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Examples of Insurance Fraud Investigations - Fiscal Year 2014

The following examples of insurance fraud investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.

Two Businessmen Sentenced for Million-Dollar Insurance Scam
On May 22, 2014, in Charleston, West Virginia, James Gregory Glick, of Logan, and William Jamey Thompson, of Chapmanville, were sentenced to 87 months and 60 months in prison, respectively, and ordered to pay $1,010,000 in restitution to General Star, for a conspiracy to burn a building and fraudulently collect the insurance proceeds. In January 2012, Glick purchased a commercial building located in downtown in Logan for $50,000, across the street from the restaurant he owned and operated, the 317 Steakhouse (317).  He then worked with Thompson, owner of the insurance agency Baisden & Associates, to obtain a $1 million insurance policy on the property from General Star Indemnity Company (General Star).  Thompson, in exchange for placing coverage, received $50,000. During the early hours of Feb. 1, 2012, co-conspirator Guy R. Miller, Jr., enlisted the assistance of Shawn C. Simon and Michael D. Williams to help torch the building. The three culprits were caught on 317’s security camera; Glick had Miller and Simon destroy the restaurant’s digital video recorder in order to conceal the crime. Without sufficient evidence of the arson, General Star paid Glick the $1,010,000 insurance policy proceeds in May 2012, and Glick began sharing the money with his co-conspirators. In June 2013, criminal investigators from the IRS, working with the West Virginia State Police, seized the remaining $450,000 in fraud proceeds from accounts controlled by Glick. Over the course of the next six weeks, the agents developed cooperating witnesses, who obtained audio and video recordings of efforts by Glick to obstruct the federal grand jury investigation by paying Miller $8,000 to provide false testimony if he was called as a witness. The Court also ordered Glick and Thompson to reimburse the City of Logan $3,900 for emergency personnel response costs. Miller, Williams and Simon will be sentenced at a later date.  

Texan Sentenced for Massive Fraud Scheme
On March 6, 2014, in Houston, Texas, Kelly Taylor Gipson, of Rockwall, Texas, was sentenced to prison for 48 months and three years of supervised release. In addition, Gipson was ordered to jointly pay $9,651,660 in restitution with Charles Craig Jordan to 503 victims of a life settlement investment fraud scheme. According to court documents, Gipson and Jordan misappropriated investor funds which ultimately resulted in policies lapsing and investors losing their investment.  A life settlement is an investment in which a person, who is typically elderly or terminally ill, sells his or her life insurance policy for a cash payment, which is a percentage of the life insurance policy’s face value or death benefit payable by the insurance company upon the insured’s death. The scheme defrauded investors from around the United States and Canada who invested millions in the life settlement offerings of Secure Investment Services and American Settlement Associates. Jordan was sentenced in December 2013 to 156 months in federal prison.

Six More Defendants Sentenced in Staged Automobile Accident Scheme
On February 4, 2014, in Miami, Fla., six defendants were sentenced for their participation in an automobile insurance fraud scheme involving staged automobile accidents. To date, 92 defendants have been charged for their participation in this automobile insurance fraud scheme. Sentenced today were:
• Elias Sebastian Munguia, clinic owner, sentenced to 102 months in prison, three years of supervised release and ordered to pay $3,491,516 in restitution.
• Aleida Capdevila, clinic office manager, sentenced to 53 months in prison, three years of supervised release and ordered to pay $1,039,928 in restitution.
• Yenisleydi Ramos, front desk receptionist and secretary, sentenced to 50 months in prison, three years of supervised release and ordered to pay $1,666,028 in restitution.
• Juan Francisco Avon, licensed massage therapist, sentenced to 38 months in prison, three years of supervised release and ordered to pay $866,801 in restitution.
• Oscar Montiel Martinez, staged accident participant, recruiter and check casher, sentenced to 76 months in prison, three years of supervised release and ordered to pay $1,359,208 in restitution.
• Teresita Mena, staged accident participant and check casher, sentenced to 66 months in prison, three years of supervised release and ordered to pay $1,321,459 in restitution.
According to court documents, between approximately October 2006 and December 2012, the conspiracy members staged automobile accidents by recruiting individuals to participate in the accidents. The clinic owners, including Munguia, then submitted false insurance claims through chiropractic clinics that were controlled by members of the conspiracy. To execute the scheme, Munguia and other true clinic owners, recruited individuals who had the medical or chiropractic licenses required by the state to open a clinic, to act as “nominee owners” of the clinics. The co-conspirators also hired complicit licensed chiropractors, and licensed chiropractic physicians’ assistants, who prescribed and billed for unnecessary treatments and/or for services that had not been rendered. Thereafter, claims were prepared and submitted to the automobile insurance companies for payment of unnecessary or non-rendered services. Once fraud proceeds were received from the insurance companies, Munguia and Capdevila recruited individuals, including Martinez, Ramos, and Mena, to help the clinics launder the insurance proceeds.

