruiter” for "pocketing" of excess medical claimseach person brought into the scheme. payments which resulted in theSome of the conspirators recruited as many victimization of over 100 patients andas a dozen people into the scheme. insurance organizations. Ivashenko was sentenced to five years probation On February 18, 2000, Kevin Spencer, conditioned on serving 180 days in countyan active recruiter of “patients,” was jail, 200 hours of community service andsentenced to a three year state prison the payment of $75,000 in restitution. Thesentence, required to pay an insurance restitution payment, which Ivashenko madefraud fine of $10,000 and restitution of immediately following his sentencing, will$11,094. Lucy Lester was convicted be divided among as many as 48 patients,following trial of conspiracy, theft by and 58 insurance carriers and self-insureddeception and official misconduct. She was organizations.sentenced on June 30, 2000 to four yearsstate prison and ordered to make State v. Anthony B. Spain, D.M.D. Onrestitution of $7,965 to the State Health December 11, 2000, Anthony Spain pledBenefits Program. Elaugh Butler was also guilty to an Accusation charging him withconvicted following trial of conspiracy, theft falsifying records relating to orthodontic 2
  12. 12. treatment he had provided to two minor Phony Medical Billschildren. He had received Medicaid and State v. Sharon DaCosta-Barrett, et al.direct payments from the children’s mother On February 25, 2000, Sharmaine Wilsonover a three year period, but in a sum less was sentenced, following her guilty plea tothan he normally would have been paid. a charge of theft from Blue Cross/BlueHe sought to make up the shortfall through Shield, to five years probation. Hera claim to a dental insurance plan (Delta husband, Edwin Wilson entered a plea andDental) in which the mother had recently was admitted to the Pre-Trial Interventionenrolled, misrepresenting the period of Program. Previously, co-defendant Sharontreatment and billing prospectively for work DaCosta-Barrett, a former Blue Cross/Bluealready completed and paid for. Spain Shield health insurance claims processor,voluntarily made restitution to the carrier was sentenced to four years in state prisonwhile the investigation was pending. This for causing the issuance of fraudulentcase was scheduled for sentencing on claims checks in excess of $97,000 to herFebruary 16, 2001. It will also be referred husband, Clive Barrett; her sister,to the dental Professional Licensing Board Sharmaine Wilson; and her brother-in-law,for appropriate professional licensing Edwin Wilson. As a condition of Ms.action. Wilson’s probation and Mr. Wilson’s admission into the Pre-Trial Intervention“Slip and Fall” Program, they agreed to be jointlyState v. Bruce Robert Tarlowe On April responsible for the payment of $32,562 in13, 2000, Bruce Robert Tarlowe, a licensed restitution, which represented one third ofinsurance agent in the State of New Jersey, the total dollar amount stolen. Clivewas charged by a State Grand Jury with Barrett pled guilty to theft on March 17,health care claims fraud and attempted 2000. On June 2, 2000, he was alsotheft by deception. It is alleged that sentenced to five years probationTarlowe staged a phony "slip and fall" conditioned upon the payment of $32,562accident, and claimed that he fell as the in restitution.result of lettuce lying on the floor of theproduce aisle in an A&P Supermarket. The State v. The Healing Clinic, Hudsonindictment further alleges that Tarlowe Neurological, Inc. Florida Medicalsubmitted more than 20 health insurance Supply and Mario Macias T h r e e n o wclaims, totaling more than $5,700 to United defunct corporations, The Healing ClinicStates Life Insurance Company for injuries Incorporated, Hudson Neurological, Inc.purportedly resulting from the accident. and Florida Medical Supply, and theirDuring the court proceedings, Tarlowe former manager and corporate officer, Mariochallenged the appropriateness of charging Macias, were previously indicted forhealth care claims fraud based on this defrauding numerous insurance carriers ofconduct, but the court denied his motion. more than $86,000. According to theThis case remains pending in court. indictment, the medical providers billed the health insurers for medical services that were never rendered and for medical equipment that was never provided. On March 17, 2000, the corporate defendants 3
  13. 13. entered guilty pleas. The Healing Clinic sentenced to 180 days in the Union Countypled guilty to one count of attempted theft Jail as a condition of probation, ordered toby deception, and was later sentenced to make restitution of $33,500 and ordered topay an insurance fraud penalty of $10,000, perform 200 hours of community service.as well as other fines, and restitution in theamount of $48,041. Also on that date, State v. Joanne Panico O n M a y 2 6 ,Hudson Neurological pled guilty to one 2000, a former insurance adjuster, pledcount of attempted theft by deception, and guilty to an Accusation charging healthwas later sentenced to pay a civil care claims fraud. Joanne Panico, formerlyadministrative penalty in the amount of employed by Blue Cross/Blue Shield as a$10,000, as well as other fines and Team Service Representative, was chargedrestitution in the amount of $33,572. with defrauding her employer ofFlorida Medical Supply also pled guilty to approximately $3,500 by electronicallyone count of attempted theft by deception, manipulating claims in order to issueand was later sentenced to pay an checks in her husband’s name for servicesinsurance fraud penalty of $10,000, as well never rendered. Panico was sentenced toas other fines, and restitution in the four years probation and was ordered toamount of $5,283. The case against the pay restitution to Blue Cross, as well as aindividual defendant, Mario Macias, is still $5,000 civil insurance fraud fine.pending in court. State v. Barbara Moran On NovemberState v. Carrell Martin and Darlene 28, 2000, Barbara Moran pled guilty toMcDaniel On March 8, 2000, Carrell health care claims fraud and forgery arisingMartin and Darlene McDaniel were indicted out of her submission of several fraudulenton second degree charges of conspiracy and health care claims to Prudential Insurancetheft by deception. The indictment charged Company. Moran filed the fraudulentDarlene McDaniel, an employee of Family claims for reimbursement of medicalHealth Center (FHC), a subsidiary of Union services, which she claimed she receivedHospital, with diverting approximately and paid for, but were never actually$77,000 in checks issued by US Healthcare provided. Moran submitted receipts fromto FHC by portraying Martin as an various doctors, which she altered, toosteopathic physician entitled to the support her fraudulent claims. Under themoney. After being diverted by McDaniel, plea agreement, Moran is required to pay athe checks were ultimately deposited into $5,000 civil insurance fraud fine. HerCarrell Martin’s bank account and the sentencing was scheduled for January 19,proceeds split by McDaniel and Martin. 