David Morse & Associates - Fighting Insurance Fraud Helps Consumers

"At any given moment, newspapers in dozens of cities across the U.S. feature stories about insurance fraud," says Tom Reitze, President of David Morse & Associates (www.davidmorse.com), providers of third-party administrator services, field adjusting services, specialty claims services, and fraud investigations. "Most consumers don't realize that 25 percent of their insurance premiums are ultimately used to pay fraudulent claims."

Indeed, in San Jose, Calif., 25 people in an auto fraud ring were recently indicted for allegedly staging and reporting two dozen fake car accidents during a five-year period, bilking insurance companies out of an estimated $400,000. David Morse & Associates and other companies provided critical information that led to the arrests and indictments. In Bridgeport, Conn., a woman was recently convicted of torching her home in order to collect from her homeowner's insurance policy. And, in Sutton, Mass., a man pleaded guilty to worker's compensation fraud for collecting $70,000 in disability benefits while secretly working in a physically demanding job.

According to Reitze, David Morse & Associates is committed to combating insurance fraud, which ultimately helps consumers by keeping insurance premiums in check. "The premise of insurance is pooled risk, but when the bad guys bilk insurance companies, honest people suffer through higher premiums," he says. "That's why our fraud investigation unit prides itself in catching fraudsters in the act."

Reitze readily recalls any number of claims where David Morse & Associates fraud investigators and adjustors employed dogged legwork, quick thinking, and expertise to keep their clients from being defrauded and help honest consumers in the process.

In one instance, a David Morse & Associates investigator was assigned to a person alleging total disability who happened to live in a rural farming community. The investigator was inventive in locating the residence of the man, but when he was not at home, the investigator had to turn to townspeople for help. The investigator was told that the "disabled" claimant was building a house in a nearby town. Reitze points out with pride, "Although the investigator was required to videotape the man, he found himself in the midst of fields, with no place to hide his vehicle. Using his imagination, he staged a vehicle breakdown on the side of the highway, and managed to capture video of the man bouncing around over rough ground on a tractor and manhandling bales of hay. Thanks to the inventiveness of the investigator, the videotape was enough to end the disability claim of the farmer."

In another situation, a David Morse & Associates truck adjustor found himself at odds with the California Highway Patrol. After a tractor-trailer collided with a van and overturned on a Los Angeles freeway, the CHP made a determination that the rig had been speeding. Although the adjustor knew that the truck had an engine governor that prevented it from speeding, the CHP wouldn't budge, exposing the trucking company to a million-dollar liability suit. The relentless adjustor duplicated the conditions with a replica truck and load, and had a CHP expert ride along, which convinced the CHP that the truck wasn't speeding. Following his suspicion the van was actually backing up on the freeway when it was hit, the adjustor consulted with David Morse & Associates' reconstruction engineer. His theory was confirmed when the lab discovered the telltale signs of stretched filaments in the van's taillights, indicating that the van had been in reverse and the backup lights were on at the time of impact. Because of the adjustor's diligence, the million-dollar claim was arbitrated for a relatively small amount.

Notes Reitze, "The adjustors at David Morse & Associates know that doing the right thing also means stepping in and helping people who are legitimately injured." When they do so, it often helps both the injured person and David Morse & Associates' insurance client.

As an example, a truck driver was making a turn and didn't see a pedestrian in the crosswalk. The truck screeched to a halt, but the man was knocked backwards and struck his head on the pavement. The David Morse & Associates adjustor arrived on the scene quickly, only to find passersby surrounding the man trying to get him an attorney. Although the man refused ambulance services, the adjustor could see that he was shaken and concerned. The adjustor quickly came up with a solution and drove the pedestrian to the Emergency Room himself. Moreover, the adjustor arranged for the client's Safety Director to pay for the $2,000 medical bill. The pedestrian was given a clean bill of health and was pleased with the outcome and attention he received.

The corporate culture at David Morse & Associates can be summed up by the maxim, "doing well by doing good." With 42 branches in 16 states, the company values the expeditious and personalized service they provide to their clients. "In the process, we do our part to help fight insurance fraud, which benefits both insurance companies and consumers," concludes Reitze.

Kris Nickerson
http://www.articlesbase.com

How Insurance Fraud Affects you

If you have tried to renew your home or car insurance recently you may well have noticed insurance premiums starting to increase. One of the main contributing factors in this increase is a rise in fraudulent insurance claims.

Fraudulent claims are made mostly on home and car insurance policies and according to the Association of British Insurers false claims cost UK insurance companies some £1.6billion a year.

So how does this affect you? While insurance companies have indicated a commitment to tackling the issue the fact remains that the problem costs them around £4million a day. This loss has to be recouped in some way and in many instances is passed onto the consumer. You are effectively paying for the fraudulent actions of other people; on average the impact of fraudulent claims adds around £40 onto your insurance premiums.

When it comes to car insurance you are effectively being hit with a double whammy. Not only are you paying for other peoples fraudulent activities but you are also paying to cover the UK’s growing number of uninsured drivers.

With these two factors forcing up the cost of car insurance it is no surprise that some people are noticing a rise in their premiums. These price increases are commonly found in the renewal letter sent by your insurance company.

However, rather than simply accept the increase you have the option to act and switch you car insurance to another provider. The car insurance market is fiercely competitive with companies eager to increase their customer base. You, the customer, can use this to your advantage. An online search for car insurance can quickly illustrate the possible savings you make by moving to another insurance company.

If, like many other honest individuals, you are unwilling to pay for other people’s insurance fraud you can put pressure on your insurance company by switching your motor insurance to another provider. You could even make a worthwhile saving in the process.

Peter Ecob
http://www.articlesbase.com

New Hampshire Insurance Commissioner and AG Announce Insurance Fraud Conviction

December 20, 2007 -- New Hampshire Attorney General Kelly A. Ayotte and Insurance Commissioner Roger A. Sevigny announced today the conviction of Terri Chase for one count of Insurance Fraud following an automobile accident.

Chase, age 26, of Fremont, NH, pled guilty to one count of Insurance Fraud under RSA 638:20 at the Rockingham County Superior Court. She was sentenced to 6 months in the Rockingham County House of Corrections, deferred for 2 years and suspended for an additional year following the deferment. The sentence is expressly conditioned upon good behavior, payment of $450 restitution to Allstate Insurance Company for rental car payments, payment of a $4000 fine and an apology letter to Allstate. Chase was given the option of performing community service in lieu of the fine.

“My fraud investigation team is committed to stopping the crime of insurance fraud, and will continue to work with the Attorney General’s office to bring criminals to justice,” said Insurance Commissioner Sevigny. Attorney General Ayotte said, “This case is an example of our teamwork with the Insurance Department to seek justice and prevent insurance fraud for the benefit of New Hampshire citizens.”

The charges stem from an automobile accident, on or about March 28, 2007, that resulted in front-end damage to Chase’s car. At the time of the accident, Chase’s insurance policy with Allstate had lapsed and she was aware that this accident would not be covered. Following the accident, the insurance policy was reinstated. Chase then made a claim to Allstate, pursuant to this insurance policy, for payment for front-end damage to her car. During a meeting with an Allstate investigator, Chase falsely claimed that the damage to her car occurred on April 5, 2007, while she had insurance coverage. Chase knew that her statement about the date of accident was false, incomplete or misleading and that this information was material to her claim for payment for damage to her car. Chase’s purpose was to deceive or defraud Allstate. The damage to Chase’s automobile was estimated at $4097.26, with a $250 deductible.

The charge is a Class A felony which carries a maximum penalty of 7½-15 years incarceration and a fine of $4000 or an amount not to exceed double the amount of property gained in the commission of a felony.

The case was investigated for Allstate by Alan Vigneau, an investigator in the carrier’s Special Investigations Unit. The case was then referred by Allstate to the New Hampshire Insurance Department Fraud Unit, as required by RSA 417:28.

The conviction is the result of a joint investigation conducted by the Attorney General’s Office and the Insurance Department Fraud Unit. Pursuant to RSA 417:23, the Fraud Unit was formed to investigate Insurance Fraud and other insurance-related criminal activity. Fraud Unit Investigator Karen L. McCallister conducted the investigation on behalf of the Insurance Department.

The collaboration between the Insurance Department and the Department of Justice in investigating and prosecuting insurance fraud crimes is unique. The agencies have entered into a special agreement to join forces to fight insurance crimes. The insurance fraud prosecutor position was created within the Insurance Department, but the prosecutor functions as an Assistant Attorney General, and has the same authority as all Department of Justice prosecutors to act on behalf of the State of New Hampshire. The insurance fraud prosecutor is able to focus exclusively on insurance related crimes, and thus these complex cases are handled by a prosecutor who has expertise in this highly technical field.

