ANNUAL REPORT

OF THE

OFFICE OF THE INSURANCE FRAUD PROSECUTOR

FOR CALENDAR YEAR 2002

SUBMITTED March 1, 2003

(Pursuant to N.J.S.A. 17:33A-24d)

Peter C. Harvey Greta Gooden Brown Acting Attorney General Assistant Attorney General Director, Division of Criminal Justice Insurance Fraud Prosecutor

Prepared by:

Office of the Insurance Fraud Prosecutor Division of Criminal Justice

Department of Law and Public SafetyP.O. Box 094

Trenton, NJ 08625-0094(609) 896-8888

www.njinsurancefraud.org

TABLE OF CONTENTS

PROSECUTOR’S MESSAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

PREFACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

PART I: OPERATIONAL AND ORGANIZATIONAL OVERVIEW

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

OIFP - CRIMINAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1General Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Auto Fraud Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Property and Casualty Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Health and Life Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Medicaid Fraud Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

OIFP - CIVIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8General Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Auto Fraud Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Health and Life Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Property and Casualty Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

CASE SCREENING LITIGATION AND ANALYTICAL SUPPORT SECTION (CLASS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

INFORMATION MANAGEMENT SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

LIAISON AND COORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14County Prosecutors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Law Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Insurance Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Professional and Occupational Boards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Other Coordination and Liaison Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20New Jersey State Police . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

INSURANCE FRAUD TRAINING PROGRAMS AND PUBLICATIONS . . . . . . . . . . . . . . . . 23

OIFP Basic Training Course for Civil Investigators . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

OIFP In-Service Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23County Prosecutors’ Offices Training Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Municipal Police Departments Training Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Insurance Industry Training Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

OIFP Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

PUBLIC AWARENESS PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

OIFP Media Campaign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26OIFP Website . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

OIFP Community Outreach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

PUBLIC RECOGNITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

PART II: CASE STATISTICS AND SUMMARIES

OIFP CRIMINAL INVESTIGATIONS AND PROSECUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 31

Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Case Summaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Auto Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

• Altering Vehicle Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32• Vehicular Theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32• Criminal Use of Runners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

• Fraudulent Automobile "Give-Up" Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33• False Automobile Insurance Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

• False Automobile Insurance Theft Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37• Phony Personal Injury Protection (PIP) Claims . . . . . . . . . . . . . . . . . . . . . . . . . 38

• Receiving Stolen Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41• Staged Accidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

• Fictitious Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Health, Life and Disability Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46• Provider Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

• False Health Care Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48• Fraudulent Disability Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

• Health Insurance Application Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53• Phony "Slip and Fall" Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 • Life Insurance Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Insurance Agent, Insurance Employee and Public Adjuster Fraud . . . . . . . . . . . . . . . . . 55

• Insurance Agent Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55• Insurance Carrier Employee Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

• Public/Insurance Adjuster Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Property and Casualty Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63• False Homeowners Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

• False Commercial Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65• Premium Refund Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Insurance Fraud Related Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Medicaid Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

• Medicaid Criminal Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

• Medicaid Civil Case Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

COUNTY PROSECUTORS’ OFFICES CRIMINAL INVESTIGATIONS

AND PROSECUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Case Summaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

OIFP CIVIL INVESTIGATIONS AND LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80Narrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

Civil Investigative Case Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82Division of Law Case Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

PART III: LEGISLATIVE AND REGULATORYRECOMMENDATIONS

RECOMMENDATIONS PURSUANT TO N.J.S.A. 17:33A-24 . . . . . . . . . . . . . . . . . . . . . 88

A. Uninsured Motorists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88B. Criminal Statutory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

C. Civil Fraud Act Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90D. Civil Fraud Act Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

E. Health Care Claims Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91F. Insurance Company Access to Accident Information . . . . . . . . . . . . . . . . . . . . . . . . 92

G. Law Enforcement Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93H. Insureds’ Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

PART IV: APPENDIX

A. OIFP Criminal/Civil Insurance Fraud Penalties Imposed Comparison Chart B. Individuals Charged Criminally by OIFP by Indictment or Accusation Bar Graph

C. OIFP Civil Insurance Fraud Actions Bar GraphD. OIFP Civil Insurance Fraud Sanctions Imposed Bar Graph

E. OIFP Civil and Criminal Monetary Sanctions Imposed Bar GraphF. OIFP Criminal Cases Investigated by Type of Insurance Fraud in 2002 Pie Chart

It is with great pride that Ipresent the fourth Annual Reportof the Office of the InsuranceFraud Prosecutor (OIFP) to theGovernor and Legislature of the State ofNew Jersey. As we embark upon ourfifth full year of operation as New Jersey'slead agency in the battle againstinsurance fraud, we are pleased to reportthat we have achieved unprecedentedlevels of success in our efforts to detect,investigate, and take action against thosewho commit insurance fraud in our State. The most obvious indicator of OIFP'ssuccess in 2002 is our increased productivity, asmeasured by our substantial gains in prosecutions andsanctions. In 2002, OIFP nearly doubled the numberof defendants charged criminally, the number ofdefendants convicted of insurance fraud and thenumber of civil sanctions imposed. A more subtleindicator of our success in 2002, however, is evidencedby the emulation of those who look to OIFP as a modelfor fighting fraud. After just four years of operation,we have grown from an organization assembled fromdivers State agencies to emerge as one of the nation'sforemost fraud fighting institutions.

Although we accomplished much in 2002, werecognize that we have only begun to meet theenormous challenges presented by those who cheat thesystem by committing insurance fraud. As one carowner is sentenced for fraudulently claiming the theftof his vehicle, several others are laying thegroundwork for similar frauds by filing false policereports. No sooner is one driver cited for showing apolice officer a phony insurance card than severalothers are purchasing such cards on the black market.As one unscrupulous doctor is jailed for submittingphony bills for services that were never rendered,others are busy concocting fraudulent schemes to pickthe pockets of the insurance buying public.