2001.The stolen money represented payments toFHC for medical services provided to State v. Charlene Vaughan a.k.a.various patients. On May 15, 2000, Carrell Charlene Jordan On June 16, 2000,Martin pled guilty to conspiracy charges Charlene Jordan was sentenced to threeand was sentenced to three years probation years probation and ordered to makeand restitution of $33,500. Defendant $9,015 in restitution after pleading guilty toMcDaniel pled guilty to conspiracy and theft by deception. Jordan, who then usedtheft by deception charges and was her married name of Charlene Vaughan, 4
  14. 14. worked as a claims adjuster for GRE State v. Lorna Kitson On April 14, 2000,Insurance in Princeton. At GRE, she Lorna Kitson was indicted for attempteddefrauded her employer by issuing theft by deception stemming from herfraudulent payments to an outside alleged submission of health care bills inconsultant for fictitious services. Vaughan the name of herself and others to twoforged the consultant’s signature and insurance carriers. Between 1995 andcashed the checks. 1997, Kitson, who had worked for Hackensack University Medical Center,State v. Xun-Cheng Huang On February allegedly submitted bogus health insurance25, 2000, a State Grand Jury returned a claims to Connecticut General Lifeten count indictment against Xun-Cheng Insurance Company (CIGNA) and ProvidentHuang, a former professor of mathematics Life and Accident Insurance Companyat New Jersey Institute of Technology totaling more than $220,000 and received(NJIT). The Hudson County resident was approximately $146,000 from thosecharged with one count of health care carriers. CIGNA’s fraud unit referred theclaims fraud, three counts of theft by investigation to OIFP in March 1999.deception, falsification of records relating tomedical care, and three counts of forgery. AUTO INSURANCE FRAUD The indictment alleges that from False Auto Theft ClaimsJanuary, 1995 through September, 1996, State v. Tok Hwan Bae On September 6,while employed at NJIT, Huang submitted 2000, Tok Hwan Bae pled guilty to a oneover 100 false claims for medical services in count Accusation charging attempted theftexcess of $40,000 for reimbursement by deception for his role in the submissionthrough the State Health Benefits Program. of phony invoices to Allstate InsuranceUpon leaving his employment at NJIT, he is Company. In October 1998 Bae filed aalleged to have submitted an additional 20 stolen vehicle claim with Allstate for hisfraudulent claims in excess of $2,500 under 1990 Mercedes 300 SL, allegedly stoleninsurance coverage obtained by his from a restaurant in New York. Hedaughter while a student at the University submitted two invoices, later proven to beof Pennsylvania. For most claims, the bogus, in support of his $4,000 claim fornamed medical provider did not exist and custom wheels. Bae received a six monthwas allegedly a fictitious provider created by PTI term and paid a $3,000 civil fine.Huang. For those claims where themedical provider did exist, the claimed State v. John B. Fagan On October 12,services were never provided. Huang failed 2000, West Orange police officer John B.to appear for his arraignment and a warrant Fagan pled guilty to an Accusation chargingfor his arrest has been issued. one count of official misconduct based on his writing of a false West Orange Police automobile theft report stating that a Land Rover Discovery SUV had been stolen. Fagan also admitted that he had written a second false police report representing that his own vehicle, a Jeep Cherokee had been 5
  15. 15. stolen. Automobile theft and related claims Protection (PIP) claim seeking more thantotaling approximately $40,000 were $2,500 from CNA Insurance Company forsubmitted to three separate insurance medical visits which he purportedlycompanies. On January 12, 2001 Fagan underwent as the result of the accident.was sentenced to three years in state Schultz had entered a guilty plea to anprison, a civil insurance fraud fine of Accusation charging health care claims$8,000 and restitution in the amount of fraud on September 9, 2000.$9,056. “Give-Up” SchemesFake Property Damage Claims State v. Pablo Cordero, et al. InState v. Fabian Hernandez On June 19, February 1999, New Jersey State Police2000, Fabian Hernandez pled guilty to a Auto Unit and OIFP investigators arrestedone count Accusation charging receiving Pablo Cordero and twelve other New Jerseystolen property. On July 7, 2000, Bergen residents for their roles in “giving up” theirCounty Superior Court Judge Meehan vehicles to a New York Police Departmentsentenced Hernandez to a four year state police officer posing as a “chop shop”prison sentence for his role in possessing operator. On January 28, 2000, Corderoseveral stolen vehicles utilized in a property was sentenced to three years probation fordamage insurance fraud scheme. Among his role in bringing vehicles to thethe stolen vehicles investigators found on undercover New York garage. Additionally,Hernandez’s North Bergen lot were a 1990 Cordero agreed to cooperate with NJSPBMW 535, a 1992 BMW 325i, a 1996 Auto Unit detectives and OIFP investigatorsNissan Maxima, a 1992 Lexus GS 400, and to pose as a tow truck driver who coulda 1995 Ford Thunderbird. Hernandez dispose of “give up” vehicles to developreceived the vehicles, valued at other cases. From February 1999 throughapproximately $82,000, between June 1995 Octo be r 2000, Cordero bro u ghtand November 1997 and then changed their investigators eleven vehicles with