Three More Defendants Sentenced in Staged Automobile Accident Scheme
On November 4, 2013, in Miami, Fla., Aaron Freedlander, Luis Ivan Hernandez, and Daviel Castro were sentenced for their participation in an automobile insurance fraud scheme involving staged automobile accidents. Freedlander was sentenced to 40 months in prison, two years of supervised release and ordered to pay $900,697 in restitution. Hernandez was sentenced to 108 months in prison, three years of supervised release and ordered to pay $4,232,248 in restitution. Castro was sentenced to 58 months in prison, two years of supervised release and ordered to pay $1,359,208 in restitution. Freedlander will also be required to surrender his chiropractic license. Each of the defendants previously pleaded guilty to conspiring to commit mail fraud and mail fraud. Hernandez and Castro were also charged with conspiring to commit money laundering and money laundering. According to court documents, between approximately October 2006 and December 2012, the conspiracy members, including Castro, staged automobile accidents by recruiting individuals to participate in the accidents. The clinic owners, including Hernandez, caused the submission of false insurance claims through chiropractic clinics that were controlled by members of the conspiracy. To execute the scheme, the true owners of the chiropractic clinics recruited individuals, who had the medical or chiropractic licenses required by the state to open a clinic, to act as “nominee owners” of the clinics. The co-conspirators also hired complicit chiropractors, including Freedlander, and therapists who prescribed and billed for unnecessary treatments and/or for services that had not been rendered. Thereafter, complicit clinic employees prepared and submitted claims to the automobile insurance companies for payment for these unnecessary or non-rendered services. Twenty-one clinics participated in this scheme. Hernandez was the “true owner” of six of those clinics. Furthermore, once fraud proceeds were received from the insurance companies, the clinic owners recruited individuals to help the clinics launder the insurance proceeds.   

North Carolina Farmer Sentenced in Million Dollar Crop Insurance Fraud
On October 31, 2013, in Raleigh, N.C., Harry Dean Canady, of Lumberton, N.C., was sentenced to 72 months in prison, five years of supervised release and ordered to pay $1,036,516 in restitution. On December 19, 2012, Canady pleaded guilty to conspiracy to make false statements, to make material false statements, and to commit mail and wire fraud; false statements to the Federal Crop Insurance Corporation; aggravated identity theft; felon in unlawful possession of a firearm; and retaliation against a federal official. According to court records, Canady owned and rented farmland in Robeson County, N.C., and produced, among other crops, tobacco, corn, wheat and soybeans. From August 2006 through December 2009, Canady conspired with others to commit fraud to profit through the filing of false, fictitious, and fraudulent federal crop insurance claims, the sale of unreported tobacco and other grains, and to hide the criminal proceeds through payments and sales in nominee names. Canady profited under the scheme because he was paid twice for each pound or bushel of his crop: once through the false crop insurance claim, and also through the sale of the “hidden” tobacco or “hidden” grain. Canady and other co-conspirators misrepresented the truth of farm operations in a variety of documents, including applications, reports of actual production history, acreage reports, and claim forms made and submitted in support of crop insurance coverage. In addition, they submitted claims that failed to truthfully show who had an insurable interest and who really suffered a loss and the extent of that loss which were submitted to the Risk Management Agency, an agency of the United States Department of Agriculture, and private entities. The investigation further revealed that Canady took the criminal proceeds obtained through other acts of aggravated identity theft and federal crop insurance fraud, and engaged in various financial transactions with those funds, including causing his daughter to deposit an $84,655 check into a financial institution and to transfer the funds to an account controlled by him. These funds were derived from the unreported sale of 23,730 bushels of corn in the name of a grandchild.