Source: New Hampshire Attorney General
http://www.allamericanpatriots.com

Special interview with Summit TV

Summit TV speaks to Jacqui Jooste from Coface about the spate of credit applications where fraudulent operators posing as blue chip companies take delivery of goods and then vanish into thin air

ERIKA VAN DER MERWE: Welcome to Business and Insurance, my guest is Jacqui Jooste from Coface. Jacqui, you’re highlighting a new form of identity fraud - this time targeting companies - and I understand it has significant financial consequences for businesses?

JACQUI JOOSTE: Yes, especially over the last six weeks or so we’ve picked up a huge increase in this identity fraud - and it has huge financial implications. On the insurance side we at Coface South Africa offer credit insurance - however criminal activities and fraudulent activities are not covered under that insurance policy.

ERIKA VAN DER MERWE: So that’s a warning about why companies should listen to your story today - what is it that these fraudsters do?

JACQUI JOOSTE: They will misrepresent themselves as being part of a large well-known company open up accounts with a whole lot of suppliers and then go - and then go and collect goods at those premises. Obviously the company - and us as the credit insurers - will grant that credit without batting an eyelid because they are well known companies, however these fraudsters misrepresent themselves totally.

ERIKA VAN DER MERWE: How can something like this happen? I understand you’re talking significant amounts of money - hundreds of thousands of rands...

JACQUI JOOSTE: Yes, it can be. What we believe is they will obtain copies of documentation from these companies - so they really are the proper application forms, even VAT registration numbers, copies of RD cheques - and they will use that to apply for credit.

ERIKA VAN DER MERWE: How do they get past the system? Surely there must be rigorous credit checking procedures and order procedures?

JACQUI JOOSTE: Yes. On the face of it, it’s all 100% legitimate - the directors listed are correct - so in the checks that you do you won’t pick up any devious action. What you do however need to look out for however is if they’re going to collect the goods - because that’s obviously a sign that you aren’t delivering it to the premises, they’re collecting the good from you - and how they’ve submitted the application. We find very often only cell numbers are provided and not full company details - and the application might not have been faxed from the premises so the fax isn’t actually identified.

ERIKA VAN DER MERWE: You’ve said that you’ve seen an increase in this kind of activity in the last month or so - is this typical for this time of the year and why?

JACQUI JOOSTE: Historically we have definitely seen an increase in fraudulent activity around this time of year - I think mainly it’s the end of the year people are closing off, and people are trying to push sales in the last month of the year, there’s skeleton staff, and just maybe not 100% focused on what we should be focused on at this time of year.

ERIKA VAN DER MERWE: Can you put it into perspective - how many of your clients have been affected this year, and could you put amounts to the fraud?

JACQUI JOOSTE: In the last month or so we’ve had four cases that we know of, and you’re probably looking in the region of R1.2million…

ERIKA VAN DER MERWE: None of which will be insured?

JACQUI JOOSTE: No.

ERIKA VAN DER MERWE: So just finally as a word of warning what can companies be on the lookout for? What sort of checklist?

JACQUI JOOSTE: Look out for if cell numbers are provided, if trade references are not provided correctly. Just be extra aware and extra vigilant - contact the company that is applying for credit and say “we’ve got this credit application form” and just confirm that directly with the company. That would be a good way to pickup potential fraud…

ERIKA VAN DER MERWE: Is this the dominant form of fraudulent activity within companies?

JACQUI JOOSTE: In terms of our experience as Coface South Africa in the credit insurance side yes. We have had cases in the past which are slightly different - where a company would trade for two or three years with a very good credit record, then all of a sudden increase their credit limits to all the suppliers - and then over night disappear with millions of rands worth of goods never to be found again. That’s a different type of fraud we’ve experienced in the past.

ERIKA VAN DER MERWE: As you indicate this time of the year is certainly a time to be on the lookout - be vigilant and don’t be too relaxed.

www.summit.co.za
http://transcripts.businessday.co.za

Pa. Attorney Charged in Insurance Fraud Case

A Pennsylvania solo practitioner was charged Tuesday with leading a personal injury insurance fraud scheme since 1981 that bilked insurance companies out of more than $2 million.

Personal injury attorney H. Allen Litt, 58, of Bryn Mawr, Pa., has been charged along with 14 others in a scam involving falsifying personal injuries from made-up or exaggerated slip-and-fall and auto accident cases and submitting fraudulent insurance claims, Philadelphia District Attorney Lynne Abraham said.

Litt was charged with 73 criminal counts, including 31 third-degree felonies of insurance fraud and one first-degree felony of corrupt organizations.

Litt, who was admitted to practice law in 1975, is accused of working with 100 runners who both located potential imposter claimants or posed as claimants, according to a grand jury presentment charging Litt and his co-defendants.

The imposters would obtain medical care from physicians selected by Litt and rack up inflated medical bills via numerous visits to the Litt-selected doctors, the grand jury charged. Some claimants actually took falls or had an injury from another instance but still participated in a fraudulent fall or accident claim at the behest of the runners, the grand jury charged.

Litt would file fraudulent insurance claims based on the doctors' bills and bogus photographs taken by the runners, the grand jury charged. Four runners alone brought in 300 claims for which insurance companies paid $2.5 million, according to the grand jury presentment. Runners received commissions for bringing in cases and for taking pictures of fraudulent accident scenes, the presentment charged.

Abraham cited the Charles Dickens' story "Oliver Twist" about an orphan sucked into a crime ring and called Litt the equivalent of the story's Fagin, the Dickensian criminal mastermind.

The 25 years of alleged fraud and "hundreds upon hundreds and hundreds of fake accidents" probably involved much more than the $2.5 million, Abraham said.

Abraham's office plans to seek a judge's imprimatur on an exception to the statute of limitations in order to be able to prosecute Litt for more fraud-based charges.

Litt was scheduled to be arrested at the office of his attorney, Marc Neff, at noon Tuesday, Abraham said. A call to Neff's office was not returned. There was no answer at Litt's office.

Litt also was charged with one first-degree felony count of conspiracy; 21 third-degree felony counts of theft by deception; 13 third-degree felony counts of attempted theft by deception; four counts of second-degree misdemeanor of false swearing; one first-degree felony count of dealing in proceeds of unlawful activities; and one third-degree felony, count of criminal use of a communication facility.

Litt could face up to 20 years in prison and a $25,000 fine for each first-degree felony, seven years in prison and up to a $15,000 fine for each third-degree felony, and two years in prison and up to a $5,000 fine for each second-degree misdemeanor.

The grand jury evidence included testimony from three alleged runners for Litt: Lewis Crump, a northern Philadelphia man who said he was in the "accident business," James "Big Frank" Guinn, a taxi driver who based himself at 27th and Tasker streets in southern Philadelphia and Nathaniel Shaw, who said he was a real estate investor and landlord in northern and western Philadelphia. All three men have already pleaded guilty to insurance fraud as part of plea bargains.

They revealed Litt "relied on a stable of runners like themselves to recruit friends and family members who pretended to fall and faked injuries in order to file false insurance claims. He then paid the runners, usually between $100 and $1,000 per case," the grand jury charged.

According to the grand jury presentment, the 132 claims brought by Shaw to Litt involved more than $1 million, and Shaw was paid $47,000. The 36 claims brought by Guinn to Litt brought in $100,000, and Guinn was paid $12,000, the presentment said. Crump allegedly brought 10 to 12 cases to Litt.

The runners "worked on commission and they were more than happy to recruit," Abraham said.

Shaw, who first met Litt when he was involved in a legitimate trolley accident, said Litt was aware the 132 cases he brought him were fraudulent, but Litt would pretend with these clients that he was not involved in the fraud, the grand jury charged. Litt, however, coached Shaw to choose accident sites that involved a cracked sidewalk or a broken step and no surveillance cameras; Litt also told Shaw to instruct the imposter claimants to go to an emergency room and complain of injuries from a fall, the grand jury charged.

Shaw's imposter-accident recruits complained that Litt promised them big money if they made frequent appointments with the doctors he referred to them, but that their share of settlements were tiny, according to the grand jury presentment.

Litt dismissed the complaints, the grand jury charged, and said: "Don't worry about it. They're not hurt anyway, and I got to pay the medical bills and got to pay the doctors."

Iris Kurtz, the receptionist in Litt's office, testified that Litt directed her to improperly notarize releases of settlements without obtaining the signatures of the clients, the grand jury charged.

According to the grand jury presentment, Shaw learned that an investigation was being undertaken of his and Litt's activities from two women he had recruited to take part in fraudulent claims.

In response, according to the grand jury presentment, Litt got Shaw to obtain retraction statements from both women. Those statements were not submitted to the district attorney, but instead were turned over to an investigator and were introduced as evidence in front of the grand jury.

Files were seized from Litt's office in December 2005, and Litt asked Shaw to contact the claimants involved in the cases in those files, but Shaw refused during a phone call with Litt, the grand jury charged.