anvehicle identification numbers to file bogus approximate value of $105,000.property damage claims with the carriers. On February 10, 2000, NJSP Auto UnitJump In Claims detectives, in conjunction with OIFPState v. Anthony Schultz On December investigators, arrested 20 defendants as1, 2000, Anthony Schultz, was sentenced to part of this “sting” operation. The arrestedfive years probation conditioned on his defendants included eight middlemen andserving 364 days in the Camden County twelve owners, including two municipalJail for causing his name to be added to a police officers.Pennsauken Police automobile accidentreport. After being identified in the Each of the defendants was chargedPennsauken Police accident report as with conspiracy to commit theft byhaving been involved in the accident when deception. The owners allegedly filed falsein fact he was not, a fraudulent practice police reports and fraudulent affidavits ofknown as a “jump in,” Schultz then filed an vehicle theft to support their claims to theautomobile insurance Personal Injury carriers that their vehicles had been stolen. 6
  16. 16. Six different insurance carriers were locations in the first large-scale, organizeddefrauded into paying stolen vehicle claims. auto insurance fraud ring prosecuted under the new Health Care Claims Fraud Act.State v. Mark Francekevich On February Arrest warrants were also obtained for two4, 2000, the Office of Insurance Fraud additional defendants who remain fugitives.Prosecutor filed an Accusation and The complaints charge Anhuar Bandy withaccepted a guilty plea from Mark being a leader of organized crime, and withFrancekevich to charges of attempted theft conspiracy to commit racketeering andby deception and false swearing. The health care claims fraud. Bandy is chargedcharges were based on Francekevich’s with paying people to stage automobilefraudulent insurance claim to Rutgers collisions in order to obtain patients forInsurance Company that his Mitsubishi numerous chiropractic clinics he allegedlyEclipse had been stolen when it was owned and operated, thereby generatingactually “given up,” and on the false billings under the Personal Injuryaffidavit of vehicle theft he submitted in Protection (PIP) portion of automobilesupport of that claim. On March 10, 2000, insurance policies. As a result, OIFP hasFrancekevich was sentenced to two years identified numerous allegedly fraudulentprobation and a civil insurance fraud fine of claims submitted to insurance carriers$4,000. throughout the state. Another target of this investigation, Alejandro Ventura, wasState v. Bruce Michael Garry On October charged with conspiracy to commit13, 2000, Bruce Michael Garry was racketeering and health care claims fraudsentenced to two years probation and for arranging the automobile collisions andpayment of a civil insurance fraud fine in recruiting the participants.the amount of $1,000. Garry wassentenced for his conduct in “giving up” a During the past year, six individualsNissan Pathfinder, and falsely reporting to involved in staged accidents, some stagedthe West New York Police Department that accidents also involving undercover Statethe Pathfinder had been stolen. After the Investigators, have entered guilty pleas.false report to the police, Garry submitted Five of the six individuals entered guiltya fraudulent insurance claim in the pleas to conspiracy to commit theft byapproximate sum of $27,725 to State Farm deception. Another entered a guilty plea toInsurance Company, falsely claiming that a charge of attempted theft by deception forthe Nissan Pathfinder had been stolen. causing claims in excess of $10,000 to be submitted to Selective Insurance CompanyStaged Accidents for treatment purportedly rendered to himState v. Anhuar Bandy, et al. The at a Bandy operated clinic, when in fact, heprosecution of this alleged large scale had not even been a passenger in thestaged accident ring advanced significantly vehicle involved in the staged accident.in 2000. Previously, ten people were Total insurance claims for the four stagedarrested and search warrants were accidents in which the arrested defendantsexecuted at eight chiropractic clinics and allegedly participated was in excess ofmedical offices in several New Jersey $108,000. The cases against several of 7
  17. 17. those arrested, as well as against others indictment charging Campbell withidentified as the result of extensive conspiracy and bribery in official matters.investigation, is pending further The indictment was based on Campbell’sprosecution. payment of approximately $1,200 to an undercover Newark police officer to obtainFake Accidents Newark Police automobile accident reportsState v. Phillip Major, et al. This case in order for Campbell to solicit the personsalso significantly advanced as 18 identified in those reports for filingdefendants pled guilty to charges of theft or insurance claims. Campbell is due toattempted theft by deception during year return to court for sentencing later this2000 as part of the continuing investigation year.and prosecution of former East Orangepolice officer Phillip Major and others. State v. Abigail Romero On January 28,Major previously pled guilty to official 2000, Abigail Romero, a "runner" who paidmisconduct and related charges for approximately $1,800 in bribes to anfabricating police accident reports. The undercover Newark police officer topleas from these 18 defendants accounted purchase police reports for use in thefor some $167,000 of the $900,000 in solicitation of persons to make automobilefraudulent insurance claims which have insurance claims, was sentenced to threebeen tied to Major’s malfeasance. It is years in state prison. She had previouslyanticipated that, with the cooperation of been indicted by a State Grand Jury andthese defendants, as required under the charged with conspiracy, bribery in officialterms of their guilty pleas, additional matters, and official misconduct for payingsubjects will be charged in 2001. the undercover officer bribe money to obtain police automobile accident reports. In a related case, Mark Bendet (a Romero would then refer the personsdisbarred attorney), Imelda Toquero (a identified in those police accident reports tonurse and Bendet’s estranged wife) and receive chiropractic treatment and fileEddie