Two More Defendants Sentenced in Staged Automobile Accident Scheme
On October 28, 2013, in Miami, Fla., Maykel Marquez, of Jupiter, and Noelia Marichal, of West Palm Beach, were sentenced for their participation in an automobile insurance fraud scheme involving staged automobile accidents. Marquez was sentenced to 58 months in prison, two years of supervised release and ordered to pay $1,177,775 in restitution. Marichal was sentenced to 48 months in prison, two years of supervised release, and ordered to pay $1,359,208 in restitution.  Each of the defendants previously pleaded guilty to one count of conspiring to commit mail fraud, multiple counts of mail fraud, and one count of conspiring to commit money laundering. Marquez also pleaded guilty to multiple counts of money laundering. According to court documents, between approximately October 2006 and December 2012, the conspiracy members staged automobile accidents by recruiting individuals, including these defendants, to participate in the accidents. Thereafter, the clinic owners caused the submission of false insurance claims through chiropractic clinics that were controlled by members of the conspiracy. To execute the scheme, the true owners of the chiropractic clinics recruited individuals, who had the medical or chiropractic licenses required by the state to open a clinic, to act as “nominee owners” of the clinics. The co-conspirators also hired complicit chiropractors and therapists who prescribed and billed for unnecessary treatments and/or for services that had not been rendered.  Thereafter, complicit clinic employees prepared and submitted claims to the automobile insurance companies for payment for these unnecessary or non-rendered services. Twenty-one clinics participated in this scheme. Furthermore, once fraud proceeds were received from the insurance companies, the co-conspirators also recruited individuals including these defendants, to help the clinics launder the insurance proceeds. Sentencing documents showed that Marquez cashed checks worth $568,517 and Marichal cashed checks worth $101,344 in laundered proceeds.

Defendants Sentenced in Florida Staged Automobile Accident Scheme
On October 21, 2013, in Miami, Fla., Wilfredo Sauceda and Nelson Felix Martinez Torres, both of West Palm Beach, Fla., were sentenced for their participation in an automobile insurance fraud scheme involving staged automobile accidents. Sauceda was sentenced to 40 months in prison, three years of supervised release and ordered to pay $643,964 in restitution. Torres was sentenced to 70 months in prison, three years of supervised release and ordered to pay $1,359,208 in restitution. Each of the defendants pleaded guilty to conspiring to commit mail fraud, mail fraud, conspiring to commit money laundering, and money laundering. According to court documents, between approximately October 2006 and December 2012, the members of the conspiracy staged automobile accidents and caused the submission of false insurance claims through chiropractic clinics they controlled. To execute the scheme, Maria Testa Baceiro, one of the true owners of some of the chiropractic clinics involved in this scheme, and others recruited individuals who had the medical or chiropractic licenses required by the State of Florida to open a clinic to act as "nominee owners" of the clinics. The defendants also recruited individuals, including Yeisy Chouza, to participate in the staged accidents, and others to help the clinics launder the insurance proceeds. The defendants hired complicit chiropractors and therapists, including licensed massage therapists Olinda Rodriguez and Iris Roca, who prescribed and billed for unnecessary treatments and/or for services that had not been rendered. Clinic employees prepared and submitted claims to the automobile insurance companies for payment for these unnecessary or non-rendered services. Defendants Yeisy Chouza, Wilfredo Sauceda, and Nelson Felix Martinez Torres also worked cashing checks for various chiropractic clinics. Other defendants recently sentenced in this case were:
• Maria Testa Baceira, aka Maria Testa, of Miami, was sentenced to 72 months in prison, two years of supervised release and ordered to pay $4,232,248 in restitution,
• Olinda Rodriguez, of West Palm Beach, was sentenced to 50 months in prison, two years of supervised release and ordered to pay $1,447,139 in restitution,
• Yeisy Chouza, of Miami, was sentenced to 40 months in prison, two years of supervised release and ordered to pay $558,261 in restitution, and
• Iris Roca, of Davie, was sentenced to 50 months in prison, three years of supervised release and ordered to pay $1,135,577 in restitution.

Fiscal Year 2013 - Insurance Fraud Investigations

Fiscal Year 2015 - Insurance Fraud Investigations


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Page Last Reviewed or Updated: 20-Oct-2014