"In response, Litt announced, 'things are going to get ugly,' and hung up," according to the presentment.

Guinn said that he drew claimants from 16 of his neighbors that he called the "Tasker Street Crew," according to the presentment. Guinn said he followed Litt's instructions to find holes in front of "well-off, but not too big, businesses" that didn't have a lot of attorneys to fight a case but would have more money to pay out than Chinese or Korean businesses, the grand jury charged.

Abraham said that the investigation is continuing into at least 10 doctors that Litt allegedly referred fraudulent clients to.

The investigation into Litt and his alleged cohorts began with an October 2004 tip from an insurance fraud investigator with Chubb Insurance Co., Abraham said.

A search of Litt's office revealed hundreds of documents, including accounting file cards, canceled checks and accident scene photos, according to the grand jury's presentment.

Litt was "really very helpful to us," Abraham said. "He kept great records."

Linda Perkins, chief of the District Attorney's Office's Insurance Fraud Unit, said Litt is an exception to the rule and that most attorneys are honest and withdraw a claim for a fraudulent accident.

Joshua Pitts, 63, of Philadelphia, was Litt's most active runner, according to the presentment. Over 400 checks totaling more than $190,000 were issued to Pitts from Litt, according to records seized from Litt's office, the grand jury charged.

Pitts and three of his adult children were charged each with one count of insurance fraud and related offenses, according to the District Attorney's Office. Ten alleged co-conspirators, including Crump, Guinn and Shaw, have already been arrested. Some have pleaded guilty as part of plea bargains and have agreed to testify against Litt.

Samuel Stretton, an attorney who writes an ethics column for Pennsylvania Law Weekly, The Legal Intelligencer's sister publication, and who often represents jurists in legal quandaries, said that Litt will most likely be able to continue practicing law pending the outcome of his court case.

But the Disciplinary Board of the Pennsylvania Supreme Court can seek more immediate action on Litt's law license by requesting that a hearing be held on suspending Litt from practicing law on an interim basis, Stretton said.

http://www.law.com

Detectives Seek Insurance Fraud Victims

PORTLAND, Ore. -- Portland police detectives are asking victims of fraud on the part of a Portland insurance company to contact them.

Darlene Jo Rethwill, 46, the owner and president of Trautman Perrin & Hale Insurance, is accused of fraud and violating state insurance laws.

Police said Rethwill wrote insurance policies for people and businesses and then used the insurance premiums for personal gain, instead of forwarding the money on to the appropriate insurance company.

As a result, police said it's possible that hundreds of people were without personal or business insurance and didn't even know it.

Police said Rethwill, who sold personal liability, auto, homeowner, renter and business insurance, was still at large as of early Friday afternoon.

Authorities served a search warrant at the Trautman Perrin & Hale office on Westgate Drive in Portland on Thursday.

Police said anyone who obtained insurance through the company should call their insurance provider to verify their coverage.

If they're not covered, they should call police at 503-823-0450.

http://www.kptv.com/news/

Oakland auto glass workers charged with fraud in insurance billing

The owner and three employees of a national auto glass company based in Oakland have been charged in federal court with conspiring to overcharge insurance companies by inflating invoices to show that more expensive windshields had been installed in cars.

Mehrdad "Tony" Hakimian, the owner of Glass Emporium of Marin Inc., directed his employees at his business' West Oakland headquarters and at its subsidiaries, Glass Pro and Glass Masters, to electronically revise invoices before they were submitted to insurance companies for processing and payment, according to a criminal complaint filed in U.S. District Court in Oakland.

"Make sure you train them like I want it done, to put in a cheap part and bill for a more expensive part," Hakimian told a former regional manager, the complaint said.

Hakimian, 46, of Mill Valley; and employees Emma DeGuzman of Union City, Aldy Antonio of San Leandro and Bobby Guinto of Oakland are to be arraigned Wednesday before U.S. Magistrate Wayne Brazil in Oakland on charges of conspiracy to commit wire fraud and wire fraud.

The defendants allegedly falsified invoices to reflect that a more expensive windshield or other hardware had been installed when in fact they had not, FBI Special Agent William Leoni wrote in an affidavit filed in court.

Investigators believe that the defendants were responsible for the bulk of some 5,900 fraudulent invoices, totaling more than $586,000 in potentially inflated costs billed to and paid by as many as 86 insurance companies, including State Farm, Allstate, Nationwide and Farmers Insurance, the affidavit said.

Hakimian has been in business for 14 years and runs 75 shops in 22 states, according to his Web site ( www.autoglass4u.com).

Reached Saturday at the glass company's headquarters on West Grand Avenue in Oakland, Guinto said, "I have no comment on that." The other defendants and their attorneys could not be reached or did not respond to requests for comment Saturday.

The FBI's investigation began in 2005 when a confidential source who worked at a Glass Masters shop came forward with paperwork showing 10 examples of billing irregularities, according to Leoni.

Several district managers with Glass Masters appeared to have prior knowledge of the scam, and one just shrugged his shoulders and said, "I know, they'll get in trouble for it one day" when asked about it by the source, Leoni wrote.

FBI agents and U.S. Postal Service inspectors searched Hakimian's headquarters in December 2006 and learned that it maintained a computerized billing system that contained detailed information from invoices generated at local shops, according to the affidavit.

Authorities visually inspected a number of cars that had windshields replaced at Bay Area shops operated by Hakimian. In some cases, the revised invoices falsely stated that the windshield contained a specialized solar tinting or was equipped with a rain sensor, Leoni wrote.

Hakimian encouraged customers to file a claim with their insurance company, instead of paying cash, so that he could inflate invoices, the FBI said. As an incentive to get customers to file claims, Hakimian instructed his branch managers to offer to waive the customer's insurance deductible, according to the FBI.

E-mail Henry K. Lee at hlee@sfchronicle.com.

Insurance license fraud uncovered!
http://www.moneycontrol.com/india/news/business/

The next time your insurance agent offers you advice, think about this. An unholy nexus is making sure unqualified people can buy insurance licenses. CNBC-TV18’s Priyal Guliani and Khushboo Narayan bring you this uncovered special investigation.

A tiny advertisement placed in a newspaper by a unit manager of a leading private insurance company, invited candidates to apply for a job of an insurance advisor. Posing as Anita Bhatia, a Standard XII pass housewife, we went to one of the company's branches.

Agent: We take this Rs 1,000 as exam fee so that you can sit for the exam. Earlier, it was free of cost but a lot of students are not interested in the job. The company spends Rs 15,000-20,000 on each student. There is a compulsory online training of 100 hours by IRDA that you have to complete before you take the exam. Now, what we do is, we make an id and keep the internet open for 100 hours. The cost of doing this comes to Rs 4,000. We show them that the candidate has completed the training, but actually it is not so. You do it for 2-3 days or at times you just do not do it.

That is not all. A phone call that interrupted our conversation exposed a bigger face of corruption and the company executive had no qualms in admitting it.

Agent: The question paper is out. There is an exam on this Sunday.
Uncovered Agent: Ok.
Agent: So, don't worry about the exam.
Uncovered Agent: So, the paper is out already?
Agent: Yes, big companies like ours buy these question papers for Rs 3-5 lakh.

Our correspondent expressed her apprehension in clearing the exam and suggested if her sister, who is also our correspondent, could write the exam on her behalf. To our shock, the company executive agreed

Uncovered Agent: So, you will make her sit for the exam?
Agent: Yes.
Uncovered Agent: It will be done.
Agent: Yes, surely.

Our correspondent posing as a sister sat for the exam on behalf of our other correspondent and cleared it. Two weeks later, we had in our hands the license that allows us to sell insurance to any consumer in this country.

German court jails three men for aiding al Qaeda
By Matthias Inverardi, Reuters.

DUESSELDORF, Germany (Reuters) - A German court jailed three Middle Eastern men on Wednesday for supporting al Qaeda plots to carry out suicide attacks and attempting to raise funds through dozens of false life insurance claims.

At the end of a 1-1/2 year trial, Ibrahim Mohamed Khalil, a 32-year-old who German authorities believe is Syrian, was sentenced to seven years in prison for belonging to a terrorist organization and attempted insurance fraud.

Yasser Abu Shaweesh and his brother Ismael Abu Shaweesh were given sentences of six years and 3-1/2 years respectively after being convicted of the same offences.

The two men, described by German authorities as stateless Palestinians, are also in their early 30s.

Prosecutors say Khalil was a senior al Qaeda figure with contacts to the leadership including Osama bin Laden, and was responsible for money, logistics and recruiting new members for suicide attacks in Europe.

The district high court in Duesseldorf described the trial as an important "pilot case" regarding al Qaeda's legal status.

"For the first time a court had to rule whether al Qaeda was a foreign terrorist organization under the German penal code," the court said in a statement about the decision.

Prosecutors said Yasser Abu Shaweesh, the elder of the brothers, had publicized his sympathies for al Qaeda and agreed to help raise funds as well as carry out a suicide attack.

