Fraud News Weekly

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Get the latest insider insurance fraud news, developments and analyses each Friday by e-mail. Concisely written by top professionals, each issue contains the latest information about:

• Legislative and regulatory developments

• State and federal court decisions

• Public outreach and media coverage

• The week's fraud arrests

• The latest convictions for insurance fraud

• Civil cases

• Administrative actions

• Upcoming meetings, seminars and conferences


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Friday, February 2, 2018


* Efforts to stop costly fraud and abuses stemming from contractor takeovers of home-repair claims are on life support in Florida. Home contractors are exploiting so-called assignment of benefits (AOB). Losses from inflated repair claims and frivolous lawsuits are spiking premiums dramatically. The state House passed a meaningful reform bill to reign in AOB scams. The Senate version does nothing to address the root problem, and will only keep premiums rising. The short 60-day legislative session leaves little time for both chambers to agree on a bill that would solve the crisis. The Coalition is urging fraud fighters in Florida to write their state Senators asap — asking them to support strong reforms. Separately … there’s a glimmer of hope for AOB scams involving auto windshield replacements in Florida. Drivers are signing over claims to auto-glass firms. Lawsuits ballooned from 397 in 2006 to 19,513 last year, the state CFO says. Insurers can require that they inspect auto windshields for damage before authorizing glass replacements under a Senate bill (SB 396). It’s still in committee, so time is growing short. A House version must start going through committees.

* Life insurance policies couldn’t be murder weapons anymore under a bill in the Maryland legislature. The measure would limit life coverage of kids. It would impose strict guidelines for life applications for youths — including requiring consents, signatures and proof of an insurable interest. Underwriting standards also would tighten. And life insurers would be empowered to reject applications, and Maryland will file away rejected applications for investigation. The Coalition advised the legislator in drafting the reform bill, and supports the measure. The Coalition started a firestorm of debate that helped prompt the bill. A financially shaky Joaquin Rams murdered his infant son Prince for more than $400,000 of life insurance in the D.C. area. “Other states, including Maryland and Virginia, need to follow their lead and tighten a system that turns children into prey,” the Washington Post wrote in an oped inspired by a Coalition letter to the editor.

* Iowa would empower victimized insurers to seek restitution from fraudsters in civil court. Most states have restitution laws that make consumers whole if they’ve been victimized. A movement is underway in states such as Iowa to strengthen restitution laws, and let victimized corporate citizens such as insurers wield civil suits against fraudsters.

* The Coalition’s Matthew Smith was appointed to the NAIC’s Consumer Liaison Committee. There are 37 members total. The Consumer Liaison Program promotes greater consumer involvement with state insurance departments. The Coalition serves as a major source of info on insurance-fraud trends, legislation and regulation across all lines of insurance. A Coalition representative has served on the committee for many years.

Note: Texts of anti-fraud bills are available on the Coalition’s website here.

P U B L I C    O U T R E A C H

* How do you stretch dollar bills to the moon and back 16 times? Line up the $80 billion of insurance money that’s stolen each year, the Coalition conservatively estimates. Learn more about how big $80 billion is — and use the info in your own consumer outreach. Other cool factoids … You can buy Thanksgiving dinners for 16 million festive gatherings of 10 guests every year for the next century … and 219,280 new homes — half of annual home buyers in the U.S.

Visit to read articles citing the Coalition.

C R I M I N A L    C O N V I C T I O N S

* The instigator of a deadly arson explosion that leveled much of an Indianapolis neighborhood has died in the hospital. Cause of death still is being determined. Mark Leonard helped rig a microwave to trigger a natural-gas line that he and his helpers opened inside the house. The goal was to burn down the place for $300,000 of insurance money. The gas exploded instead. The house was wrecked. Two next-door-neighbors were incinerated in their own home, and numerous other houses were destroyed. Neighbors were traumatized by the blast, which caused millions of dollars in damage. Leonard and his half-brother Bob were handed life in prison. Even more foreboding, Mark was dishonored with induction into the Insurance Fraud Hall of Shame.

* Insurance agent Jeremy Lee Olson took in client premiums though didn’t buy coverage. Twelve clients had their policies canceled because the Boyd, Minn. agent paid premiums too late or not at all. A client suffered a house fire yet couldn’t collect full coverage for damaged vehicles because the policy was cancelled for nonpayment. The client lost $5,864. The scam was discovered after Olson sold Montevideo Insurance Center. The new owners found discrepancies between billings and actual policies that Olson had handled. The Minnesota Department of Commerce uncovered at least $9,234 in premiums that weren’t used to buy the requested coverage. Olson received 30 days in county jail for insurance fraud, and must repay $22,723.
* Jean Davilmar refused to leave his holding cell for his fraud sentence. The Brooklyn man’s lawyer was willing to finish without Davilmar, but the judge wanted him present. Davilmar and 5 cohorts created fake business partnerships, using false documents to obtain lower-priced commercial vehicle insurance. Davilmar created at least a dozen fake partnerships and bought more than $250,000 in commercial policies plus registrations. To lower their premiums, ring members lied that the vehicles were driven for low-risk businesses such as delivering packages, performing carpentry or doing photography. They also falsified the locales where the vehicles were operated and garaged, and misrepresented the vehicle operators. They also used the fraudulently obtained insurance cards as proof of coverage to register the vehicles. Some policies were canceled for nonpayment, and insurers started asking nosy questions about others. The gang thus opened another policy under a fake partnership and transferred the vehicles onto the new policy. Davilmar faces up to 7 years in prison when he’s ordered back for sentencing on Feb. 22.