There is no doubt that our greatest challenges, and ourgreatest successes, lie before us. Our continuingsuccess in ferreting out and prosecuting insurancefraud ultimately hinges upon the support andcooperation of those beyond OIFP. We recognize thatwe need the support and cooperation of concernedmembers of the public, resourceful law enforcementofficials, savvy insurance industry investigators andconscientious members of those professions most proneto the breeding of insurance cheats. Without theassistance of these individuals in identifying and reportingsuspected insurance fraud, our most industrious efforts

will, at best, fall short.

When we work together inconcert, as we did in 2002, we

can alleviate the insurance fraud problemin New Jersey. The value of the productiveworking relationships we have developedwith others, such as the insurance industry,cannot be underestimated. We areparticularly appreciative of the active roleassumed by such organizations as theInsurance Council of New Jersey and theNew Jersey Special InvestigatorsAssociation. Both organizations arerecognized leaders in New Jersey's

insurance community and play a vital role in our fraudprevention efforts in the State.

We are also appreciative of the leadership of GovernorJames E. McGreevy and the members of hisAdministration, particularly former Attorney GeneralDavid Samson and Acting Attorney General andDirector of the Division of Criminal Justice, Peter C.Harvey. Their unwavering support, keen insight andsteadfast guidance have empowered our staff andthereby unleashed the true potential of our Office.

I would also like to commend our County Prosecutorsand the members of the Insurance Fraud Unit of theNew Jersey State Police for their efforts in combatinginsurance fraud at the local level. Without theircontributions, we would not attain the fully integratedand comprehensive law enforcement attack oninsurance fraud envisioned by the Legislature whenOIFP was created.

Most of all, I would like to acknowledge the untiringefforts of OIFP’s team of attorneys, investigators,professional and administrative support staff. In theend, it is through their efforts, their expertise, and theirdedication that we fulfill our mission as an agencycommitted to fighting insurance fraud in every wayand on every front. As we reflect on the successes of2002, we look forward to the greater challenges offeredby 2003.

Respectfully Submitted,

Greta Gooden Brown

Greta Gooden Brown Insurance Fraud Prosecutor

PROSECUTOR’S MESSAGE

PREFACE

The New Jersey Office of the Insurance FraudProsecutor (OIFP) leads New Jersey's fightagainst insurance fraud. Created by the NewJersey Legislature on May 19, 1998, pursuantto the provisions of the Automobile InsuranceCost Reduction Act (AICRA), OIFP wasestablished to administer a comprehensive andwell integrated program to investigate andprosecute insurance fraud as effectively andefficiently as possible. Accordingly OIFP was,vested under AICRA with authority andresponsibility for investigating all types ofinsurance fraud and for conducting andcoordinating criminal, civil and administrativeinvestigations and prosecutions of insuranceand Medicaid fraud throughout New Jersey.To provide for the most effective and wellintegrated statewide strategy possible tocombat insurance fraud, OIFP's authorityunder AICRA includes responsibility for theoversight of all anti-insurance fraud efforts oflaw enforcement and other public agencies anddepartments in New Jersey, as well asappropriate coordination with private industry.

Pursuant to AICRA, OIFP was established asa law enforcement agency within the Divisionof Criminal Justice in the Department of Lawand Public Safety, with a primary focus oncriminal prosecution. In order to unify, bothcivil and criminal authority for prosecutinginsurance fraud in one agency, AICRA alsorequired that certain civil enforcementfunctions previously handled by the Division ofInsurance Fraud Prevention in the Departmentof Banking and Insurance would betransferred to OIFP pursuant to a plan ofreorganization which became effective onAugust 24, 1998. (Reorganization Plan 0007-

98). Among other things, this reorganizationplan effected the transfer of the entire civilinvestigative staff of the Division of InsuranceFraud Prevention to OIFP.

As provided by AICRA, OIFP is overseen bythe Insurance Fraud Prosecutor, who isappointed by the Governor, with the adviceand consent of the Senate, and who reports tothe Attorney General. Reflecting theconsolidation and integration of both criminaland civil insurance fraud responsibilities intoone agency, the Insurance Fraud Prosecutor isrequired under AICRA to have had priorprosecutorial experience, including experiencein the litigation of civil and criminal cases. TheInsurance Fraud Prosecutor is required underthe provisions of N.J.S.A. 17:33A-24d toprovide an annual report to the Governor andthe Legislature, no later than March 1 of eachyear, summarizing the activities of the Officeof the Insurance Fraud Prosecutor for thepreceding 12 months, including information asto the number of insurance fraud casesreferred, investigated and prosecuted; thenumber of cases in which professionallicensees were sanctioned; the number ofconvictions procured; and the amount ofmonies collected in fines and restitution. Thisis the fourth annual report of the Office of theInsurance Fraud Prosecutor.

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EXECUTIVE SUMMARY

Insurance fraud continues to plague us as oneof our country's most costly and pervasivewhite-collar crimes. Costing Americanshundreds of billions of dollars a year in losses,insurance fraud artificially inflates ourinsurance premiums and threatens the veryintegrity and viability of the safety netprovided by our system of insurance. It can beas simple as lying on an insurance applicationor as complex as building a staged accidentring, replete with phony accident victims,crooked medical providers and corruptlawyers. The problem is, perhaps, no moreacute than in New Jersey which has, for years,suffered from some of the highest insurancerates in the country.

In recognition of the need to more effectivelytarget insurance cheats by consolidatingresources in a single agency and bycoordinating the oft times fragmented anddisparate efforts of others engaged in the battleagainst insurance fraud, the New JerseyLegislature established the New Jersey Officeof the Insurance Fraud Prosecutor (OIFP) asNew Jersey's premier fraud fighting agency in1998, pursuant to the provisions of theAutomobile Insurance Cost Reduction Act(AICRA). As explained by the New JerseyLegislature, OIFP was created in order toprovide for "a more effective investigation andprosecution of fraud than exists at the presenttime.” To this end, the legislature designatedOIFP as the focal point for the investigation,prosecution and coordination of all criminal,civil and administrative cases of suspectedinsurance and Medicaid fraud.