Boyd (a suspected runner) were automobile insurance claims.indicted in 2000 on charges of seconddegree bribery and second degree State v. Jerome F. Bollettieri andconspiracy to commit bribery and official Thomas DiPatri On October 20, 2000,misconduct stemming from their alleged the Office of Insurance Fraud Prosecutorinvolvement with a medical practice known obtained and executed arrest warrants foras Metro Medical Services. On June 9, Lt. Jerome F. Bollettieri, the officer in2000, OIFP caused the arrests of Bendet charge of the Camden County Policeand Toquero in Texas and their return to Department Records Section, and retiredNew Jersey to face those charges. Camden Police Department Sergeant Thomas DiPatri. Bollettieri and DiPatriUsing “Runners” were arrested and charged with conspiracyState v. James Lee Campbell On to commit official misconduct and officialDecember 2, 2000, James Lee Campbell, a bribery. It is alleged that they acceptedrunner, pled guilty to a State Grand Jury money in return for providing Camden 8
  18. 18. Police Department automobile accident made a claim worth $15,935 on herreports to other individuals in order for homeowners’ policy for vandalism andthose individuals to solicit the persons property allegedly damaged or stolen duringidentified in those police accident reports to a burglary. To support her claim, Tomassobecome patients and submit automobile allegedly provided false information to theinsurance claims. The OIFP’s investigation insurance carrier about the items that werein this matter is continuing and additional stolen or damaged. The false informationcharges are anticipated. included receipts for property that was returned to the seller before the burglary,Phony Auto Insurance Documents and forged receipts for nonexistentState v. Joann Sullivan On December 15, purchases. The carrier stopped payment on2000, Joann Sullivan waived indictment the claim after discovering the bogusand pled guilty to a one count Accusation receipts. The case is pending in Superiorcharging theft by deception in the third Court.degree. The indictment charged Sullivanwith obtaining $8,855 from First Trenton State v. Paul LoPapa On October 25,Indemnity by creating or reinforcing the 2000, Paul LoPapa was indicted by a Statefalse impression that she was entitled to Grand Jury on 15 counts charging him withcompensation for lost wages and essential theft and attempted theft by deception,services under the Personal Injury misconduct by a corporate official, failureProtection (PIP) component of her to file a New Jersey Income Tax-Residentautomobile policy as a result of an accident Return, failure to pay New Jersey Grossshe was involved in on July 23, 1997. The Income Tax with intent to evade, falsifyinginvestigation revealed that Sullivan falsified records and forgery. The investigationthree letters purportedly from her medical leading to the indictment was conductedproviders in order to collect lost wages and jointly by the New Jersey State Police andessential services from her automobile OIFP. In addition to a fraudulent realcarrier. Essential services include payment estate financing scheme, the indictmentby an insurance carrier for assistance with charges LoPapa with attempting to file ahousehold work, child care and other fraudulent insurance claim under hismiscellaneous chores which would have homeowners’ policy in the sum of $33,400normally been performed by the insured. for purported water damage. The case isThese payments were made directly to pending trial.Sullivan. Sullivan was scheduled to besentenced on February 16, 2000. LIFE INSURANCE FRAUD PROPERTY INSURANCE FRAUD State v. Lucille Dennis On October 16, 2000, the State Grand Jury returned a 14State v. Athena J. Tomasso On count indictment against Lucille Dennis forSeptember 15, 2000, Athena J. Tomasso allegedly attempting to collect accidentalwas indicted on attempted theft and forgery death benefits for her late husband andcharges in connection with a false brother, both of whom died natural deaths.homeowners’ claim. Tomasso allegedly Typically, these attempts were allegedly 9
  19. 19. made by altering police reports and/or money. On January 12, 2001 Greenfielddeath certificates to reflect accidents which was sentenced to three years probation,never occurred. These attempts are alleged and restitution in the amount of $65,232.to have taken place between 1995 and 1998 Because he was a licensed insurance agent,against five different insurance companies. the OIFP referred Greenfield’s criminalThe most recent attempt involves an alleged conviction to the Department of Bankingeffort to collect on a $1 million accidental and Insurance for appropriate action withdeath policy. In that case, it is charged that respect to Greenfield’s insurance agent’sDennis enrolled her husband for the license.accidental death benefits three monthsafter he had already passed away. Dennis State v. Richard Leavitt On August 25,is currently a fugitive and a bench warrant 2000, a former licensed insurance producerhas been issued for her arrest. who operated an insurance agency in Somerville, NJ, pled guilty to theft by INSURANCE AGENT FRAUD deception and falsifying records for failing to remit $16,924 in premium funds to anState v. Steven M. Usarzewicz On insurance company on behalf of an insuredNovember 3, 2000, Steven M. Usarzewicz, a for an automobile policy. Leavittformerly licensed insurance producer and fraudulently collected the premium fundssecurities dealer, was sentenced to three from the insured, Atlantic Sportsyears in state prison after pleading guilty to Management, for coverage for seventhe looting of over $100,000 from the trust vehicles which were purportedly insured byfunds and insurance policies of a client’s New Hampshire Insurance Company, eventwo minor children. On December 8, 2000, though the policy had not been renewedthe sentencing court also ordered that and was no longer in effect. Leavitt keptUsarzewicz make payment of restitution in the premium money and used it forthe sum of $106,810. personal expenses. Leavitt also admitted to producing a fraudulent auto insuranceState v. Joseph Greenfield On November identification card for one of the vehicles9, 2000, Joseph Greenfield, a licensed purportedly insured under the policy. Oninsurance agent in New Jersey, pled guilty October 20, 2000, he was sentenced toto an Accusation charging theft by three years probation and was ordered todeception. The Accusation charged pay full restitution and a $5,000 insuranceGreenfield with theft of approximately fraud fine.