He was accused of taking out 10 life assurance policies worth at least 1.3 million euros ($1.92 million) and applying for 23 others worth at least 3 million euros.

His brother Ismael had been attracted to alcohol, tobacco and women as a student in Germany, though he had also absorbed an "Islamist outlook," the court decision said.

The three men, who denied the charges, were arrested in 2005 after police carried out a surveillance operation at their homes. The defence lawyers called the bugging illegal and argued it should not be used as evidence.

The judges rejected this view.

Prosecutors believe Khalil was trained in al Qaeda camps in Afghanistan before the September 11 attacks and later fought against U.S. troops there between October 2001 and July 2002.

Khalil described "violent Jihad" as the duty of every Muslim, they said.

Prosecutors also said Khalil sought to acquire unspecified radioactive material -- which could have been used in a "dirty bomb" -- from Luxembourg, but did not succeed.

The insurers are fighting back
Liz King says that honesty is the best policy as increasingly sophisticated methods are used to catch out those who make fraudulent claims
http://business.timesonline.co.uk/

Insurance fraud is far from a victimless crime, with the estimated £1.6 billion a year in bogus claims adding about £40 a year to every insurance policy.

These figures, produced by the Association of British Insurers (ABI), relate to general insurance – motor, home and travel cover – and to false claims on business policies. Fraudulent claims for personal policies alone amount to a whopping £800 million.

The average fraudulent claim was for about £800, says the ABI, and of the one million fraudulent claims in the year to March, nearly 90 per cent related to exaggerations of genuine claims. The remainder were invented, but they account for almost 30 per cent of the value of fraudulent claims.

While many people may be tempted to inflate a claim or add on a little extra to cover the excess when they have a car accident, for example, the reality is that you are more likely than ever to get caught out. Not to mention, of course, that you are breaking the law. Insurers are becoming increasingly sophisticated in spotting fraudulent claims. Last year Norwich Union, one of Britain’s biggest insurers, investigated about 60,000 suspect claims and denied 20,000 of them – worth approximately £150 million.

Certain types of fraud are becoming increasingly common, such as “fronting”, where parents take out a policy on a car that only their children are likely to drive, in an attempt to reduce premiums. They are committing fraud but may not realise it. Chris Hill, head of fraud at Norwich Union Insurance, says: “Parents buy their 18-year-old son a car for his birthday. But when they look into the cost of insuring a newly qualified driver, aged 18 and without a no-claims discount, the cost looks high. So they insure the car in the mother’s name and include the son as a named driver, even though he will be the principal user.

“The son has a crash while away at university and the insurer twigs that he is the principal driver. The policy is declared void with two implications: the insurer will not compensate the policyholder for damage to the vehicle and, under insurance law, if damage or injury is sustained by the other vehicle or driver involved in the crash, the policyholder may also be liable for this. Suddenly the cost of properly insuring the 18-year-old does not look so expensive.”

By knowingly giving false information, or failing to disclose something when you take out a policy, whether it is motor, home, travel or other types of insurance, such as medical, you may invalidate it. Mr Hills says: “Let’s be clear what that means. You may not have insurance cover to drive. Your home and contents may not be insured. Under insurance law, if any material part of a policyholder’s claim can be shown to be fraudulent, then the whole claim is potentially invalidated.

“Put another way, if your house burns down and you lose everything, and you try to add £5,000 fraudulently to an otherwise genuine claim, then you seriously risk receiving no compensation. This is not widely appreciated by most opportunistic fraudsters and it can be heartbreaking to see the subsequent impact it has on them and their families.”

Of course, fraud occurs on a range of policies, and travel insurance is no exception. Perry Wilson, managing director of Insure & Go, the web-based insurer, says: “We tend to deal mainly with travel insurance fraud, which is broken down into three categories. First is blatant fraud by the customer, such as claiming to have lost a suitcase that was never lost. Then there are instances where the suitcase was lost, but the items inside have changed from George at Asda to Armani. This is called ‘upping the case’. But surprisingly, the fraud that seems to be increasing most quickly is from clinics abroad. We had a customer who had some treatment and was given a €9 (£6.30) bill for a cold-sore cream, and we were billed €240 by the hospital.”

The insurers, understandably, are reluctant to reveal their counter-fraud measures, but the barriers between insurers are being broken down, especially since the Insurance Fraud Bureau was set up last year. Susan Evans, of Admiral, another insurer, says: “Intelligence gathering is now more focused and the bureau can lobby the Government and the police more effectively than a lone insurer could.”

Admiral is one of a number of insurers that use “voice-stress analysis equipment” – essentially a lie detector – to help to weed out false claims. Ms Evans says: “Technology is now far more available to help in the fight against the fraudster. When we find a claim to be fraudulent, an investigation is begun to obtain evidence to the criminal standard. Once we are satisfied that we can substantiate the high burden of proof needed, we will refuse to pay, try to get back any money spent on the investigation and, where possible, prosecute.”

The sheer volume of insurance fraud means that insurers need to investigate bogus claims themselves rather than involve the police, at least in the early stages. But helping customers to understand the importance of disclosing information is one weapon in the armoury, says Allan Clare, of Direct Line Insurance: “If a visit is required after a loss, we talk the customer through the claims process. It is important that we manage their expectations at what can be a time of high anxiety for them.”

But the insurers are not the only victims. Organised criminal gangs prey on the general public to get money out of the insurers too. Mr Clare says: “Our customers can become the target of scams such as induced motor accidents, where gangs target motorists and slam on their brakes unnecessarily when in front of them. We see a high level of organised criminal activity in these staged accidents, which are often called ‘cash for crash’.”

Despite all of this, it is important to remember that the percentage of people trying to make a fraudulent claim may not have increased. Dave Perry, financial crime prevention manager for Halifax General Insurance, says: “Not everybody is that way inclined. That more fraud is getting picked up is not necessarily because more people are trying to defraud, but because the systems of investigation and the quality of investigative staff are improving.”

4 Ways to Protect Yourself

Play it safe and smart before buying your health coverage….

1. Contact your state insurance department. Ask if the insurance company is licensed in your state or has a history of complaints.

2. Watch for slight differences in names between an unlicensed and licensed health insurance company. Often the phony name closely resembles a legitimate insurer. One example: The crooked Employers Mutual LLC sounds just like the real Employers Mutual Insurance Company.

3. Never rely on slick marketing literature or high-pressure sales pitches. Check the facts yourself — call your state insurance department.

4. Back off and ask questions if …

— the deal sounds too good to be true;
— the agent or rep insists that you buy now;
— the agent or rep sounds evasive when you ask direct questions.

10 Warning Signs

Watch for these warning signs of a possible swindle…

1. The coverage costs 25 percent or more below the norm, yet promises generous benefits and a large provider network.

2. The plan readily accepts people with serious illnesses and other medical conditions that other plans normally reject.

3. The insurance has few or no underwriting guidelines – the agent or rep appears almost too eager to sign you up.

4. You’re approached by an insurance agent, phone or direct mail. Honest group plans normally are sponsored by your employer — and aren’t sold directly to individuals.

5. The plan isn’t licensed in your state, and the agent (falsely) assures you the federal ERISA law exempts the plan from state licensing.

6. The plan seems like insurance, but the agent or rep avoids calling “insurance,” and instead uses evasive terms such as “benefits.”

7. The agent or rep doesn’t have clear answers to your questions, seems ill-informed, or avoids sharing information.

8. You’ve never heard of that health insurance company — and nobody else has, either.

9. You have to join an “association” or “union” to obtain the health coverage. But you get no voting rights, receive no bylaws or other material, and aren’t involved in the group’s activities.

10. Your hospital keeps calling you to complain that your health plan isn’t paying your medical bills. Often the plan’s reps keep making flimsy excuses, or stop returning phone calls altogether.

The price you pay

You foot the bills. You must pay all medical bills yourself. Many people ended up paying hundreds or thousands of dollars out of their own pockets — including critical treatment such as kidney transplants, chemotherapy and eye surgery.

People have spent their life savings, sold their homes, gone into debt, wrecked their credit and disrupted their lives.

Health endangered. Your health also could be in danger. Some people have delayed urgent medical care – threatening to make their illness worse.

Finance crooked lifestyles. And what happens to your stolen premiums? The crooked plan’s owners spend your money on mansions, vacations, jewelry, large salaries and other luxuries.

How the scams work

You’re contacted. An insurance agent or other rep may try to sell you group health insurance at rock-bottom prices. You may also receive slick marketing material in the mail, or see enticing ads.

Typically you’re promised premiums up to 50 percent below normal — plus superior coverage and a large, convenient network of skilled medical providers.

Coverage too easy. The insurance also is easy to obtain — too easy. You need few or no medical exams or medical questionnaires. And you can sign up even if you already have an illness or injury for which other plans turn you down. You may simply have to join an association or union and write out a premium check.