* Threats and thefts demarked Jose Agosto’s fraud binge. The Worcester, Mass. man lifted the ID of a disabled man, using the info to get $140,000 of Medicare treatment. The victim lived in Puerto Rico, and was a relative of someone who lived with Agosto. Pretending to be his own cousin, Agosto made death threats to a relative of the victim. He left 2 voice messages threatening “a massacre” if he found out his “cousin” (Agosto) went to jail. “… if my cousin goes to jail ... I’m going to start killing all of your family one-by-one … once my cousin goes to jail, all your family are dead. … This is not a threat. This is a promise, honey.” The feds promise Agosto up to 20 years in jail when he’s sentenced for each of several wire-fraud charges. Aggravated ID theft, Social Security fraud and other charges could extend his stay in prison.

C R I M I N A L   C H A R G E S 

* A reputed Philly mob boss made a fortune in stolen insurance money for an East Coast crime syndicate by bribing corrupt docs to write bogus scripts for pain creams, the feds charge. The suspected crime: Joey “Skinny Joey” Merlino was among 4 dozen suspected hoods busted in a federal crackdown on the syndicate in Pennsylvania, New Jersey, New York and Massachusetts. A Genovese family turncoat named John Rubeo was wired and took down Merlino. Joey also ran an illegal sports betting racket, the feds say. Merlino left the mob and reinvented himself as a restauranteur in South Florida after too many hits were taken out on him as a crime boss.

* A rehab clinic staged crashes then lodged more than $1 million of bogus physical-therapy claims with auto insurers, the feds charge in Grand Rapids, Mich. The allegations: Primary Rehab Center hired recruiters to find real and fake crash victims. The “victims” were paid $500-$1,000 each. The clinic coached patients on what symptoms to report to docs to obtain a prescription for physical therapy. The victims then went to Primary Rehab, which made more than $1 million in bogus physical-therapy claims. Clinic owners Maria Del Carmen Ramirez-Rodriguez and Marvin David Ramirez each faces up to 20 years in federal prison if convicted.

* Oscar Arnelson Rodriguez-Cruz facilitated the hiring of undocumented laborers in a $2.5-million workers-comp premium theft, the feds charge in Jacksonville, Fla. As alleged: Rodriguez-Cruz created a shell company to provide construction firms with mostly undocumented aliens living in the U.S. The firms hired them as subcontractors to illegally avoid paying full workers-comp premiums, and to disclaim responsibility for hiring illegals. Rodriguez-Cruz also created a firm called Gedeon Multiservices and bought a basic comp policy covering 5 employees with a $121,000 annual payroll. The premium was $20,473. Rodriguez-Cruz “rented” the policy to numerous construction firms and subcontractors that employed hundreds of workers. The comp insurer sent them insurance certificates as purported proof of coverage. The contractors and subcontractors wrote payroll checks to the shell company. Rodriguez-Cruz cashed the checks, and construction crew leaders paid the workers in cash. Rodriguez-Cruz cashed $15.6 million of payroll checks, keeping $626,817 in “rental fees.” The annual premium for a $15.6-million payroll would’ve exceeded $2.5 million. Rodriguez-Cruz could spend up to 20 years in federal prison on each of 21 federal wire-fraud counts if convicted.

* Marines and sailors were pawns in a $66-million plot to soak the federal military insurance program, prosecutors charge in San Diego. As the feds allege: A husband-wife team owned a compounding pharmacy in Bountiful, Utah. Military members in San Diego were bribed to recruit other service members for a fake medical study. They were paid $100-$300 to speak with a doctor in a telemedicine session. Then they were prescribed compound meds — some in cream form. Many of the compounds came from a Utah pharmacy then owned by Jimmy and Ashley Collins. Compound meds billed to the military insurer skyrocketed from 218 in 2013 to 4,637 in just the first four months of 2015. The latter batch scored $67.3 million in claims. The Collinses were paid $45 million in kickbacks. They bought property around Tennessee, a yacht and luxury cars, including 2 Aston-Martins. No word on potential sentence if they’re convicted.

* Sitting on more than $1 million in the bank, Galit Levi said her income was near poverty level in a plot to steal nearly $70,000 in benefits from Medicaid, prosecutors charge in New York City. Levi said she was unemployed, and that she and her hubby made just $1,750 a month. That wasn’t enough to support the adults and 4 kids. The Queens woman was approved for Medicaid and received $67,000 of benefits over about 3 years. A review of the couple’s bank accounts, however, allegedly show more than $1.3 million of deposits. Levi could spend up to 15 years in jail if convicted.

* A retired urologist got mixed up with a crooked pain-management clinic and could pay with his freedom. Jose Leyson was hired as medical director of a pain clinic in Newark, N.J. As the feds see it: Leyson illegally sold oxycodone scripts to a confidential source acting for law enforcement. Leyson performed no medical treatments or patient exams. He provided the confidential source with at least 420 pills. Leyson and others at the clinic also made phony claims to Medicare and Medicaid for allergy tests that Leyson prescribed without examining patients. The suspects stole at least $30,000 from Medicare and Medicaid. Leyson could spend 20 years in federal on the oxy charges, and 10 years for healthcare fraud.

C I V I L  &   A D M I N I S T R A T I V E   A C T I O N S

* Three attorneys recently were disciplined in Florida: Francisco Aguero (Coral Gables) was suspended after the state bar discovered he had just $36.97 in his client trust account. The balance should’ve been about $135,000. … Elaine Laura (Margate) was disbarred for misusing trust funds meant for a client’s medical expenses. The client discovered the issue when a $6,200 check bounced and was quickly repaid. … Vincent Pravato (Fort Lauderdale) was suspended for an auto scheme. Pravato made fraudulent no-fault claims after paying for referrals from tow truck drivers, auto repair workers and others. Pravato also received 5 years of probation in criminal court.

C O U R T   D E C I S I O N S

* Lack of evidence overturned the Medicare convictions of a doc and owner of a home healthcare firm in New Orleans. Dr. Pramela Ganji was accused of bilking Medicare by making bogus referrals for home healthcare. She was a medical director for Christian Home Health Care. Elaine Davis owned the outfit, which received $28.2 million from Medicare. Yet none of the feds’ cooperating witnesses directly implicated Ganji or Davis, the U.S. District Court ruled. The most-crucial witnesses were based 50 miles away in Ponchatoula. The judges called the government’s reliance on witnesses from the north shore “peculiar.” Several medical professionals who pleaded guilty also said they never discussed Medicare fraud with Davis. The government’s case amounted to an argument that Davis “should have known” her business was involved in Medicare fraud. Prosecutors had to show Ganji actually knew about it, the court ruled. Davis was serving an 8-year federal sentence, and Ganji 72 months. They’re now free.


* Medicare is extending a moratorium on new home healthcare agencies in the troubled states of Florida, Illinois, Michigan and Texas. New non-emergency ambulances are blocked in New Jersey and Pennsylvania. The moves signify there’s enough fraud in those locales to merit the stoppages while the feds clean up the scams. Home-health agencies are beset with Medicare cheating in many areas of U.S. — enough to become a federal anti-fraud priority. In fact, about 1 of every 4 home-health agencies have high-enough Medicare billings to raise investigative eyebrows with the feds.

F R A U D    T R A C K E R

A Philly mob boss is in trouble. … A notorious Indiana arsonist dies in the hospital. … Marines and sailors are duped in San Diego. Click the map to read about these and other cons.

Q U O T E   O F   T H E   W E E K

F A C E S   O F    F R A U D

Joseph Merlino
Philadelphia, PA
Drug diversion
Johnathan Dobbins
El Paso, TX
Auto claim
Oran Lewis
Columbus, OH
Workers comp
Delilah Smith
Gwinnett County, GA
Business arson
Natem Stonic
Sumter County, FL
Auto claim

Click on image for more information.

O T H E R   H E A D L I N E S

* Mississippi agent steals from client’s cashed-out policy
* 2 charged in arson, insurance fraud case
* Couple charged with illegally selling prescription medical devices


March 7  — 2018 GA IASIU Insurance Fraud Seminar
Kennesaw, GA (IASIU - Georgia Chapter)

March 7  — 2018 Ohio Joint Insurance Fraud Seminar
Columbus, OH (NSPII)

April 11-13  — 29th Annual Anti-Fraud Conference
Monterey, CA (Anti-Fraud Alliance/NCFIA)

June 4-5  — Coalition Midyear Membership Meeting
Orlando, FL (Coalition Against Insurance Fraud)

June 6-8  — FIFEC 26th Annual Conference
Orlando, FL (FIFEC)

June 11-13  — 9th IASIU Europe Insurance Fraud Seminar & Expo
Vienna (IASIU)

September 9-12  — IASIU 2018 Seminar
Baltimore, MD (IASIU)