$65,232 representing insurance premiumsfor a variety of insurance policies including CONTRACTOR FRAUDcommercial auto and multi-peril insurance,accident/sickness coverage and workers’ State v. Jeffrey Nemes On December 18,compensation, along with a “floater” for 2000, Jeffrey Nemes, a Hamilton Twp.equipment damaged or lost, which he sold police officer was charged with theft byto the Marlboro Township Board of Fire failure to make required disposition ofCommissioners, Fire District #2. Greenfield money in excess of $75,000. Thepurposely overcharged the fire district for indictment alleges that Nemes, whothe insurance coverage and kept the excess operated a construction business in 10
  20. 20. addition to being a Hamilton Twp. police Unemployment Insurance Fraudofficer, stole in excess of $75,000 in State v. Renee Brown; State v. Zinainsurance claim money from several Shivers On August 29, 2000, two personspersons who suffered property damage to were separately indicted by a State Grandhomes or commercial businesses that they Jury for allegedly falsifying officialowned. This case remains pending in documents in order to obtain thousands ofcourt. dollars in unemployment insurance to which they were not entitled. Allegedly PUBLIC ADJUSTER FRAUD Brown received more than $15,000 and Shivers over $8,000.State v. Michael Winberg On September22, 2000, Michael Winberg, a licensed State v. Anthony Pagan; State v. Markpublic adjuster, was indicted for allegedly DiNacola; State v. Vanegas Wilborne;stealing over $15,000 which represented State v. Darnell Toliver; State v.the insurance proceeds settlement checks Bernard Wilson On September 29, 2000,from two clients. The indictment alleges five persons were separately indicted by athat Winberg, in his capacity as a licensed State Grand Jury for allegedly falsifyingpublic adjuster working for American official documents in order to obtainAdjustment Agency of Bordentown, New thousands of dollars in unemploymentJersey, was retained by two homeowners to insurance to which they were not entitled.negotiate settlements with Prudential Allegedly, Toliver received over $8,000,Insurance Company following damage to DiNacola received almost $12,000 andtheir homes from a storm. Prudential Pagan received over $8,500.issued five checks, each made payable toone of the homeowners and American State v. Walter Harris; State v.Adjustment Agency as co-payees. Winberg, Constance Odoemena-Henderson; Stateallegedly had each homeowner endorse the v. Pamela Mundy; State v. Andegdochecks, then cashed them and kept the Naccillo On December 4, 2000, fourmoney for his own personal use. The case persons were separately indicted by a Stateis pending in court. Grand Jury for allegedly falsifying official documents in order to obtain thousands of LABOR FRAUD1 dollars in unemployment insurance to As a result of a cooperative effort among which they were not entitled. AllegedlyOIFP, the Labor Prosecutions Unit of the Harris received more than $9,000 andDivision of Criminal Justice, and the New Odoemena-Henderson received overJersey Department of Labor, the following $7,000.unemployment insurance fraud cases andworkers’ compensation cases were filed: 1 All cases reported in the Labor Fraud sectionof OIFP’s Annual Report may also be reported elsewhereby the Division of Criminal Justice. 11
  21. 21. State v. Johhny Medrano; State v. operated by the Division of Workers’Gregory K. Jones; State v. Denise Compensation within the New JerseyDinielli; State v. Charles Gosha; State v. Department of Labor. Huggins admittedCamille Buffa; State v. Frank Tarantino; that she forged the name of a deceasedState v. Deborah Brown On December associate, who had legitimately received the18, 2000, seven persons were separately benefit payments until his death inindicted by a State Grand Jury for allegedly September 1989. She also admitted tofalsifying official documents in order to fraudulently obtaining $63,784 in disabilityobtain thousands of dollars in benefits from New Jersey Manufacturersunemployment insurance to which they Insurance Company for the same timewere not entitled. Allegedly, Medrano period and same deceased associate.received more than $12,000, Tarantinoreceived over $12,000, Buffa received over State v. Leonard Lipman On September$9,000 and Jones received almost $9,000. 25, 2000, Leonard Lipman pled guilty to anThese cases are pending in Court in various Accusation charging failure to providestages of prosecution. workers’ compensation coverage. Lipman admitted that an employee was injuredWorkers’ Compensation Insurance Fraud while working for him at Serene RestaurantState v. Lawrence Ford, Sr. On Equipment Corporation and agreed to paySeptember 18, 2000, Lawrence Ford, Sr. $73,248 to the Uninsured Employer Fundwas sentenced pursuant to an indictment of the New Jersey Department of Labor.charging him with theft by deception andforgery for cashing more than $150,000 MEDICAID FRAUD UNIT - CASEworth of workers’ compensation checks HIGHLIGHTSissued to his deceased father. Ford wassentenced to five years probation and given Medical Treatment Fraudfive days jail credit. The case had been State v. Tommie Murry and The Excelreferred by the Division of Workers’ Center, Inc. On August 1, 2000,Compensation after new computer defendants Tommie Murry and The Exceltechnology designed to uncover workers’ Center, Inc., a subsidiary of Facilitiescompensation fraud revealed potential Management Associates, Inc., entered guiltyfraud. pleas in Superior Court, Mercer County, to the crime of theft by deception pursuant toState v. Maude E. Huggins On November the terms of a plea agreement negotiated8, 2000, Maude E. Huggins pled guilty to with OIFP. Murry, formerly the Executivean Accusation charging second degree theft Director of the Excel Center, together withby deception, third degree theft by that corporation, admitted to defrauding thedeception and two counts of fourth degree Medicaid Program of approximatelyforgery. The charges stem from her falsely $600,000 through the submission of falseendorsing $200,430 worth of benefit checks claims for group and individual therapyfrom New Jersey Manufacturers Insurance sessions which never occurred. The ExcelCompany and the State of New Jersey. By Center had operated as a substance abusepleading guilty, she admitted that she treatment center in Vineland, New Jersey.fraudulently obtained disability benefitsfrom the Second Injury Fund, a program As a result of these guilty pleas, on 12