In establishing OIFP, the Legislature

recognized that the complex challenges raisedby insurance fraud required creative,comprehensive and far-reaching solutions. Itprovided for the gubernatorial appointment ofan Insurance Fraud Prosecutor, who wouldwork closely with, and report directly to, theNew Jersey Attorney General. At its inception,OIFP was situated within the New JerseyDivision of Criminal Justice to draw upon theresources and expertise of one of the nation'sleading law enforcement agencies. In additionto its cadre of criminal investigators andprosecuting attorneys, the Legislature uniquelyconfigured OIFP by incorporating, the entirecivil investigative staff formerly within theNew Jersey Department of Banking andInsurance.

In its role as the State's leader in combatinginsurance fraud, OIFP was charged by theLegislature with responsibility for coordinatingthe insurance related anti-fraud efforts of allState and local agencies and departments, aswell as those of private industry, to provide forthe most effective and efficient use of fraudfighting resources possible. Consequently, inaddition to its traditional law enforcementfunctions of investigation and prosecution,OIFP offers a comprehensive, integrated rosterof programs designed to inform the public,train law enforcement and marshal theresources of the public and private sectors toeradicate insurance fraud.

Consistent with the expectations of those whowere instrumental in the formation of OIFPover four years ago, OIFP experienced, in2002, its most productive year to date,registering increases of 130% in the number of

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defendants indicted, 79% in the number ofdefendants convicted, 115% in the number ofdefendants sentenced, 91% in the number ofcivil insurance fraud sanctions imposed and59% in the amount of the civil consent orders,settlements and judgments obtained. In all,OIFP imposed nearly 4,000 criminal and civilsanctions on those who committed insurancefraud in New Jersey in 2002. OIFP alsoimposed over $7.3 million in civil fines andpenalties. Together with OIFP funded CountyProsecutors’ insurance fraud units, in 2002,OIFP accounted for the criminal charging of502 defendants, the conviction of 302defendants, the imposition of jail sentencestotalling 219 years, and the ordering ofrestitution in excess of $8.3 million, on behalfof the citizens of New Jersey .

In order to achieve the increased efficienciesresulting from greater specialization, OIFPunderwent a reorganization in 2002 resultingin the creation of separate investigativesections, within both the criminal and civilsides of OIFP, focusing, respectively, on autofraud, health and life fraud, and property andcasualty fraud. In 2002, OIFP also continuedto expand upon its programmatic efforts toinform the public and train law enforcementpersonnel by increasing the dissemination ofinformation regarding OIFP prosecutions,expanding the scope of its trainingopportunities, releasing the most recent in itsseries of roll-call training videos, andpublishing and distributing to every NewJersey police department a directory ofinsurance verification hotline telephonenumbers called the Uninsured MotoristIdentification Directory (UMID).

1

That OIFP has achieved such a high degree ofsuccess has been reflected in the recognition ithas received from others in the fraud fightingcommunity in 2002. Its work has been cited inperiodicals of national scope and in at leastone major criminology textbook, and itsassistance has been sought by officials fromthroughout the United States and Canada.OIFP's Insurance Fraud Prosecutor wasinvited in 2002 to participate as a keynotespeaker at major gatherings of those engagedin fighting insurance fraud, includinginvitations to address the National Health CareAnti-Fraud Association in Washington, D.C.,in November of 2002, and to address the AsiaPacific Fraud Convention in Australia inSeptember of 2003.

OIFP's year of successes culminated in itsproducing and co-sponsoring, along with theInsurance Council of New Jersey and the NewJersey Special Investigators Association, theNew Jersey Insurance Fraud Summit inOctober of 2002. The Summit showcasedOIFP's accomplishments and the effectiveworking relationships it has developed with theinsurance industry as well as other lawenforcement and government agencies since itsbirth as an agency in 1998. This year's Summitwas attended by over 200 government andinsurance industry executives, including NewJersey Governor James E. McGreevy, formerAttorney General David Samson, ActingAttorney General Peter C. Harvey, InsuranceFraud Prosecutor Greta Gooden Brown,Commissioner of the

Department of Banking and Insurance HollyBakke and Director of the Division of MotorVehicles, Diane Legreide. The Summit servedas the forum for Governor McGreevy to unveilhis Administration's 2002 agenda to fightautomobile insurance fraud.

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2002 New Jersey Insurance Fraud Summit

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PART I OPERATIONAL AND ORGANIZATIONAL OVERVIEW

Introduction

The Office of the Insurance Fraud Prosecutor(OIFP) is organized to provide acomprehensive and integrated approach tocombating insurance fraud throughout theState. OIFP is headed by the New JerseyInsurance Fraud Prosecutor and consists of acriminal and civil bureau. Each bureau iscomprised of several sections. OIFP-Criminalincludes both a Medicaid Fraud Section, whichinvestigates and prosecutes Medicaid fraud,and specialized Insurance Fraud Sections,which investigate and prosecute all other typesof insurance fraud.

OIFP-Civil is comprised of specialized teamsof civil investigators who investigate cases ofpossible insurance fraud, and, whereappropriate, pursue restitution and theimposition of civil fines. OIFP-Civil is oftenable to impose fines or obtain restitution incases where OIFP would otherwise be unableto pursue a successful criminal prosecutionbecause of the heightened burden of proofrequired in criminal cases. Legal support forOIFP-Civil is provided by Deputy AttorneysGeneral from the Division of Law in theDepartment of Law and Public Safety.

OIFP's intake unit, the Case ScreeningLitigation and Analytical Support Section(CLASS), processes incoming referrals from avariety of sources, logging them into theOffice's database, cross checking them againstcurrent or closed cases, and screening them forsubsequent assignment to the criminal and civilsections of OIFP. The Liaison Section of theOffice coordinates OIFP investigations,prosecutions and programs with insurancecompanies, professional licensing boards,

county prosecutors’ offices, and other lawenforcement and governmental agencies.Administrative support for the Office,including fiscal, human resources andcomputer operations, is provided by theAdministration Bureau of the Division ofCriminal Justice.