No licenses. The agent or rep also falsely insists that federal law exempts the plan from state licensing (in fact states do require licenses). It’s an amazing deal — and phony.

No insurance. You have no health coverage or provider network. Your insurance company is fake, and the “association” exists only on paper.

Your premium money is being stolen.

Scam Alerts from Coalition Against Insurance Fraud

Con artists are selling phony group health coverage to small businesses and consumers who are looking for lower-priced insurance to beat today’s skyrocketing premiums.

These scams are operating in nearly every state. They’re stealing millions of dollars from people across America. These swindles can leave you dangerously uncovered when your medical bills need paying — and your health is on the line.

You could be next. Here’s what you should know….

* How the scams work
* The price you pay
* 10 warning signals
* 4 ways to protect yourself

'Poster Boy' for insurance fraud sentenced
by Brian T. Murray
Friday November 02, 2007, 4:12 PM
http://www.nj.com

A business executive who Essex County prosecutors labeled a "poster boy" for auto insurance fraud, was ordered to spend 180 days in jail today for arranging the theft of his sports utility vehicle, but his sentence was stayed for a month.

Vincent DeVito, 34, of Wat­chung, was also fined $1,500 by Su­perior Court Judge Ned Rosenberg in Newark, who additionally sentenced him to serve a year on pro­bation for helping to stage the theft of his 1996 Mercedes-Benz G 320 more than two years ago.

The jail term was stayed until Nov. 30 after his lawyer, Brian Neary, asked the judge to consider letting DeVito serve in an alternative program that will not leave him locked up.

''This is an otherwise very moral man who made a serious error in judgment. Every day he regrets the decision he made, and the court recognized that today. We're talking about a family man and business man who made an error in judgment," said Brian Neary, DeVi­to's lawyer.

Assistant Prosecutor Michael Morris said DeVito deserves to land behind bars because his case reflected an epidemic of cases involv­ing people dumping vehicles in urban areas in Essex and Union counties, setting them ablaze and reporting them stolen to collect in­ insurance money.

DeVito's pricey, wagon-style ve­hicle was found set ablaze in a gritty, industrial section of Belle­ville on June 8, 2005.

When police notified him they found his vehicle, he said he had left it parked at work in Union Township at about 9:30 that night because it had a flat tire. De­Vito, who owns a Union Township electronics firm, claimed an em­ployee drove him home from his of­fice.

But when the car was found, it still had four inflated tires, a work­ing spare in the rear and a tire jack inside, according to police. Prose­cutors also contend that anti-theft devices in the vehicle were not breached or activated.

DeVito was charged with insur­ance fraud after he filed a claim to collect $44,000 in insurance money. He was initially indicted on arson charges, but he entered a plea-deal in September, admitting to insurance fraud and attempted theft charges.

The arson charges were dropped.

Neary said that while his client admitted to arranging to have the vehicle stolen, he had nothing to do with the manner in which his vehi­cle was disposed of in Belleville.

A Russian Doctor Whose Wife Disappeared Is Charged With Insurance Fraud
By ANEMONA HARTOCOLLIS
Published: November 2, 2007

A Russian doctor whose wife left their Upper East Side apartment to walk a dog in March 2003, and was found drowned in the East River two months later, was arrested yesterday and charged with insurance fraud.

Prosecutors said the doctor, Alexander Aronov, had prescribed unnecessary back treatment — physical therapy and chiropractic services — for an undercover officer who claimed to be an employee of Verizon. The doctor then billed Verizon $6,947 for the unnecessary treatment, prosecutors said. Although the charges were not linked to the still-unsolved death of Dr. Aronov’s wife, Svetlana, a prosecutor at the doctor’s arraignment in State Supreme Court in Manhattan yesterday made the connection while arguing for $25,000 bail, a high amount given how much he is accused of stealing.

The prosecutor, Hope Korenstein, told Justice Laura Ward that Dr. Aronov was a flight risk because he had been wiring large amounts of money overseas to France, Russia, Denmark and Georgia. She said Dr. Aronov’s “character and reputation” warranted high bail because, among other things, his entire career had been spent working at “medical mills” and because he had “refused to cooperate with law enforcement” in the investigation into his wife’s death.

The prosecutor’s assertions brought a strong rebuke from Dr. Aronov’s lawyer, Douglas Nadjari, who denied the fraud charges and accused the Manhattan district attorney’s office of conducting a vendetta against his client because investigators were frustrated that they had been unable to solve the mystery of Ms. Aronov’s death.

“To say that he’s being punished because he hasn’t cooperated with their investigation is just unconscionable,” Mr. Nadjari told Justice Ward. “The only thing colder than the district attorney’s investigation into this death is the way they’ve treated Dr. Aronov.”

Ms. Korenstein said the undercover officer was treated from October 2005 to March 2006. She said the officer went to Dr. Aronov with a clean bill of health and came out worse.

But Mr. Nadjari said Dr. Aronov had been entrapped by the officer, who lied, saying she was suffering from back pain.

Asked yesterday whether the investigation into Dr. Aronov’s medical practice was related to the investigation into his wife’s death, Robert M. Morgenthau, the Manhattan district attorney, replied, “It could be more than coincidence.”

The disappearance of Ms. Aronov, who was 44 and a rare-book dealer, is one of the more mysterious episodes in New York City’s recent history. She left the family’s apartment building at 1175 York Avenue between East 63rd and East 64th Streets on March 3, 2003, to walk her father’s cocker spaniel. Her decomposed body was found May 6, floating under a pier behind the Water’s Edge Restaurant in Long Island City, Queens.

Her body had small bruises on both shins. A spokeswoman for the New York City medical examiner’s office said at the time that although the death was suspicious, investigators could not determine whether Ms. Aronov’s death was an accident, a suicide or a homicide.

Mr. Nadjari denied that his client had worked in medical mills, saying that he had trained as an oncologist and had many grateful cancer patients. He said Dr. Aronov had passed a lie detector test administered by the police, and he accused the district attorney’s office of “botching” the investigation into Ms. Aronov’s death.

He said that if Dr. Aronov had transferred money overseas, it was because his older daughter lives in Paris. He suggested that Svetlana Aronov’s family believed in Dr. Aronov’s innocence, saying that the doctor lived with his late wife’s parents and his 13-year-old daughter, who attends school in Manhattan.

Dr. Aronov, 49, was arrested yesterday outside his office at 36 East 38th Street. He pleaded not guilty to third-degree grand larceny, a felony that could bring up to seven years in prison, and health care fraud.

Justice Ward set bail at $15,000 after questioning the prosecutor about whether any further indictment, alleging a larger pattern of fraud, was planned. Ms. Korenstein said there were no such plans at the moment.

Dr. Aronov was not immediately able to post bail and remained in custody. His lawyer said that Dr. Aronov’s practice had suffered because investigators had scared off patients by executing a search warrant at his office and arresting his physical therapist.

The Aronovs grew up in St. Petersburg, Russia, and were childhood sweethearts who had been married almost 25 years, Dr. Aronov said after his wife’s death.

Former doctor pays $3M toward insurance fraud conviction
Thomas Zambito
http://www.nydailynews.com

"Dyno Gyno" Niels Lauersen put a $3 million downpayment on his freedom Friday.

The former Park Ave. fertility doc, who has violated his probation six times, paid $3,085,000 toward restitution for his 2001 insurance fraud conviction.

Lauersen is expected to pay back another $840,000 by February. If not, Manhattan Federal Judge William Pauley could send him back to prison.

Lauersen was convicted in 2001 of masking fertility treatments he performed by billing for gynecological care.

He was released from prison in April 2006.

Businessmen indicted for insurance fraud are coaches at local school
http://www.wave3.com/
mansari@wave3.com

LOUISVILLE (WAVE) -- WAVE 3 has uncovered that two Christian Academy of Louisville coaches are facing an insurance fraud indictment. Head football coach Dan English and his brother Thomas English owned two framing companies and were allegedly shuffling employees back and forth between companies when they had to make an insurance claim.

According to the indictment, that way they were able to avoid paying more than $250,000 to the state for insurance.

The news came as a shock to school officials who found out about the indictment Thursday. They met with the coaches and are investigating the allegations.

"Well, we're in the information gathering mode, so I don't know exactly what is going to happen. But we need to make sure we do our due diligence because these are allegations" said Steve Shubert, CAL athletic director.

Both Dan and Thomas English are charged with one count of insurance fraud. If convicted, they face a maximum of 5 years in prison.

We're told both coaches have decided to take a temporary leave of absence immediately until the allegations are resolved.

Firefighter avoids jail for insurance fraud
BY JASON DEL REY
jason.delrey@newsday.com
July 3, 2007

A former New York City firefighter from Long Island avoided prison when he was sentenced Tuesday to probation and community service in connection with a fire which was set to his car in February 2004.