  22. 22. January 5, 2001, defendant Murry was State v. Alice Yolanda Carmona Onsentenced to three years in state prison and October 23, 2000, defendant Carmona pledthe corporation was sentenced to and paid guilty to a one count Accusation charginga fine of $10,000. Both defendants Medicaid fraud. Carmona was an employeeconsented to an order debarring them from of a mental health clinic and after theparticipation in the Medicaid Program and doctor left the clinic, Carmona, who was notwaived any claims to approximately $1.7 licensed as a medical care practitioner,million that had previously been forfeited in continued to provide mental healthconnection with the case. counseling to Medicaid patients.State v. Yogendra Sharma Yogendra On December 1, 2000, Carmona wasSharma, the sole owner and operator of sentenced to three years probation and 162Advanced Optical, previously pled guilty to days timed served in the Cumberlanda one count Accusation of health care County Jail. She was also debarred fromclaims fraud, for recklessly committing the Medicaid program for a minimumhealth care claims fraud in the course of period of five years. As indicated elsewhereproviding professional services. Sharma, an in this report, Carmona also pled guilty tooptometrist, billed Medicaid for services Cumberland County charges relating to thewhich were never prescribed by a physician unlicensed practice of medicine.and which were never provided by Sharmato Medicaid recipients. The majority of his Medicaid Laboratory Fraudpatients were elderly. On February 8, State v. Venditti Clinical Laboratory, et2000, Yogendra Sharma was sentenced in al. On August 1, 2000, Venditti ClinicalMercer County to four years probation, Laboratory of South Plainfield, Mohammedordered to pay restitution in the amount of Saleem, Iftikhar Hussain and Abdul Hafeez$2,951, and a criminal fine of $12,000, and Raja, owners and operators of Vendittito serve 100 hours of community service. Clinical Laboratory were indicted forAdditionally, he was debarred from conspiracy, Medicaid fraud and misconductMedicaid and any similar health insurance by a corporate official. The defendantsprograms for a minimum of five years. The allegedly paid almost $347,000 injudge ordered Sharma’s optometrist license kickbacks to encourage clinic owners toto be suspended for one year during which submit blood samples to the laboratory totime he is barred from the practice of the undergo an expensive panel of diagnosticprofession. tests. All the samples submitted were from Medicaid recipients and paid for by the Medicaid Program. The defendants allegedly attempted to hide the kickback payments by writing checks from the Venditti business account to fictitious business entities controlled by the various clinic owners. This case is pending trial in Middlesex County. 13
  23. 23. State v. Janet Scarpitta On October 23, practitioner with one count of health care2000, Janet Scarpitta, the former manager claims fraud. Aly was also indicted for oneof Roseville Medical Center in Newark, and count of health care claims fraud as a non-Amad, Inc., also in Newark, was indicted for practitioner. The defendants owned andconspiracy, Medicaid fraud, and theft by operated Paterson Community Pharmacy indeception. Scarpitta was charged with Paterson. It is alleged that the defendantsfabricating blood requisition forms in purchased prescriptions for Serostim, anconnection with fraudulent blood tests expensive anti-AIDS medication. It is alsopurportedly performed by United Diagnostic alleged that the defendants did notLaboratory and causing Medicaid to be dispense the medication but submitted abilled approximately $129,991 for expenses claim for reimbursement to the Medicaidrelated to the purported blood testing. In Program, and received approximatelyaddition, while working as office manager of $170,000 in Medicaid payments. It isAmad, Inc., Scarpitta is alleged to have further alleged that in an attempt to coverdeposited into her bank account 17 checks up their crime, the defendants submittedtotaling $5,877 made payable to three false invoices to establish that theirdoctors, without the authorization of those inventory contained the amount of drugsdoctors. The case is pending trial in provided. This matter is pending in PassaicMonmouth County. County. Medicaid Drug Fraud Medicaid Transportation FraudState v. Mark Anthony On May 9, 2000, State v. I&I Invalid Coach, ImadAnthony was sentenced to five years in Elbashir and Imadelin Khair Onprison after he pled guilty to one count of November 29, 2000, Imad Elbashir,health care claims fraud. Anthony engaged Imadelin Khair and I&I Invalid Coach werein a scheme to defraud the Medicaid indicted for conspiracy, health care claimsProgram by forging prescriptions for high- fraud, theft by deception, Medicaid fraud,priced drugs. Using stolen or purchased and corporate misconduct. I&I was anMedicaid cards, he had these prescriptions invalid coach provider in Clifton, Newfilled at pharmacies which in turn billed the Jersey, owned by defendants Imad ElbashirMedicaid Program. Anthony then sold the and Imadelin Khair, that provided non-drugs on the street for a fraction of their emergency medical transportation tovalue. OIFP investigators from the Medicaid recipients. It is alleged that,Medicaid Fraud Section, were able to between November 15, 1995 and July 27,determine that Anthony was responsible for 1999, I&I inflated mileage on claimsover $250,000 in Medicaid billings before submitted to the Medicaid Program andhe was apprehended. received $90,000 more than it was entitled to for services rendered. In addition, theState v. Hanan Selim, Wail Aly and defendants are alleged to have paid cashPaterson Community Pharmacy On kickbacks to several Medicaid recipients inMarch 3, 2000, a State Grand Jury indicted exchange for their continued patronage.the defendants for conspiracy and Medicaid The matter is pending in Passaic County.fraud. Additionally, Hanan Selim, alicensed pharmacist, was charged as a 14