OIFP maintains a home office inLawrenceville, New Jersey, as well as regionaloffices in Cherry Hill and Whippany, NewJersey. Each regional office maintains a staffof deputy attorneys general and criminal andcivil insurance fraud investigators, conductinga full range of criminal and civil insurancefraud investigations and prosecutionsthroughout the State.

OIFP-CriminalGeneral Description

Traditional criminal investigations andprosecutions of insurance and Medicaid fraudare conducted by specialized sections withinOIFP-Criminal. These Sections are staffed byexperienced Deputy Attorneys General,criminal State Investigators, Analysts andother professional and administrative supportstaff.

In 2002, these Sections experienced their mostproductive year to date, opening 508 newinsurance fraud investigations, leveling chargesagainst 225 defendants, and obtainingconvictions of 154 defendants. A total of 121years of incarceration and $7,875,157 incriminal fines and penalties were imposed in2002. These statistics represent an increaseover statistics in 2001 of 24% in the number ofnew insurance fraud investigations opened,130% in the number of defendants indicted,

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79% in the number of defendants convictedand 115% in the number of defendantssentenced.

In order to ensure the most effective targetingof suspected insurance fraud, OIFP-Criminalunderwent a reorganization in 2002. The oldstructure was replaced by four specializedsections, each headed by a Supervising DeputyAttorney General (SDAG) and SupervisingState Investigator (SSI), and devoted,respectively, to auto insurance fraud, propertyand casualty insurance fraud, health and lifeinsurance fraud, and Medicaid fraud.

Including supervisors, when fully staffed,thirteen Deputy Attorneys General and thirtyeight State Investigators are assigned to theAuto Fraud Section, three Deputy AttorneysGeneral and twelve State Investigators areassigned to the Property and Casualty Section,nine Deputy Attorneys General and twentyfive State Investigators are assigned to theHealth and Life Section and nine DeputyAttorneys General and twenty five StateInvestigators are assigned to the MedicaidFraud Section. Supervising State Investigatorsin OIFP-Criminal report to a Deputy ChiefInvestigator who, in turn, reports to theagency's highest ranking investigator, theManaging Deputy Chief Investigator. AllSupervising Deputy Attorneys General reportdirectly to the Insurance Fraud Prosecutor.

Auto Fraud Section

The Auto Fraud Section targets a variety ofinsurance frauds which, in one way or another,arise from, or are related to, the use of anautomobile. One of the most common typesof automobile insurance fraud involves themaking of a fraudulent claim for the theft of anautomobile which the owner or lessor falselyclaims was stolen. In this type of case, alsoknown as a "give-up" because the vehicle inquestion is often voluntarily given up by the

owner or lessor for disposal by a middleman,a vehicle is purposely reported as stolen inorder to make a fraudulent insurance claim.

Owners or lessors who commit this type ofinsurance fraud are usually motivated by adesire to eliminate a seemingly burdensomemonthly loan or lease payment or by a desireto "unload" a damaged or high mileage vehiclewhich the owner is unable to sell, or which islikely to result in a substantial lease-endpayment to the leasing company. Typically, atthe behest of the owner or lessor, themiddleman takes the vehicle to an isolatedlocation and, to preclude its return to theowner or insurance company, causes as muchdamage to the vehicle as possible byvandalizing it, burning it, dumping it in a lakeor river, or undertaking a similar effort tocause so much damage as to render its repaireconomically prohibitive.

The vehicles which are "given up" aresometimes "sold" by the owner or lessor to themiddleman for a nominal sum, who, in turnmay resell the vehicle for illegal export, or fordisassembly and the subsequent sale of partson the black market by a "chop shop." Insome cases, the owner or lessor may be soeager to dispose of a vehicle and file afraudulent claim that the owner is willing topay the middleman to dispose of the vehicle. To most members of the public, such schemingwould seem shocking. However, the sadreality is that somewhere between fifteenpercent and twenty five percent of all reportedauto thefts are probably fraudulent, accordingto statistics maintained by the NationalInsurance Crime Bureau. Even in those caseswhere a vehicle has actually been stolen,insureds are sometimes tempted to commitinsurance fraud by exaggerating the conditionor value of the vehicle or items which were inthe vehicle when it was stolen.While many fraudulent auto theft claims arefiled by individuals who have plotted the

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frauds on their own, many fraudulent autotheft claims involve seasoned criminals. Thesecriminals specialize in disposing of vehicles forowners who are seeking assistance in gettingrid of their vehicles to make it appear asthough their vehicles were stolen.

Another type of fraud targeted by the AutoFraud Section is the staging of bogusautomobile accidents as a predicate to thefiling of fraudulent insurance claims. Claimsare filed for medical bills, for damages forpurported "pain and suffering" stemming fromfeigned injuries, and for automobile propertydamage allegedly sustained in the stagedaccident. While accidents are sometimesstaged by individuals acting alone or with a co-conspirator, accidents are more often stagedby a network of conspirators involving acombination of participants. Theseparticipants may include drivers andpassengers, as well as, in many cases,"runners" (individuals who act as procurers ofaccident victims for the filing of medical andlegal claims), corrupt police officers,individuals affiliated with medical andchiropractic clinics, auto repair shop ownersand operators and those employed in the alliedlegal professions, such as lawyers, paralegals,law office managers and investigators retainedby law firms.

Accidents are staged in a variety of ways.Sometimes, vehicles which have beenpreviously damaged are placed at the scene ofan alleged collision, accompanied byconspirators posing as drivers and passengers.In other cases, one or more individuals arriveat a police station and falsely report the allegedoccurrence of an automobile accident. In thesecases, no collision or accident whatsoever haseven taken place.