Robert Schlosser, 34, of West Islip, was sentenced Tuesday morning in Riverhead by Suffolk County Court Judge Barbara Kahn to 5 years probation, 420 hours of community service and ordered to pay $18,774 in restitution to his insurance company after being convicted in March of insurance fraud and falsifying business records.

Schlosser reported his 2002 Cadillac Deville stolen in February 2004 and it was later found, damaged by fire, in Uniondale.

Schlosser's attorney, William Keahon of Islandia, said his client will appeal the decision. Both Keahon and Schlosser declined to comment after the sentencing.

Assistant District Attorney Michael McCoy said he had hoped that Schlosser would be sentenced to some prison time because of his occupation as a firefighter.

"He should be held to a higher standard," McCoy said after the sentencing. As a firefighter, "he would know what the result of the car fire could have been."

Schlosser was fired by the New York City Fire Department, both attorneys said.

http://www.newsday.com

New Jersey Doctor Admits Insurance Fraud

A New Jersey doctor pleaded guilty Thursday to falsifying medical records and insurance claims.

Dr. Farouk Al-Salihi, of Jersey City, admitted making the fraudulent claims in January and February 2006. The patient whose papers Al-Salihi forged turned out to be an undercover investigator from the New Jersey Office of Insurance Fraud.

Al-Salihi will appear before Hudson County Judge Vazquez on June 15 for sentencing. He faces up to 18 months in prison and a $10,000 fine.

In addition to his guilty plea in criminal court, Al-Salihi is expected to face fines and could lose his medical license in New Jersey.

http://www.wnbc.com/news

Selling the Fear of the Big One
Mark Medley, National Post
July 10, 2007

For companies concerned a disaster might affect the bottom line, it's all about "business continuity." And behind those buzzwords lies a billion-dollar industry built on "what ifs," people's fears, and disasters that might never happen.

"Some people would call it a ghoulish industry," says Mark Conron, president of FSI North America, a company that supplies decontamination shower systems, portable shelters, and other emergency products, who was displaying his wares at the 17th annual World Conference on Disaster Management in Toronto.

Water purification systems? Check. Pandemic outbreak coping strategies? The experts are here. Hazmat suits, gas masks, satellite phones, emergency stretchers? No problem. An emergency makeshift field hospital? There's more than one set up on the convention centre floor. A board game for kids designed to help them pack their very own survival kit? You can buy that, too.
A hypochondriac's paradise and a survivalist's dream, the trade show - drawing 1,650 attendees from 35 countries - provided answers for (almost) all the bad things the world has to offer. If the Apocalypse were to strike, this is where you would want to be.

"When a demand is there, people are going to jump into the industry," says Mr. Conron, whose company attends about 40 similar shows worldwide every year.

"There's always going to be disasters. There's always going to be emergencies. So there's always going to be a market for these types of products."

And more people are seemingly taking the plunge into the industry - there were about 100 exhibitors at the trade show, compared with 80 last year - with many speaking of 9/11 being a turning point.

Products on display included dozens of books and guides with such ominous titles as Catastrophe: Risk and Response, Terrorism Emergency Response and Disaster Dictionary. There were a variety of sirens, those Cold War relics used to rush you to your fallout shelter, now marketed for "homeland security" and as "campus alert systems," with the words "Virginia Tech" being spoken as dire warning.

It's about being proactive instead of reactive, says Kurt Theil, a manager with Stevens, a medical distribution company.

"It's all about business continuity," he says. "People are more concerned. They're planning ahead."
Tommy Rainey, publisher of the Disaster Resource Guide, says, "Most of what's going on here is insurance. In the event of an emergency, then the insurance will pay off. A life insurance salesman is not looking at you hoping you'll die, but he's hoping he'll help you be ready in the event of an emergency."

Jake Baillie of Pandemic 101, a London, Ont., company specializing in pandemic preparedness, says the choice is simple: Be prepared or face the consequences.

"It's the same as: Do you bring an umbrella to work? It may not rain, it may rain. If it doesn't rain then you're okay. If it does rain then you look pretty good next to the guy who doesn't have the umbrella."

On top of being able to handle the physical effects of a crisis - by stocking respirators, flu kits, bottled water - business continuity is also about finances.

"It's almost beyond preparedness. It's for competitive [reasons] as well," says Mr. Baillie, pointing out Air Canada was bankrupt by SARS.

"If you've prepared for a pandemic and your business successfully survives that pandemic, you're going to be much stronger economically than you will be [compared] to your competitors that are just sitting out there twiddling their thumbs."

Ralph Dunham, senior vice-president risk consulting for Marsh Canada Ltd., an insurance broker and strategic risk advisor, thinks the business community is beginning to take notice.

"They're really looking at it and saying, this is the health of the business," he says. "This is not about a cataclysmic, smoking hole in the ground. This is [about] how do we optimize our business model so that we can be resilient and we can be flexible and we can adapt to events as they unfold.... It's not [about] saying how much is it going to cost me if I have a big explosion, but rather how can I make sure that if and when it does happen I can move, I can adapt, I can be flexible."

Even the education sector is getting involved. There were about a half-dozen displays for institutions offering diplomas and degrees in the field of emergency management, including Royal Roads University in Victoria, and George Brown College in Toronto.

While the schools may be attracting new blood to the field, even those who have spent years in the industry are sometimes philosophical about their line of work. Dale Hull, director of sales for Federal Signal Corporation, an Illinois-based provider of warning systems, reflected on the unorthodox nature of the industry while standing next to a huge siren in the middle of the booth.

"It's kind of a strange business in general," he says. "Sometimes it's difficult selling to a customer because they don't want to make the investment because at that moment they don't need it. It's like life insurance...."

http://www.canada.com/nationalpost/news/index.html

Home repairs can cut insurance bills, too
Sharon Harvey Rosenberg
The Miami Herald

Home repairs can be a two-for-one special. First, maintenance work upgrades your home. And second, repairs and home improvements could also lower the cost of your home-insurance bill, according to insurance experts.

"If you've made significant improvements to your home, you should, by all means, notify your insurance company," said Jeanne Salvatore, a spokeswoman for the Insurance Information Institute (www.iii.org). "You want to make sure that you get every available discount that you are entitled to."

Here's a rundown of potential savings:

• Inquire about discounts: A new roof or roof repairs may translate into a discount. Upgraded plumbing or a new heating/air-conditioning system may also qualify for discounts, according to Matt McWilliams, co-founder of HometownQuotes.com, an online insurance portal.

Some insurance companies offer 5-15 percent discounts if you have upgraded or modernized the wiring in your home within the last 10 years, according to the Insurance Information Institute.

• Safety and burglar alarms. You could qualify for a discount of 15 to 20 percent off your home-insurance premium for good fire-alert or security systems, Salvatore said. Insurers provide the greatest discounts to systems that alert authorities or other emergency systems. Security lights, smoke detectors and deadbolt locks can yield discount points of 5 percent or higher.

• Look for obscure savings. If your home is near a fire hydrant or in a municipality with professional firefighters (instead of volunteers), your insurer may provide discounts.

Additionally, ask about reduced-risk security discounts if you are retired or work from a home office. Your constant presence in the home means that a fire would be quickly detected and the home less of a target for criminals. Some companies provide a 10-percent discount to retirees.

Frugal Duchess is an occasional feature in digs. E-mails can be sent to Sharon Harvey Rosenberg at sharonhr@bellsouth.net. Sorry, no personal replies.

http://seattletimes.nwsource.com

Life Insurance Fraud

Ha. These are the schemes that make great movies and great television show plots. Here are some of those we've seen.

1. Crooks will take out an insurance policy on themselves and then fake their own death. How does that happen? Most of them travel to another country and then support their death claim with fraudulent documents. Very few are successful because insurance companies routinely investigate all foreign death claims.

2. A somewhat recent case involved a man who wanted to disappear from the radar screen because he didn't want to go to jail. It seemed so much easier to die, at least on paper, so he and his wife went to a pauper's cemetery and dug up a recently buried body. They put the body into the husband's car, drenched the whole thing in gasoline, then pushed it over a cliff. The car and body was burned beyond recognition, and the widow said, "oh my, it was my dear husband because he never came home last night and that was our car ..." She promptly buried the charred remains of her husband and filed a life insurance claim. Relatives got suspicious when she quickly found a new boyfriend who looking strikingly similar to her dead husband. The Police launched an investigation and the scam was discovered. Both are currently serving well-deserved jail sentences.

3. Too often people really do die. Wives kill (or hire it out) husbands and husbands kill wives. Children kill parents and parents kill children. All for the proceeds of an insurance policy.


Dead or Alive?

Shortly after 911, insurance companies began receiving claims. Adjusters were trying to expedite payments to families that had lost loved ones. In one case, a claims representative drove to the deceased's house, hoping to assure the grieving widow that a check would be forthcoming. Imagine his surprise when the deceased answered the door.