  24. 24. State v. Lakshminarine Rampersad On with the furnishing of Medicaid services.August 4, 2000, Rampersad, the owner of Sentencing for Bilenkin was scheduled forFirst Invalid Coach Company in Landing, February 5, 2001.Morris County, was sentenced to 180 daysin the Morris County Jail and placed on State v. Alaa Baker and Ali Baker Onprobation for three years. Rampersad also April 28, 2000, Alaa and Ali Baker, ownerswas disqualified from participation as a of Royal International Trade and Services,transportation provider in the New Jersey Inc., were indicted by a State Grand JuryMedicaid Program for a minimum period of for conspiracy, theft by deception,eight years and relinquished all rights to misconduct by a corporate official and$172,400 in claims submitted by him that Medicaid fraud. The defendants, throughhad been held in abeyance until the their company, provided transportationconclusion of this case. This case was services to Medicaid recipients in thereferred to the Medicaid Fraud Section in Monmouth County area. They allegedlythe OIFP by the Division of Medical submitted approximately 1,902 fraudulentAssistance and Health Services. An audit claims for services not rendered andhad revealed unusually high mileage inflated mileage charges on other claimscharges which was confirmed by OIFP resulting in losses of approximatelyinvestigation. $138,380 to the Medicaid Program. Both defendants were arrested in Virginia and,State v. Genady Chulak; State v. Elana after an extradition hearing, ordered toBilenkin On December 14, 2000, a jury appear in Monmouth County Superiorfound Genady Chulak, owner of GGE Court. Both defendants failed to appearImpact Corp. t/a Medicall, guilty of theft by and arrest warrants were issued for them.deception, Medicaid fraud, and misconductby a corporate official. Chulak defrauded State v. Rafik Raziq On November 30,the Medicaid Program by submitting 2000, a State Grand Jury returned anapproximately $400,000 in false claims. He indictment charging Rafik Raziq with theftfalsely certified to the Medicaid agency the by deception, misconduct by a corporatemileage driven to transport Medicaid official and Medicaid fraud. Raziq was therecipients, which was greatly in excess of owner and manager of Absolute Transportthe mileage actually driven. Additionally, and Limousine Service in MonmouthChulak had provided illegal kickbacks to County. He is alleged to have unlawfullyMedicaid recipients in the form of cash, obtained more than $140,000 from thechecks and other valuable items. State Medicaid Program by submittingSentencing for Chulak was scheduled for claims for services that were not renderedFebruary 20, 2001. On December 5, 2000 and inflating mileage charges on otherElana Bilenkin, wife of Genady Chulak and claims. A warrant has been issued forco-owner of GGE Impact Corp. t/a Medicall Raziq’s arrest.pled guilty to one count of Medicaid fraud,for knowingly and willfully making falsestatements of material fact on Medicaidclaim forms, and one count of Medicaidfraud for offering kickbacks in connection 15
  25. 25. State v. Alexander Soyfer, Boris Milman, alleged to have submitted false expenses onVadim Boguslavskiy and A&B Invalid cost reports to the Medicaid agency. TheCoach Company On March 29, 2000, the allegedly fraudulent expenses are related todefendants were indicted by a State Grand a bus that Stone Arch purportedly used forJury for conspiracy, theft, Medicaid fraud patient care but which was actuallyand misconduct by a corporate official. The inoperable. It is also alleged that Stonedefendants operated A&B Invalid Coach in Arch reported to Medicaid the salary andWoodbridge, New Jersey. They were health benefits of an alleged "no-show"charged with defrauding the Medicaid employee who was the daughter of theProgram by submitting approximately nursing home owner. The case is pending$141,000 in false claims, falsely certifying in Mercer County.to the Medicaid agency that recipients werein need of invalid coach services when they State v. M&G Livery and Transportation,were not. They also inflated mileage Inc., Gregory Sverdlov, Raisa Zeltser Oncharges on claims they submitted. June 21, 2000, the three defendants were indicted in connection with the operation of On October 2, 2000, defendants Milman a livery transportation company called M&Gand Soyfer pled guilty to Medicaid fraud. Livery and Transportation, Inc. TheOn November 13, 2000, the defendants indictment variously charged Gregorywere each sentenced to four years Sverdlov, Raisa Zeltser and the corporationprobation, ordered to spend 60 days in the with conspiracy, Medicaid fraud, theft byMiddlesex County Jail, and to pay $42,153 deception, and misconduct by a corporaterestitution, as well as to debarment from official.the Medicaid Program. On December 18,2000, defendant Boguslavskiy pled guilty to Sverdlov and Zeltser, who were married,one count of Medicaid fraud. His are alleged to have fraudulently operatedsentencing was scheduled for February 20, M&G Livery and Transportation, Inc. by2001. paying kickbacks to induce Medicaid recipients to use their company, by billingState v. Stone Arch Health Care Center, for people ineligible to receive Medicaid, byInc., Nancy Tofani and David Hofstetter transporting Medicaid recipients to On February 14, 2000, a State Grand destinations not allowable under MedicaidJury indicted David Hofstetter, Nancy regulations and by submitting falseTofani and Stone Arch Health Care Center information on Medicaid forms to avoidInc., for conspiracy, theft by deception, and Medicaid scrutiny. This matter is currentlyMedicaid fraud. David Hofstetter and pending trial in Union County.Nancy Tofani were also indicted formisconduct by a corporate official. StoneArch is a nursing home owned by defendantHofstetter. Nancy Tofani is theadministrator of Stone Arch. This caseinvolves approximately $104,566 in allegedMedicaid fraud. The defendants are 16