However, in some cases, those who stageaccidents may cause actual collisions to take

place, creating a real, immediate and seriousthreat to the safety of the motoring public.Conspirators may drive separate cars into oneanother creating an actual "accident" andrisking their own safety, as well as the safetyof those posing as passengers, otherunsuspecting motorists and innocentbystanders in the vicinity.

In other cases, real accidents may be caused bypassing an unsuspecting motorist andslamming the brakes to cause the unsuspectingdriver to crash into the rear of the perpetrator'svehicle. An accident may also be causedintentionally by the perpetrator inviting theunsuspecting motorist to proceed from aparking space or stop sign, and quicklyaccelerating to cause a crash which thenappears to be the fault of the innocent driver.In both of these cases, the staged accidents aremade to appear as if they were the fault of theinnocent, unsuspecting party.

OIFP devoted significant resources to theinvestigation and prosecution of stagedaccident rings in 2002. As reported at greaterlength in the section of this report containingcriminal case summaries, OIFP madesignificant progress in the investigation andprosecution of persons who participated in thestaged accident ring allegedly headed byAnhuar Bandy for the benefit of hischiropractic practices operated under theumbrella of ABP Chiropractic. In April of2002, OIFP obtained the indictments of 28individuals, including Bandy, himself, oncharges ranging from conspiracy andracketeering to health care claims fraud andtheft by deception. Although the indictmentsfocused specifically on eight automobileaccidents, the indictments also generallyalleged that the ring was responsible for morethan 90 other automobile accidents, whichgenerated phony insurance claims exceeding$2 million. By the end of 2002, nine of thosecharged with participating in the ring had pled

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guilty to various charges stemming from theirinvolvement.

Automobile accidents which are not stagedalso give rise to fraudulent insurance claimswhich are investigated and prosecuted by theAuto Fraud Section. Occupants of a vehiclewhich has been involved in a collision oftenview the collision's occurrence as anopportunity to "cash in" on their insurancepremiums. Sometimes, fraudulent claims aresubmitted for fictitious or inflated propertydamage to the vehicle. In many cases, theseoccupants feign or exaggerate injuries andseek unnecessary medical treatment in order tofile a claim for "pain and suffering." Becausethe settlement value of a claim for bodily orpersonal injury may be determined, in largepart, by the severity of injuries as measured bythe cost and extent of medical treatmentrendered to the claimant, claimants may betempted, or encouraged by unscrupulouslawyers or medical providers, to "run up" theirmedical bills as high as possible, a practicecommonly known as “overtreatment.”

Medical bills for treatment for injuriessustained in an automobile accident in NewJersey are typically covered under an insured'sautomobile insurance policy as Personal InjuryProtection (PIP) benefits. PIP fraud isparticularly difficult to investigate andprosecute because it is almost always justifiedby the opinion of a medical professional who,himself, may be the beneficiary of continuingunnecessa r y med ic a l t r ea t ment s .Unfortunately, many clinics, sometimesdescribed as "treatment mills," whichspecialize in the "assembly line" like treatmentof those who claim to have been injured inautomobile accidents, have arisen in NewJersey. Practitioners who participate in thesemills are most effectively prosecuted when itcan be proven that they have billed for serviceswhich they have not actually provided.

A legitimate automobile accident may give riseto other types of fraudulent claims as well.Occasionally, a driver who has been involvedin an accident falsely claims that a friend ormembers of the driver's family were passengersat the time of the automobile accident when, infact, the driver's vehicle had no passengers atthe time of the accident. This type of claim,known as a "jump in," because imaginarypassengers figuratively jump into the vehicleafter the accident, is sometimes initiated at thetime a claim is submitted to the insurancecarrier. At other times, the groundwork is laidby the driver prior to the filing of a claim byfraudulently altering the original accidentreport prepared by law enforcement officials.

Sometimes, after a bus has been involved in anaccident, passersby, hoping to "cash in" byclaiming to have been injured in the accident,actually climb on board the bus after theaccident has occurred. In one such typical"jump-in" case, reported in our criminal casesummaries, OIFP prosecutors obtained theconvictions of twin sisters, a daughter and afriend who falsely claimed to have been injuredin an accident which never occurred.

The Auto Fraud Section also investigates andprosecutes those who commit a crime bymanufacturing, distributing, selling orknowingly displaying a fictitious or fraudulentinsurance card which falsely purports toprovide mandatory automobile insurancecoverage. It has been estimated that morethan 10 percent of those who drive in NewJersey do so without having purchased therequired automobile insurance. Of those whochoose to drive without insurance, manyattempt to avoid the penalties for drivingwithout insurance, which includes mandatoryloss of license and substantial civil fines, byobtaining these fictitious cards. While OIFPand other agencies in New Jersey explorepossible ways to thwart the counterfeiting of

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automobile insurance cards, the use of suchcards continues to be a major problem in NewJersey.

Property and Casualty Section

The Property and Casualty Sectioninvestigates and prosecutes a wide variety ofinsurance fraud scams which may fall outsidethe purview of the other specialized sections.Frauds investigated and prosecuted by theProperty and Casualty Section typicallyinvolve fraudulent claims under homeownersor commercial property insurance policies.The most common types of insurance fraudcommitted by homeowners involve claims inwhich homeowners exaggerate or inflate thevalue of the property that has been destroyed,damaged or stolen. Other fraudulenthomeowner claims relate to prior losses forwhich the homeowner was previouslycompensated, or may involve a contrived,staged or false claim of loss, such as the casewhere a homeowner falsely claims to havebeen the victim of a burglary, and claims tohave lost valuable jewelry as a consequence.

Owners of commercial property may makesimilar fraudulent insurance claims underpolicies of insurance covering their commercialpremises. In some cases, owners ofcommercial premises, such as restaurants, maypurposely arrange for someone to set theirpremises on fire in order to file a fraudulentclaim. They then use the insurance proceedsto rebuild their premises in a different location,or on a grander scale. Other fraudulent claimsstemming from a commercial insurance policymay involve a fraudulent claim by a third partywho falsely claims to have tripped, fallen andbeen injured on the commercial premises.Casinos in New Jersey are a particularlyvulnerable target of so-called "trip and fallartists," some of whom make a career offalling and filing such insurance claims.

