Insider connivers carve trail of misery

By James Quiggle
January 15, 2009
insuranceBuildingHeadlines have been awash with lurid news of corrupt corporate insiders who’ve illegally enriched themselves at the public’s expense.

Some insurance schemes also are insider jobs. The dodgy deals are foisted by insurance personnel who exploit trusting policyholders, insurance companies—and the public trust. Other connivers are fake insiders who set up equally fake insurance operations that sell phony coverage to vulnerable consumers and businesses – leaving the victims dangerously unprotected.

Whatever their origin, insider insurance schemes can carve a trail of misery for trusting victims and keep premiums higher for honest Americans everywhere.

Three businessmen, for instance, scammed hundreds of thousands of innocent employees out of vital workers compensation insurance in a complex scheme that peddled more than $75 million worth of fake coverage to businesses around the U.S.

Workers took the fall

Donald Edward Touchet, Richard Standbridge and Robert Jennings were key players in the massive con.

Vulnerable workers suffered without comp coverage. One man who lost both legs in a work accident but could afford only one prosthetic leg. A trucker suffered brain damage from a job injury but had no salary or hospital benefits – he lost his home and marriage.

A grandmother hurt her back while working for a company that cared for elderly hospice patients. Her workers comp checks stopped coming. She lost her Virginia farm and had to sleep in her truck outside a convenience store.

Touchet received 22 years in federal prison, Standridge 18 years and Jennings 15 years last year. Even more galling, they earned front-row seats to the Insurance Fraud Hall of Shame, founded by the Coalition Against Insurance Fraud.

Adjusters abuse trust

Insider jobs sometimes are foisted by maladjusted claims adjusters. Most adjusters are ethical, but some use their influence over the claims process to steal money.
Unitrin Insurance adjuster Brenda Buckaloo-Merchant looted her Dallas employer out of more than $1.2 million by writing claim checks to a fake medical provider who turned out to be Buckaloo-Merchant herself. The Texas woman received 12 years in prison.

A Nationwide Insurance adjuster took bribes from a body shop in the New York City area to inflate repair claims. Michael Boles was caught in a sting, and lost his adjuster license.

State Farm auto claims adjuster Crystal Shaw issued nearly $43,000 in checks to a fictitious claimant named Darrin Shefton. The Plainfield, N.J. woman received five years of probation.

An independent adjuster in Kentucky helped himself to more than $17,000 by forging claims in the names of unsuspecting policyholders. Kelly Lee Mora used the money to help buy a home. But the Kentucky insurance department caught on, stopped his con and yanked his license.

Four adjusters – three who worked for Chubb & Son Insurance – took bribes from contractors to inflate claims in Manhattan, Brooklyn and Staten Island. The adjusters raked in money, golf outings, golf equipment and dinners.

Millions in bills unpaid

Two executives cooked the books of the ailing Oath for Louisiana to make the HMO seem in better financial shape than it was. At one point the outfit covered 80,000 people. But execs Barry Scheur and Robert McMillan stiffed policyholders and medical providers by leaving $45 million in unpaid claims while pocketing much of the insurer’s money themselves.

Thomas Brown, meanwhile, won’t serve jail time for selling fake workers comp and other coverage in Florida, Georgia, Alabama and Tennessee in a separate scheme. The Orange County, Calif. man drained innocent businesses of $5 million in premiums without providing any coverage, but hung himself after pleading guilty.

One of America’s largest insider con jobs was foisted by Martin Frankel. A financial whiz, Frankel secretly gained control of several ailing life insurers and looted them of $200 million to finance an extravagant lifestyle from his Connecticut mansion.

Frankel lived like a sultan. He showered jewelry, fancy vacations and cars on girlfriends while innocent employees lost their jobs and livelihood when the insurers went out of business.

Frankel eventually crashed and burned. He received nearly 17 years in federal prison in 2002, and a front-row ticket to the coalition’s Insurance Fraud Hall of Shame.

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