  26. 26. OIFP-CRIMINAL OIFP’s criminal cases are investigated by health care providers, such as doctors,State Investigators within the Division of dentists, chiropractors, etc. or by individualCriminal Justice, Department of Law and patients, or by others providing health carePublic Safety, who are assigned to the OIFP. related services, such as medical billing andDeputy Attorneys General within the invalid transportation businesses. HealthDivision of Criminal Justice, also assigned care claims fraud occurs when a person orto OIFP, prosecute OIFP’s criminal cases. business makes a misrepresentation in aThese Deputy Attorneys General and health claim for benefits under a policy ofinvestigators are assigned to squads in the health insurance. See N.J.S.A. 2C:21-4.2.Insurance Fraud Unit or the Medicaid For example, health care claims fraud isFraud Unit of OIFP, which are each headed committed when a physician knowinglyby a Supervising Deputy Attorney General. submits bills for unnecessary medicalInvestigators within these units report to a procedures or for medical services that wereSupervising State Investigator, who, in not provided. Similarly, a patient commitsturn, reports to the Deputy Chief health care claims fraud when submitting aInvestigator in charge of OIFP -Criminal. claim for medical benefits for treatment ofThe Deputy Chief Investigators in charge of feigned injuries, when submitting falseOIFP-Criminal and OIFP-Civil are medical receipts for reimbursement or,supervised by OIFP’s top ranking when as an accomplice, a healthcareinvestigator, the Managing Deputy Chief provider submits a false or inflated claim forInvestigator, who oversees all OIFP shared benefits.investigators and investigations, both civiland criminal. Currently, the OIFP According to the United States GeneralManaging Deputy Chief Investigator Accounting Office, health care fraud lossesposition is vacant. The Deputy Chief may constitute as much as ten percent ofInvestigator-Criminal has been serving as our nation’s annual health careboth the Deputy Chief Investigator-Criminal expenditures. In addition to increasing ourand as the Managing Deputy Chief health care insurance premiums, healthInvestigator for OIFP, following the care claims fraud may also adversely affectdeparture of the former Managing Deputy the quality of medical care rendered byChief Investigator to join the Inspector those committing health care fraud andGeneral’s Office on August 11, 2000. diminish available funding for medical research. The Insurance Fraud Unit of OIFPinvestigates and prosecutes all types of Because false or inflated health careinsurance fraud, most of which involve claims frequently arise in the context ofeither health, automobile, homeowners, or automobile accidents, these claims alsocommercial insurance policies. Health impact the premiums charged for theinsurance fraud constitutes a significant Personal Injury Protection (PIP) componentsportion of cases handled by OIFP. Health of car insurance in New Jersey. OIFPcare claims fraud may be committed by places a high priority on the prosecution of 17
  27. 27. individuals and practitioners engaging in screen” of law enforcement by the use ofhealth care claims fraud, as exemplified by aliases supported by phony credentials,its prosecutions of phony clinics and such as false social security numbers andmedical mills, often times associated with counterfeit drivers’ licenses. Because of thestaged accident rings. potential for serious injury to innocent victims, staged accidents pose a significant Staged accidents are among the crimes of threat to the safety of the public.most concern to OIFP because of the threatto the safety of the motoring public and OIFP has also committed to theinnocent bystanders. In this type of prosecution of fraudulent automobileinsurance fraud, the subjects plan and insurance theft claims resulting fromintentionally cause a motor vehicle staged auto thefts, sometimes referred to ascollision, often purposely involving “give-ups.” In these cases, an automobileunsuspecting motorists in the “accident.” owner or lessee purposely abandons orTypical staged accident scenarios involve disposes of the insured automobile in orderpassing an innocent motorist and abruptly to fraudulently collect the insurancebraking, causing the motorist to appear at proceeds, frequently turning the vehiclefault by causing him to crash into the rear over (the “give-up”) to an intermediary.of the subject’s vehicle; or waving an Often those who lease automobiles stageunsuspecting motorist from a stop sign or these vehicle thefts to avoid the substantialparking spot and then quickly proceeding to mileage or repair costs which mightcrash into the unsuspecting motorist, again otherwise have to be paid by the lesseein an attempt to make the unsuspecting upon the return of the vehicle to the leasingmotorist appear at fault. Other staged company at the conclusion of the lease. Inaccident scenarios involve an intentional other cases, a theft is staged to enable ansideswipe in which the driver in the inside owner to recover more than the ownerlane of a dual left turn lane intentionally would have received from the purchaser indrifts into the outer lane causing a a legitimate sale. Vehicles which are givencollision, and the “hit and run” when the to a middle man may be exported for foreignsubject drives a damaged vehicle to a public resale, quickly disassembled at a “choplocation and falsely reports that the shop” which sells the parts on the blacksubject’s vehicle had just been damaged by market or uses the parts in conjunctiona fleeing driver. with an auto body repair business, or may be simply destroyed or otherwise disposed Subjects who stage such events frequently of to prevent the insurance company fromplant coached “witnesses” at the scene of returning a recovered vehicle to the ownerthe alleged accident or as passengers in the or lessee. The search of lakes, rivers andpurported accident, and may subsequently ponds frequently reveals automobiles whichwork with unscrupulous doctors, lawyers, were the subject of “give-up” thefts. Asor auto repair facilities to fabricate or inflate explained elsewhere in this report, toclaims for injury or property damage. address the growing problem of fraudulentThose engaged in staging multiple accidents auto theft claims, OIFP-Civil has institutedsometimes attempt to “fly below the radar a program designated as the “Give-Up 18

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