Following any disaster, opportunists attempt frauds. People who are alive and insured see an opportunity to report themselves dead. The World Trade Center, the Tsunami or Katrina. Any excuse works for them.

Do YOU appreciate having to pay higher premiums to fund these people?


Viatical Fraud

Perhaps one of the most deadly of all, viatical fraud is shocking enough to be the subject of a Hollywood action movie. Because it's not been publicized, few people have any idea of what it is.
What is a viatical policy?

Think of it as a reverse home mortgage.

Let's say that Joe has a $500,000 life insurance policy. He is diagnosed with an inoperable brain tumor and given six months to live. If Joe wants to have a six month party, cruise around the world, or even seek alternative medical treatment in some far off country, he needs money. His life insurance policy is money.

Joe can sell his policy to a viatical company. They will give him a certain amount of cash, right now, and he will (in turn) make them the beneficiary. The amount of cash he is given depends upon how long he will live ... and the company can get their "return on investment."

The viatical marketplace got very big at the time that AIDS was killing so many people. Those who were dying of AIDS were selling their policies, enjoying the money, and then dying "on schedule." Business was booming.

But then extensive research gave way to many new drug cocktails, and AIDS patients were suddenly NOT dying. Companies (or individuals) who had purchased their life insurance policies as a financial investment were not getting their expected returns. Instead, they were out considerable sums of money, and had no relief in sight unless the owner of the life insurance policy dropped dead.

Where was the fraud? Murder. In too many cases, the alive and well victims were hastened to the grave via gunshot, car accident, fire or worse. Since they had not died "on schedule," they were helped along by a hired gun. Once dead, the viatical company could collect on the life insurance policy and the investors could get paid. Dirty business. Scary business.


Murder For Money

It's not unusual to see a story like the one that recently occurred in California. What was unusual, however, was the ages of the perpetrators and the uniqueness of their scam.

Two women, ages 75 and 73, found a way to supplement their social security retirement income. Murder.

Here's what they did:

First they'd find a homeless person. They'd befriend him and help him get on his feet. They'd buy him some new clothes, get him an apartment ... and INSURE HIM with themselves named as the beneficiaries. Then they'd run him over with a car and file the claim.

Both are in jail right now awaiting trial. Both are facing the death penalty for premeditated murder. Two men are dead as a result of their plot.

http://www.fightfraudamerica.com

Insurers Also Do Wrong

Law firms Wiley Rein and Coughlin Duffy, two law firms and the insurer they represented, Zurich American Insurance Companies, have been assessed $1.25 million in sanctions by Southern District of New York Judge Alvin Hellerstein. The basis for the sanctions started when the judge learned that:

On the day of the terrorist attacks, Zurich’s chief underwriter for the United States, Mary Merkel, asked her assistant to print a copy of the then-existing primary policy from the computer system Zurich uses to generate its policies. She retained the print-out, a 62-page document (the "9/11 Document"), in her files in Schaumberg, Illinois. The 9/11 Document, and the specific wording of the endorsements that were part of the 9/11 Document, contradict Zurich’s contention that the Net Lessees, excepting Westfield, were not Named Insureds under the Policies. In particular, the 9/11 Document contained a "Broad Form Named Insured" endorsement that listed as named insureds:

World Trade Center Properties, LLC c/o Silverstein Properties, Inc. and any subsidiary company as now formed or constituted, and any other company over which the named insured has active control so long as the named insured or any subsidiary company has an ownership interest of more than 50% of such company.

Just four days after Brunner's instruction to destroy nothing was issued, Zurich underwriter Lynn Maier sent an e-mail to two assistants and her supervisor saying, " As per our conversation, please confirm ASAP, that the old version of the policy has been deleted from the Document Library and replaced with the final corrected policy. This information needs to be relayed to the ... home office."

In March 2003, Zurich’s attorneys took possession of the 9/11 Document, or a copy, from Mary Merkel’s office. The document was not produced until February 18, 2005, after depositions had been completed and following pointed inquiries by opposing counsel, following up trace references in other of Zurich’s productions.

By signing, filing, or otherwise representing to the Court that something is or is not so, the attorney certifies that he has complied with each of the foregoing obligations to the best of his knowledge, information, and belief, formed after an inquiry reasonable under the circumstances. If, after notice and an opportunity to respond, the court determines that an attorney has not complied with his obligations set forth in Rule 11(b), it may impose an appropriate sanction on the attorney, law firm, or party that violated or is responsible for the violation.

The court reasoned:

A baseless factual contention poses a greater threat to justice than a baseless legal contention. The evidentiary foundation upon which an attorney rests his assertions of fact is, for the most part, exclusively within the control of the attorney and his client. In order to function, the court must repose trust in the attorneys who come before it to make factual representations supported by evidence. The legal process contemplates and requires that when the time comes for a judge or jury to find facts, both sides will have legally sufficient evidence to present in support of those facts. In a complex case, baseless factual contentions can delay the time for presentation of evidence to the fact-finder for years, at an expense running into the millions of dollars. An attorney who abuses the trust of the court in this manner, and who causes such delay and needless expense thereby, should be penalized. In contrast, a misstatement of law is much more easily remedied, by the adverse party’s research, or the court’s own research.

* * *
Zurich denied that the Port Authority was entitled to Additional Insured status, arguing that because the only Named Insured on the policy binder was WTCP, and because the Port Authority did not lease the World Trade Center to WTCP, but rather to the Net Lessees, the endorsement providing additional insured coverage to the "lessor" did not extend coverage to the Port Authority.

* * *
Simply put, Zurich’s position made no sense, because the parties would not have agreed to insure a holding company with no operations and no direct holdings, without an understanding and intent to insure the subsidiary entities that would actually be exposed to premises liability. See Hametz Decl., Ex. 7 (deposition testimony of Zurich employee Mark Elias). Nor has Zurich offered any evidence to the contrary, arguing not that it was right, but that in the absence of evidence, the Port Authority could not prove it was wrong. This approach shielded Zurich from judgment on Port Authority’s motion for judgment on the pleadings, but it will not suffice under Rule 11. The Port Authority’s motion for sanctions pursuant to Rule 11, Fed. R. Civ. P., is GRANTED.

* * *
I impose Rule 37 sanctions in the amount of $500,000. Of this amount, $250,000 shall be payable to the Port Authority, and $250,000 to Westfield, to defray the costs they unreasonably incurred in the wasted discovery proceedings. The sanction is imposed jointly and severally against Zurich, Wiley Rein LLP, and Coughlin Duffy LLP, subject, as with the Rule 11 sanction, to review and re-allocation at the request of any of them. The sanction is additive of the sanction imposed pursuant to Rule 11, for a total sanction of $1,250,000.

It was "clearly important," and "not the type of document that becomes lost without a trace," Hellerstein wrote in In re September 11th Liability Insurance Coverage Cases, 03 Civ. 332. The discovery abuses also concealed that Westfield Corporation, a major retailer at the site, was one of the "additional insureds" that Zurich was obligated to cover under its policies with Silverstein.

"Zurich's 'culpable state of mind' is established by evidence that it intended to delete, and deleted, the electronic version of the 9/11 document, and by evidence that Zurich, or its attorneys, or both, had possession of the printed version of the 9/11 document, but failed to produce it," according to the order.

While the electronic version of the document was destroyed on Sept. 11, a paper version remained in a file cabinet in Illinois. "Wiley Rein attorneys obtained and copied the 9/11 document in March of 2003, but they left it buried in a box for nearly two years and failed timely to produce it. ...Counsel's failure to recognize the importance of this document, and to produce it timely, especially when alerted to its possible existence by opposing counsel, also constitutes a violation of discovery obligations."

Refusing to accept an explanation of inadvertence, the judge concluded: "The explanation is not apt," he said. "A finding of negligence or worse would appear to be a more appropriate characterization, and I so find."

"Clearly, Zurich's decision to assert and maintain its denials and defenses regarding the Port Authority's status as additional insured multiplied proceedings, caused substantial expense to the parties, caused substantial waste of court time, and insulted public and judicial expectations of the standard of conduct expected of attorneys and insurance carriers."

Barry Zalma
http://www.zalma.com

Zalma's Insurance Fraud Letter

Zalma's Insurance Fraud Letter (ZIFL) is published 12 months a year by ClaimSchool. It is provided free to clients, friends of the Law Offices of Barry Zalma, Inc., clients of Zalma Insurance Consultants and anyone who sends me an E-Mail requesting a FREE subscription.

The comments made are for information only and are not intended as legal advice. If you need legal advice, Barry Zalma practices law as the Law Offices of Barry Zalma, Inc., 4441 Sepulveda Boulevard, CULVER CITY, CA 90230 or at 310-390-4455, fax at 310-391-5614, Cell Phone: 310-738-6818 or E-Mail at zalma@zalma.com. Zalma's Insurance Fraud Letter can also be read on the web at http//www.zalma.com.