Those who engage in the types of fraudinvestigated and prosecuted by the Propertyand Casualty Section are often assisted byothers, such as contractors or public adjusterswho provide phony or inflated estimates ofloss. In one such ongoing case handled by theSection in 2002, OIFP obtained a guilty pleafrom an individual named Otis Boone. Booneadmitted committing arson as part of aconspiracy with Marc Rossi, a licensed publicadjuster, in an alleged scheme to burnproperties in order to enable Rossi and theother conspirators to profit through Rossi'srepresentation of the properties' owners. Oneof the owners of the burned properties, MarcGraziano, also pled guilty to participating inthe conspiracy, admitting that Rossi, with hisconsent, arranged to have his florist shop seton fire as part of the conspiracy. Rossi, whohas denied his involvement in the allegedarsons, is pending trial.

Still other types of fraud investigated andprosecuted by the Property and CasualtySection stem from insurance agents orinsurance company employees who embezzletheir clients' premium payments or whoengage in schemes to issue fraudulent claimsettlement checks. One such case, which wassuccessfully prosecuted by OIFP in 2002,involved a conspiracy in which a formerinsurance claims adjuster was alleged to havespearheaded a scheme to issue 57 fraudulentset t lement claim checks t otallingapproximately $625,000. Although the allegedring leader, Carl Prata, has denied anywrongdoing, many of his 45 alleged co-conspirators pled guilty in 2002 toparticipating in the scheme. They weresentenced to penalties ranging fromincarceration and substantial civil and criminalfines to full restitution. Prata, himself, wasindicted on December 18, 2002, and isexpected to be scheduled for trial in 2003.

Health and Life Section

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The Health and Life Section addresses a widevariety of frauds relating to life insurance,disability insurance, and insurance whichprovides for the indemnification of medicalcare expenses. Life insurance fraud may, forexample, involve the misrepresentation of aninsurable interest, the unauthorized altering ofa designation of a beneficiary, the failure of aninsured to disclose a disqualifying, pre-existingmedical condition, the fraudulent reporting ofan insured's death, or even the murder of aninsured in order to collect the insurance policyproceeds.

Health insurance fraud may be committed bymedical providers and patients, alike. Whencommitted by health care professionals, suchas physicians or hospitals, health insurancefraud often takes the form of billing forservices that were never rendered to a patient,exaggerating the extent to which services wereprovided, mischaracterizing the nature of theservices rendered in order to charge a higherfee, or knowingly billing for the provision ofmedical services to patients who fraudulentlyclaimed to have been injured in accidents. When committed by patients, health insurancefraud may take the form of a person usinganother's insurance card to claim benefits, theseeking of benefits for treatment of phonyinjuries in conjunction with the filing of afraudulent pain and suffering claim, or schemesto fabricate and submit phony medical bills fortreatment the claimant never received.

Disability insurance fraud most often takes theform of an applicant purposely omittingnegative medical information which wouldeither disqualify the applicant from obtainingthe insurance, or which would likely result inthe payment of higher premiums for theinsurance coverage sought by the applicant. Italso takes the form of fraudulent claims fordisability benefits by insureds who exaggerateor fake injuries which they allege to be

disabling. These frauds are often uncoveredafter a claim is made and subsequentinvestigation identifies pre-existing injuries orreveals that the insured is working or engagedin other able-bodied activities while claimingto be totally physically impaired.

In one case of health insurance fraud by aprovider handled by OIFP in 2002, forexample, OIFP obtained the conviction of Dr.Elliot Heller, a plastic surgeon, who hadattempted to bilk insurance companies out ofmore than $1 million. Heller mischaracterizedcosmetic procedures as "medically necessary,"and attributed some of the surgeries heperformed to another physician in order to billinsurance companies at higher out of networkrates. In all, Heller collected nearly half amillion dollars from the victimized insurancecompanies before he was caught. InDecember of 2002, Heller was sentenced toserve three years in State prison and orderedto pay $321,000 in restitution and $100,000 incivil insurance fraud fines.

In another case handled by OIFP in 2002involving patient fraud, OIFP obtained theconviction of a purported patient, MichaelForma. Forma submitted 73 false healthinsurance claims totalling $12,798 fortreatment he had neither received nor forwhich he had paid. He was sentenced to twoyears probation, conditioned upon him serving90 days in the Middlesex County AdultCorrectional Center and payment of a $2,500criminal fine.

Medicaid Fraud Section

The Medicaid Fraud Section investigates andprosecutes those who commit fraud againstNew Jersey's Medicaid Program. TheMedicaid Program is designed to help NewJersey's disabled and economicallydisadvantaged citizens with their health careexpenses. The cost of the program in New

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Jersey is borne equally by the state and federalgovernments. New Jersey's share foradministering the program is significant,constituting nearly 15 percent of the State'sannual budget. The Medicaid Fraud Sectionof OIFP, which receives 75 percent of itsoperational funding from the federalgovernment, is a highly cost effective way ofcombating this type of health care fraud, sinceits efforts typically result in the recovery of farmore funds in restitution and penalties than theState expends in its matched portion of itsbudget.

As in other types of health care related fraud,fraud against the Medicaid Program may becommitted by either providers or patients,though the most sophisticated and costlyfrauds are most often perpetrated by providers,or those purporting to be providers. Providerfraud against the Medicaid Program is typicallycommitted when a provider of Medicaidcovered services fraudulently obtains medicalassistance payments to which the provider isnot entitled. Medicaid fraud also encompassespatient abuse and criminal neglect occurring inhealth care facilities, such as nursing homes,which receive Medicaid funds.

Among the providers investigated by theMedicaid Fraud Section are doctors, dentists,pharmacist s, c linics, laborato r ies,transportation services, nursing homes, durablemedical equipment suppliers and otherancillary service providers who operate andadminister services under the MedicaidProgram. Increases in Medicaid fraud tend tobe driven by increases in program benefits.

Many of the cases handled by the MedicaidFraud Section involve non-emergencytransportation providers. These providersreceive reimbursement from the MedicaidProgram for transporting Medicaid recipientsbetween their residences and the place wherethey receive treatment or other services

covered by Medicaid. Medicaid licensedtransportation providers include "liverytransportation" for patients who can walk ontheir own, and "mobility assisted vehicles,”also known as “invalid coach transportationservices,” for those who require assistance dueto physical or mental infirmity. Fraud bytransportation providers is most oftencommitted by inflating mileage claims,providing kickbacks to recipients of theirservices, and falsifying prior authorizationforms to qualify a recipient for mobilityassisted services, which are paid at a higherrate than livery transportation. These non-emergency transportation providers areparticularly adept at exploiting the Medicaidsystem because no professional license isrequired, such as that required of a doctor orpharmacist, and because of the minimaleconomic investment necessary to engage inthis type of business.

One case handled by the Medicaid FraudSection in 2002 involving M&GTransportation typifies the types of schemessuccessfully investigated and prosecuted by theSection. In this case, the scheme to defraud theMedicaid program included the paying ofkickbacks to patients to induce them to usetheir service, billing for individuals who wereineligible to receive Medicaid, transportingMedicaid recipients to destinations notallowable under Medicaid regulations, andfalsifying information on Medicaid forms.Following his conviction, the owner of M&GTransportation was sentenced to serve fouryears in State prison.

In addition to investigating and prosecutingtransportation providers who defraud theMedicaid Program, the Medicaid FraudSection assists the State agency in conductingbackground checks for prospectivetransportation providers. These investigationsenable the State agency to screen out possiblyunethical providers who might engage in such

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fraud.

The Medicaid Fraud Section also investigatesand, when possible, prosecutes those whoattempt to commit Medicaid fraud through theuse of sophisticated electronic billing schemes.Through these schemes, unscrupulousproviders are sometimes able to defraud theMedicaid program of millions of dollars byremotely (from out-of-state), quickly andanonymously submitting electronic claims forenormous sums. In order to combat thisproblem effectively, the Medicaid FraudSection has adopted an aggressive approach tothe execution of search and arrest warrants.The execution of these warrants arm lawenforcement with an element of surprise andenable OIFP to swiftly freeze assets and securedefendants' presence at trial, by obtainingadequate and appropriate conditions of bailbefore suspects have an opportunity to flee.

Federal law permits the Medicaid FraudSection to prosecute health care fraud in otherfederally funded health care programs,including Medicare. The Section is soauthorized whenever there is a connection toMedicaid fraud and the Inspector General ofthe concerned federal agency assents. Federalguidelines also encourage negotiated civilsettlements in cases of suspected Medicaidfraud where the evidence would be insufficientto satisfy the higher burden of proof requiredat a criminal trial.

Under this authority, the Medicaid FraudSection has successfully collaborated withMedicaid fraud units in 47 other states and theDistrict of Columbia, as well as with federalauthorities, in recovering overpayments fromproviders who operate on a national scale. Inthese actions, State and federal prosecutorswork as a team, filing these cases under thefederal False Claims Act, and negotiating thebest possible settlements for their respectiveagencies. Recoveries and penalties are

allocated among the participating authoritiesaccording to their respective damages. Thesettlements also require the execution ofcorporate integrity agreements by theoffending parties, and may also involvecriminal action against responsible individualsand corporate entities. Some of the cases inwhich OIFP's Medicaid Fraud Sectionobtained settlements for New Jersey in 2002included a settlement with NationalNephrology Associates, which had beenoverpaid on the submission of claims forEpogen administrations in the sum of$1,658,778, and a settlement with GambroHealthcare, Inc., which had also overchargedfor Epogen administrations in the sum of$2,098,291.

OIFP-CivilGeneral Description

The majority of OIFP's insurance fraudinvestigations are conducted by the civil sideof the Office. OIFP-Civil is authorized to seekthe imposition of civil penalties against thosewho commit insurance fraud, under authorityof the New Jersey Insurance Fraud PreventionAct (Fraud Act). N.J.S.A. 17:33A-1 et seq.The Fraud Act defines several acts oromissions which constitute civil insurancefraud violations. These violations give rise tosignificant monetary penalties which may belevied against persons who violate the Act.

The Act provides for fines of up to $5,000 fora first violation, $10,000 for a secondviolation, and $15,000 for third andsubsequent violations. Each misrepresentationor fraudulent omission in a claim or applicationconstitutes a separate violation of the Act,triggering liability for the specified fines. Inaddition to the imposition of civil fines, whereappropriate, OIFP-Civil also seeks to recoverrestitution and attorneys fees from the violator.

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Of the 9,530 referrals of suspected insurancefraud received by OIFP in 2002, 4,639warranted assignment for additionalinvestigation by OIFP-Civil investigators.

Like its counterpart, OIFP-Criminal, OIFP-Civil was similarly restructured in 2002.Within each of its four squads, teams weredevoted to investigating the same categories ofinsurance fraud (with the exception ofMedicaid fraud) investigated by OIFP-Criminal. Accordingly, OIFP-Civil nowconsists of teams which investigate insurancefraud involving either property and casualty,health and life, or automobile insurancecoverages.

When fully staffed, and including TeamLeaders, 54 investigators are assigned to autoinsurance fraud investigations, 34 investigatorsare assigned to property and casualtyinsurance fraud investigations, and 43investigators are assigned to health and lifeinsurance fraud investigations. In addition,another twelve criminal and civil investigatorsare assigned to various supervisory positionsin OIFP-Civil, while another six civilinvestigators perform various professionalsupport functions in OIFP-Civil, such asmaintaining required databases, production ofOIFP training videos and other publications,and performing similar tasks requiring a highlevel of expertise.

