2008 Insurance Fraud

Hall of Shame


Arson con burns out of control

Dozens of houses went up in flames as Kenneth Allen launched one of the most brazen serial arson scheme in Indiana history. Allen led a 30-member gang that torched at least 50 houses for insurance money, looting insurers out of millions.

He concocted a get-rich formula that looted insurers for two years. He even had a crooked insurance adjuster on the take to ensure fraudulent claims were inflated and sailed through without a hitch.

Gang members bought cheap fixer-uppers mainly in the Muncie and Indianapolis areas. Then they packed the doomed buildings with used furniture and second-hand appliances. The homes mysteriously began going up in smoke.

Gang members left old blankets on space heaters, or food frying in pans on a hot stove to make the fires look accidental. Candles left alone also were often used to start blazes. Once the houses were in ruins, gang members made large and inflated insurance claims that helped them buy more homes destined to be lit up like firework displays. Read full story

Triathlete takes insurer for wheelchair ride

A wheelchair-bound crash victim suddenly leaps to his feet to conquer mighty mountains and compete in triathlons.

An inspiring script right out of Hollywood? Or a million-dollar dose of insurance fraud?

Turns out it was fraud.

Aaron Brabson tried to steal $1.3 million in accident insurance money by faking back and neck injuries from a car crash that, he claimed, largely confined him to a wheelchair.

Brabson bilked his insurance company for 18 months. He was hurt for real in a crash in Texas in 2001. After moving to Virginia, Brabson told his insurer that he'd reinjured himself in another crash several years later. He went after the insurance money. Read full story

High-flying judge crashes to earth

A fender bender left Pennsylvania appellate court judge Michael Joyce in almost constant pain. Neck and back injuries made it impossible for him to golf or swim. He suffered numbness, and brain damage clouded his mind.

Sometimes he could barely hold a coffee cup.
Or so Joyce said.

The elected Erie-area jurist on the state's second-highest appeals court collected $440,000 from auto insurers to help reclaim a life seemingly devastated by the Ford Explorer that love-tapped his Mercedes at just 5 mph.

But far from being virtually crippled, Joyce lived an enviously active lifestyle.

He went scuba diving in the Caribbean only two weeks after Erie Insurance paid out $390,000 for injuries Joyce said had left him unable to swim (the other driver's insurer paid out $50,000). Read full story

Sinister seniors murder for money

Homeless street drifters, Kenneth McDavid and Paul Vados thought they'd found guardian angels in two elderly women who befriended them, put them up in apartments and fed them.

But Olga Rutterschmidt and Helen Golay were the men's assassins. The seniors had the Los Angeles men run down by cars in alleys in a plot to collect more than $3 million in life-insurance money.

Longtime friends, Rutterschmidt and Golay bought at least 12 life policies in Vados' name and 23 policies for McDavid, listing themselves as beneficiaries. The women secretly used rubber stamps of the men's signatures to sign many of the policies.

Before long, Vados was found dead in an alley in West Hollywood, apparently run over by a car. No witnesses came forward. The case languished for years, just another luckless, transient John Doe. Read full story

Dodgy dentists get case of truth decay

Four-year-old Brandon Dillbeck went into the Medicaid Dental Center for routine teeth cleaning.

Instead, the dentist drilled out and capped 16 of his teeth with stainless steel. Dillbeck was strapped down so he couldn't struggle.

Children had multiple teeth yanked and root canals performed in single appointments at the North Carolina clinic chain in Charlotte, Winston-Salem, Ashville and Raleigh.

The clinics owned by dentists Letitia Balance and Michael DeRose overbilled North Carolina Medicaid with needless, invasive and traumatic surgeries on helpless children from low-income families.

"When he came out he was crying, his whole shirt was soaking wet with sweat," Christy Dillbeck told reporters after Brandon emerged from the office. "His whole head was soaking wet and his mouth was full of gauze, just held open." Read full story

Sweet revenge turns sour for diabolical doc

Dr. Ira Klein wouldn't take his conviction...

The Houston doc was serving more than 10 years in federal prison for stealing at least $10 million by billing insurers inflated fees for injecting patients with Hepatitis C medicine even though he'd given the meds to patients to inject themselves. He even refused to treat some patients after insurers stopped paying his huge bills.

But Klein's con took a sinister turn when he decided it was payback time for the people he thought had put him behind bars.

His revenge wouldn't be pretty, and plenty of Grade B slasher movies were tamer than Klein's plot.

Klein set his plot into motion by trying to convince fellow inmate lyad Abu El Hawa to help arrange the hits for $550,000. El Hawa was no angel either; he'd been convicted of injecting fake flu vaccine into 1,100 Exxon Mobil employees in 2005. Read full story

Blabbing bilker talks himself into jail

Is common sense common? Not for two arsonists who wanted insurance money but screwed up the jobs and earned long jail sentences instead.

Michael Paul Schook blabbed so much about his crime that it became the subject of small-town gossip in Connecticut before the blaze even started. Another arsonist, California resident Sundeep Dharni, hired a torch who was a bungler and just as dishonest as he.

Schook was an ex-con with 26 felony convictions and a heap of debt. His house in Suffield, Conn., was in foreclosure, his car had been repossessed, and he owed thousands on his credit cards. His $250,000 homeowners policy seemed the only recourse.

Schook sought help from a friend living with his family, another ex-con he had met in prison. The buddy was prudent-he declined to set the house afire-but did offer friendly advice on how to get the job done. Read full story

Trusting employees fall hard in comp con

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.

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

Skin doc's con more than skin deep

Trusting patients came to dermatologist Dr. Robert Stokes for honest advice about skin conditions. Instead, many were needlessly sliced up with his scalpel so the East Grand Rapids, Mich. skin doc could steal nearly $2 million from Medicare and Blue Cross Blue Shield of Michigan.

His unsanitary habits also potentially exposed thousands of patients to HIV and hepatitis.

Stokes routinely removed lesions-often just blemishes or freckles-that didn't need a surgeon's knife. He scared patients into the procedures by falsely diagnosing them with cancer or precancerous conditions. On top of the unsettling surgeries and healing processes, hundreds of patients were saddled with expensive co-pays and deductibles that sometimes exceeded $500.

One patient had up to 40 lesions removed, but only a handful needed removing. Stokes told another patient, Anne Gulch, that she needed 30-40 moles removed. After having five sliced off, Gulch went to another skin doc who said the moles were benign. Read full story

Read about previous year’s inductees to the Insurance Fraud Hall of Shame: