Consumer information
Real-life cases
Insurance fraud comes in all shapes and sizes, in all kinds of insurance. Here are several examples…
Staged auto accidents. A staged-accident ring’s 20-year crime wave screeched to a halt when 40 people were rounded up around Los Angeles, police say. Three generations of a family allegedly were involved — including a grandfather, sons, daughters and grandchildren. The suspected gang raked in millions in bogus injury and repair claims. It was one of California’s largest staged-accident rings, officials say. Grandfather Curtis Connor bought battered old cars, then purchased coverage using aliases or stolen identities — including a quadriplegic who couldn’t even drive, prosecutors say. Ring members lied they were car passengers who were hurt in rear-end collisions that actually never happened, police say. The “injured” victims went to his daughter — a chiropractor — for worthless treatment. Lawyers then allegedly submitted bogus medical claims.
Arson. Three children died when Timothy Nicholls torched his Colorado Springs, Colo. home to steal insurance money so he could escape mounting debt. He owed a motorcycle gang that had supplied him with meth, and his businesses were struggling. Jay-Jay, Sophia and three-year-old Sierra died of smoke inhalation. Investigators also found traces of an accelerant spread in the charred living room, and a can of flammable cleaning solvent under shrubbery outside the home. Traces of a fire-spreading accelerant were found on his kids’ pajamas. Nicholls received life in prison.
Health insurance fraud. Dentist Alireza Asgari victimized dozens of healthy patients with needless, painful — and often botched — root canals, extractions, sinus surgeries, cavity fillings and tooth restorations at his Wilkes-Barre, Pa. dental clinic. Asgari’s motive: $366,000 in fraudulent insurance billings. Patients’ mouths became infected and required more surgery to repair his botched procedures. One patient found a broken dental instrument lodged in a tooth. Another patient received several unneeded cavity drillings, two root canals, a new crown and a sinus operation. He spent months in agony until another dentist straightened out his mouth. Asgari received 2 1/2 to five years.
Property insurance. Jeweler Steve Clark lied to his insurer that someone stole a box with $132,000 of diamonds and sapphires from his store in Sewall’s Point, Ga. But officials grew suspicious when Clark later reported that someone stole $85,000 in cash from his other store in Jensen Beach. Detectives searched his wife Wendalyn’s safe deposit box and found a diamond from the earlier theft claim. Wendalyn and Steve desperately fingered each other as the real thieves, but both were convicted anyway. Clark received 15 years, and Wendalyn 10 years.
Workers compensation/disability (bogus claims). Prison guard June Lucena said she hurt herself when she fell 20 feet from a guard tower in Folsom Prison (Calif.). She underwent surgery on her shoulder and jaw and said she continued to experience back pain. Lucena started collecting workers compensation money. But surveillance footage caught Lucena cavorting on a Jet Ski and water slide. She received seven years and was ordered to repay $340,000.
Workers compensation (premium schemes). A Massachusetts temp agency illegally evaded paying millions in workers comp premiums by paying employees $40 million in cash wages under the table and hiding the employees in shell companies. Employees and payroll size are major factors in setting comp premiums. This was the largest under-the-table payroll scheme in the state’s history. Daniel and Aimee McElroy’s temp agency in Easton provided laborers to factories and food processors. They funneled most cash payrolls through straw firms they created. They also filed bogus tax returns and created fake payrolls. Daniel received 108 months in federal prison. Aimee awaits sentencing.
Agent fraud. Most insurance agents are honest, but a Michigan man swindled 500 customers, leaving them driving without auto coverage. Isaac “Clarence” Chandler posted notices on telephone poles and gave business cards to strangers. He touted his cheap auto policies selling for just $40 each. But the policies were fake, carrying the names of legitimate insurers and local insurance agencies. He’d printed the policies on his home computer. One customer had no coverage when he was involved in a crash that killed an 88-year-old woman. Chandler received at least six years in prison.
Drug diversion. Ohio pain management specialist Dr. Jorge Martinez threatened to deny desperate patients painkillers unless they let him use their names to bill insurance companies more than $60 million in narcotic drugs and expensive diagnostic tests he never gave. Some patients grew addicted, and two died of overdoses. Blair Scott Knight, for example, died of a massive drug overdose the same day Martinez gave him a prescription for OxyContin and other narcotics. Martinez also fraudulently billed insurers for more than 100 patients a day for years. He received life in federal prison.
Fake insurance. Three men collected more than $75 million in premiums for fake workers comp coverage they sold to professional employer organizations (PEOs). Hundreds of thousands of employees were left without coverage, and some had uncovered catastrophic injuries. PEOs across the U.S. were conned into buying worthless coverage for client small businesses. One man lost both legs in a construction accident but couldn’t even afford a second prosthetic leg. Truck driver Mitchell Powell suffered brain damage from a work accident but received no salary or hospitalization benefits. He lost his home and marriage. Donald Touchet received 22 years in federal prison, Richard Standbridge 18 years and Robert Jennings 15 years. They also must repay $75 million.
Insider fraud. A claims adjuster, three Houston-area medical clinic operators and a personal-injury lawyer stole more than $1.7 million from The Hartford. Staff adjuster Sandra Johnson issued Hartford checks to several clinics that didn’t exist or had provided no services. She received kickbacks from operators Theresa Williams, Dianne Winzer and Deandra S. Wade. A fourth schemer, attorney Eric Amoako, also received insurance payouts even though his clinic was defunct.
Extortion plots. Self-proclaimed gypsy Ronald Evano and his wife swallowed broken glass to shake down insurers and business along the East Coast by lying that they found the shards in food and drinks they consumed. The Evanos extorted restaurants, bars and grocery stores. He and his wife rang up more than $100,000 in unpaid hospital bills. Evano went to emergency rooms with painful internal bleeding from the glass, and had X-rays and treatment that convinced insurers to pay up. He received 63 months in prison and must repay more than $340,000.
Fake death. Molly and Clayton Daniels dug up the grave of an elderly woman, dressed her in Clayton’s clothing, stuffed her body in the car and pushed it off the cliff. The Leander, Tex. couple wanted to collect $110,000 in life-insurance money, hoping the insurer would believe the blackened body in the car was her husband Clayton. He even reappeared in disguise, posing as Molly’s new live-in boyfriend. DNA testing eventually showed the body wasn’t Clayton. Molly received 20 years. Clayton had an earlier parole revoked and received 20 years.
Murder-for-life insurance. Senior citizens Helen Golay and Olga Rutterschmidt befriended two homeless men off the streets of Los Angeles, secretly took out 15 life policies in their names, then had them killed for more than $3 million in insurance money. Paul Vados and Kenneth McDavid were run over by vehicles that were traced back to Golay and Rutterschmidt. Clumps of McDavid's hair and pieces of flesh were found clinging to the undercarriage of a new Mercury Sable car the women bought under false names. Both women received life without parole.
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