Examples of Insurance Fraud Investigations - Fiscal Year 2013
The following examples of insurance fraud investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Louisiana Man Sentenced in Insurance Fraud Scheme
On May 16, 2013, in Baton Rouge, La., Timothy R. Schlatre, of Denham Springs, La., was sentenced to 57 months in prison, two years of supervised release, and ordered to pay $1,424,931 in restitution to his victims. Schlatre pleaded guilty on December 7, 2012 to money laundering and mail fraud. According to court documents, Schlatre was a life insurance agent. He recruited individuals and persuaded them to submit false information to the companies regarding their net worth and annual income, which caused the insurance companies to approve the policies and issue the commission payments to Schlatre. Because the policy values were so large, the applicants could not afford to make the premium payments. In order to accomplish his scheme, Schlatre further agreed to provide the premium payments on behalf of the applicants. This process, known as “rebating,” was prohibited by both company’s policies as well as state law. In order to conceal the fact that he was the source of the premiums, Schlatre deposited money directly into the individual applicant’s bank account. Schlatre further misrepresented the source of the premium payments by falsely declaring that he was not paying or allowing the rebating of any premiums.
Michigan Arson Ringleader Sentenced for Arson, Money Laundering and Other Federal Charges
On May 8, 2013, in Detroit, Mich., Ali Darwich, of Beverly Hills, Mich., was sentenced to 137 years in prison for arson and other charges related to wire fraud, mail fraud, and money laundering. According to trial evidence, beginning in 2005, Darwich, along with eight co-defendants, ran an arson-for-profit ring in the greater Detroit metropolitan area. Specifically, Darwich, along with his co-conspirators, would purchase insurance for various dwellings, businesses and vehicles. After purchasing the insurance, Darwich and others would intentionally burn, vandalize, or flood the various properties or vehicles and then file false insurance claims seeking reimbursement for such things as structural repair, contents replacement, loss of profits and alternative living costs. Seven insurance companies were defrauded for over $5 million.
Texas Man Sentenced in Insurance Fraud Scheme
On April 10, 2013, in Houston, Texas, Robert Steve Mills, of Bonita Springs, Fla., was sentenced to 120 months in prison, three years of supervised release and ordered to pay $2,455,531 in restitution for his participation in an insurance scam. Mills pleaded guilty on July 26, 2012 to conspiracy to money laundering. According to court documents, Mills conspired to launder the proceeds of a fraud scheme that sold fake liability insurance policies through "benefit associations" operated from Texas and through a company domiciled in American Samoa. The fake insurance was purchased by apartment complexes, condominium associations, bars, restaurants, trucks, taxi cabs, charter aircraft services and other businesses in the United States and Caribbean. One company that purchased the insurance was Shoreline Cruises Inc., which operated a 40-foot tour boat on Lake George, N.Y. The tour boat operator discovered its insurance policy was fictitious after the boat sank in October 2005. Three others were previously sentenced in this scheme. Christopher Purser was sentenced to 188 months in prison, Edmund Benton was sentenced to 120 months in prison and Malchus Irvin Boncamper was sentenced to 97 months in prison.
North Carolina Crop Insurance Adjuster Sentenced
On February 20, 2013, in Raleigh, N.C., Jimmy Thomas Sasser was sentenced to 48 months in prison and three years of supervised release and ordered to pay $21,045,917 in restitution. On February 21, 2012, Sasser pleaded guilty to conspiring to make false statements, making material false statements and committing mail and wire fraud. According to court documents, Sasser, a crop insurance adjuster, received cash pay-offs from 1996 through 2007 to falsify claims regarding the scope of damage or the farmer’s true tobacco production on a particular acreage. The scheme consisted of adjusters, including Sasser, who would submit a false assessment of loss, which was mailed or wired to the insurance company. The co-conspiring insurance agent would collect pay-offs for the inflated loss adjustments from the co-conspiring farms and would share the monies with the adjusters.
Arizona Man Sentenced for Role in Scheme
On November 26, 2012, in Phoenix, Ariz., Mark Islas was sentenced to 22 months in prison, three years of supervised release and ordered to pay $953,176 in restitution. Islas pleaded guilty on June 25, 2012 to mail fraud and money laundering. According to his plea agreement, Islas was employed as a representative of Woodbury Financial Services selling life insurance and brokerage services to clients in the Republic of Mexico and the United States. Beginning in 2002, Islas and others embezzled clients' insurance premium payments for their personal use. Islas created a corporation, International Financial Services Group (IFS Group) and opened a bank account in the corporation's name to deposit the money they embezzled. He then transferred the money to personal bank accounts for his own personal benefit. To cover their actions, Islas and his co-defendant opened numerous postal boxes in the names of clients and changed the clients' address in the system so the statements would be sent to the postal boxes not the true clients. Additionally, Islas created false account statements for the victim clients which were hand-delivered. He also made minimal payments to the clients' life insurance policies to keep them from lapsing.