Mr. Zalma serves as an expert witness or consultant in insurance coverage, claims handling, insurance bad faith and fraud. Mr. Zalma's law practice is limited to the representation of insurers and those in the business of insurance. He is available to provide advice and counsel concerning insurance fraud, first and third party insurance coverage issues, bad faith and first party insurance appraisals.

Recipients of Zalma's Insurance Fraud Letter are authorized by ClaimSchool and Barry Zalma to make as many copies as needed to pass to your friends and staff as long as you do not copy for resale.

If this has been forwarded to you and you want to be on the FREE mailing list as a subscriber to ZIFL please send me an e-mail with your full name, your title, your company, your mailing address, your city, your state or province, you zip or postal code and your e-mail address to zalma@zalma.com or bzalma@earthlink.net and I will add you to the FREE e-mail list. If you want to be removed from the list please send me an e-mail and I will immediately remove you from the list.

It will be posted for a full month at http://www.zalma.com with graphics and can be read at your leisure.

Barry Zalma
http://www.zalma.com

N.Y. Attorney Suspended for Funding More Than 200 Loans to Clients

Although not directly an insurance case the decision of the New York Appellate Division concerning attorney James J. Moran shows the depths to which a lawyer -- faced with the volume of money earned from legitimate and illegitimate personal injury claims -- will fall. Money, especially large sums of money, easily obtained caused a lawyer to violate the rules of professional conduct and loan money secretively to his clients to keep them as his clients. Because of his failure of judgment the lawyer is now suspended from the practice of law for 18 months because of 200-plus loans the attorney made to his own clients via intermediaries.

A unanimous New York Appellate Division, 4th Department, panel found that James J. Moran made more than 200 loans totaling more than $700,000. The panel said that the loans through third parties for non-litigation-related expenses did not "directly" violate the Code of Professional Responsibility, but that Moran's actions nonetheless "circumvented" the code, which in itself is a violation.

Moran conceded, according to the ruling [http://www.nycourts.gov/ad4/court/Decisions/2007/06-08-07/PDF/P-06-008.pdf], that he knew his conduct violated disciplinary rules, but "he stated that he provided the financial assistance so that his clients would not be required to borrow funds from lending companies at exorbitant rates of interest."

The panel found six other violations:

1. DR 1-102 (a) (2) (22 NYCRR 1200.3 [a] [2]) - circumventing a disciplinary rule through actions of another;

2. DR 1-102 (a) (4) (22 NYCRR 1200.3 [a] [4]) - engaging in conduct involving dishonesty, fraud, deceit or misrepresentation;

3. DR 1-102 (a) (5) (22 NYCRR 1200.3 [a] [5]) - engaging in conduct that is prejudicial to the administration of justice;

4. DR 1-102 (a) (7) (22 NYCRR 1200.3 [a] [7]) - engaging in conduct that adversely reflects on his fitness as a lawyer;

5. DR 1-104 (b) (22 NYCRR 1200.5 [b]) - failing to make reasonable efforts to ensure that a lawyer over whom he has direct supervisory authority conforms to the disciplinary rules;

6. DR 2-105 (c) (1) (22 NYCRR 1200.10 [c] [1]) - stating that he has been recognized or certified as a specialist in a particular area of law or law practice by a private organization without identifying the certifying private organization and including the required disclaimer; and

7. DR 5-101 (a) (22 NYCRR 1200.20 [a]) - accepting or continuing employment if the exercise of professional judgment on behalf of the client will be or reasonably may be affected by his own financial interests.

The lawyer was found to have, "with full knowledge of the prohibition, funded loans to clients for more than eight years and engaged in deceptive and deceitful conduct to conceal his role as lender. Respondent has expressed a shocking lack of remorse for his misconduct. He conceded that he loaned money through intermediaries in order to circumvent the disciplinary rules, and he continued to represent clients who had obtained loans funded by him until as late as the commencement of the hearing conducted by the Referee in this matter. Accordingly, after consideration of all of the factors in this matter, we conclude that respondent should be suspended ..."

Moran, 58, was admitted to the New York bar in 1973. His firm, Moran & Kufta, specialized in personal injury and medical malpractice. (Wednesday, the firm's Web site was out of commission, and a receptionist said the firm had recently changed its name to Valerio & Kufta.)

The panel also found that Moran violated disciplinary rules by failing to disclose the existence of one such loan during a client's bankruptcy proceeding and by failing to include a required disclaimer when referring to himself as a trial specialist on his Web site.

The panel however rejected the referee's findings that loaning money via intermediaries directly violated the disciplinary rules, that Moran loaned money directly to clients, that it was improper for Moran to compare the quality of his firm to others' on his Web site or that he engaged in "misleading" conduct by posting information about the rival firm.

Justices Robert G. Hurlbutt, Salvatore R. Martoche, Nancy E. Smith, John V. Centra, and Erin M. Peradotto sat on the panel.

Barry Zalma
http://www.zalma.com

ClaimSchool and North American Training Group

Announce Formation of a Strategic Alliance

Because a thorough knowledge of insurance, insurance coverage and insurance claims handling are necessary to a successful anti-fraud program, North American Training Group, a national fraud training organization, announces the formation of a strategic alliance with ClaimSchool, a national provider of insurance claims training.

ClaimSchool for more than ten years has helped insurance professionals and insurance claims personnel meet state requirements by providing ongoing training paramount to the goals of effective claims handling and fraud reduction.

North American Training Group (NATG) exists to facilitate greater understanding and awareness of insurance fraud. NATG provides a high quality, engaging and user-friendly online curriculum that fosters greater success for all parties involved with the programs dedicated to fighting fraud.

Insurance and insurance claims handling are subjects that require continuous training and education. The law of insurance seems to change daily. The insurance claims professional needs to be familiar with new court decisions, laws, and regulations imposed upon them by the courts and by regulators from various states.

NATG includes a group of insurance and SIU professionals who saw a need within the insurance industry to standardize and make available training specifically targeted to insurance fraud issues. Industry professionals are experiencing greater and
greater demands upon their time and need quality resources to efficiently train claim professionals, underwriters, agents and other integral personnel to effectively recognize, identify, combat and deter fraud.

NATG’s courses provide professional license holders & other insurance professionals convenient, engaging and superior quality training that both enhance career development and increases productivity. NATG also offers courses designed specifically for private investigators who work in the insurance fraud arena, offering the IFC professional designation.

NATG offers On-Line Continuing Education (CE), Compliance Training and General Fraud Training courses on topics including insurance coverage, claims handling and fraud for the industry's adjusters, claims executives, SIUs, agents, underwriters and private investigators. NATG will provide clients with an individual branded and secured on-line "Training Center" for which the client will have access to all of NATG’s courses and provide the option for the client to add their own training materials to the site. NATG will customize state specific courses so all employees can obtain 100% of state compliance material in one course. Administrators have the ability to run compliance reports, track employee progress and print certificate of completions.

Details concerning course offerings and a sample of the computer based training, which will include ClaimsSchool, are available at http://fraudeducation.com/ or contact Fred Wharton, President of NATG Fwharton@fraudeducation.com

Barry Zalma
http://www.zalma.com

State Farm Moves to Disqualify Scruggs

State Farm, on June 19, 2007 moved the court to remove Scruggs and his firm off a case for alleged ethical violations, including the use of "stolen" State Farm documents. The motion to disqualify Richard "Dickie" Scruggs, his Oxford, Miss. law firm and the Scruggs Katrina Group was filed in Mississippi three days after Judge Acker asked the U.S. attorney there to prosecute Mr. Scruggs for criminal contempt.

State Farm filed its motion in a case brought by a Biloxi, Miss., couple--Thomas and Pamela McIntosh--who are disputing the insurer’s engineering report concerning the amount of Hurricane Katrina damage to their home.

According to the insurer, Kerry Rigsby worked on the McIntosh claim, and the Rigsby sisters "stole thousands of State Farm’s confidential documents"--including an engineering report on the McIntosh case--and gave them to Mr. Scruggs.

Mr. Scruggs, "in turn, rewarded the sisters for their cooperation by paying them an annual salary of $150,000 each to serve as ‘litigation consultants’ for him and his associates at the Scruggs Katrina Group…"

The insurer also argued Mr. Scruggs is prevented from representing a party in a proceeding where he is likely to have to testify. In the McIntosh case, State Farm said he has knowledge of exculpatory facts that bear directly on that claim.

State Farm, in its papers, contends it did not make its move lightly, but deposition testimony, public statements and other evidence shows Mr. Scruggs committed "repeated ethical violations and traduced the Federal Rules," making State Farm’s attorney "duty bound to bring these issues to the attention of the court." We will report the results of this motion when we learn of it.

Barry Zalma
http://www.zalma.com