OIFP-Civil also completed its most productiveyear to date in 2002, issuing 1,044 insurancefraud administrative consent orders totalling$6,344,058 in civil fines. Issuance of theseadministrative consent orders are authorizedunder the Fraud Act after an investigationreveals a violation of the Act. Anadministrative consent order represents apreliminary settlement offer to the violatorproviding the violator with the earliestopportunity to voluntarily agree to the terms

of the order, the findings of the investigationand the imposition of an agreed upon civil fine.Otherwise, the case is referred to civilattorneys in the Division of Law for litigation.Of the consent orders issued by OIFP-Civilinvestigators in 2002, 440 were voluntarilyexecuted, totalling some $1,373,000.

In 2002, OIFP-Civil investigators referred 490cases to Division of Law Deputy AttorneysGeneral for the filing of civil enforcementactions stemming from the refusal of insurancefraud violators to either voluntarily executeconsent orders or to make payments onoutstanding consent orders. Civil actions byDivision of Law Deputies culminated in 526judgments and settlements totalling$5,073,212 in civil penalties. Enforcementactions by DOBI on prior judgments resultedin the recoupment of $1,981,845 in penaltieson behalf of the State.

The investigation of cases of suspectedinsurance fraud by OIFP-Civil investigatorsprovides law enforcement with an invaluableweapon in the battle against insurance fraud.This mechanism complements the efforts ofOIFP-Criminal and provides an avenue forenforcement and penalties where criminalprosecutions are not appropriate. Because theimposition of a civil fine under the Fraud Actrequires the lesser burden of proof for civilcases, that of a "preponderance of theevidence," it is often possible to impose civilfines on those who cheat insurance companies,when they would have otherwise avoidedresponsibility for their actions. Indeed, theability of OIFP-Civil investigators to catchinsurance cheats and hold them accountable byrequiring them to pay hefty fines provides asignificant disincentive to many who mightotherwise consider committing insurancefraud, while providing a mechanism to ensurethat the justice system is able to administerproportionate remedies in appropriate cases.

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While the imposition of civil fines by OIFP-Civil under the Fraud Act is frequently a viablealternative to an otherwise doubtful criminalprosecution, the imposition of civil fines is notnecessarily mutually exclusive of a criminalproceeding against the subject. Most caseswhich result in a successful criminalprosecution also result in the imposition ofcivil penalties under the Fraud Act.Conversely, in most cases where OIFP is ableto successfully impose civil penalties, theevidence is insufficient to sustain a successfulcriminal prosecution. In addition, Civilinvestigators are able to pursue civil penaltiesin cases where the criminal prosecution ishandled by a prosecuting entity other thanOIFP-Criminal, such as County Prosecutors’Offices or federal authorities.

Auto Fraud Teams

OIFP-Civil's Auto Fraud investigative teamsgenerally handle the same types of fraud astheir counterparts in OIFP-Criminal. Civilinvestigators additionally handle cases wherethe fraud, while technically a crime, may notconstitute a viable criminal offense, such ascases involving "rate evasion" where aninsured misrepresents the garaging location ofan insured vehicle in order to obtain a lowerpremium rate.

OIFP-Civil’s Auto Fraud investigators havecontinued to work closely with local policedepartments throughout the State. Throughits highly successful "Give- Up Initiative," civilinvestigators identify reported vehicle theftsthat may have been falsely reported by thevehicles' owners as a predicate to the filing ofa fraudulent insurance claim. In anotherinitiative undertaken by OIFP-Civil's AutoFraud teams in 2002, investigators haveimplemented a program to identify contractorswho fraudulently register their commercialvehicles as personal vehicles in order to obtainthe lower insurance rates which reflect the

lower risks associated with non-commercialvehicle use. The business owners who havebeen caught in the net cast by this initiativeare, in many cases, facing civil fines far inexcess of the savings they enjoyed bymisrepresenting the use of their vehicles totheir insurance companies. Like theircounterparts in OIFP-Criminal, investigatorsassigned to the Auto Fraud teams in OIFP-Civil also investigate other types of fraudassociated with automobile insurance, such asphony and exaggerated claims for propertydamage, phony claims associated with stagedaccidents, and fraudulent claims by "jump- ins"who falsely claim to have been injured aspassengers in an automobile accident, whenthey were not involved at all.

OIFP-Civil often teams with officials fromother law enforcement agencies in itsinvestigative efforts, including those associatedwith its “Give-Up Initiative.” In one suchcollaboration in 2002, designated "OperationStreet Sweep," OIFP-Civil investigatorsworked closely with law enforcement officersfrom the New York office of the FBI, the NewYork Police Department, the Elizabeth PoliceDepartment and the District Attorneys' Officesfrom Brooklyn and Queens in the targeting ofauto owners who had voluntarily "given-up"and falsely reported their vehicles stolen, inorder to file fraudulent insurance claims.

Health and Life Teams

The Health and Life Teams in OIFP-Civil alsohandle cases which mirror those investigatedand prosecuted by OIFP Criminal, butfrequently involve cases with respect to whicha criminal prosecution is not warranted. Civilinvestigators conduct investigations of avariety of schemes perpetrated by both medicalproviders and patients to bilk insurancecompanies. Frauds perpetrated by providersinclude billing for services not rendered,misrepresenting the nature of services rendered

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in order to charge a higher fee, and"unbundling," or billing for multiple serviceswhen billing for only a single procedure isappropriate. Other frauds perpetrated byproviders may involve billing for servicesrendered beyond the scope of a provider'slicense, such as where a chiropractor submitsa bill for a surgical procedure, or charging forthe dispensing of a medication which theprovider received as a free sample from apharmaceutical representative.

Other cases investigated by the OIFP-CivilHealth and Life Teams relate to insurancefraud committed by patients or purportedpatients. These cases include patientssubmitting fabricated bills for treatments thatwere never provided, or subjects submitting abill for reimbursement of a fraudulentprescription.

Property and Casualty Teams

The Property and Casualty Teams in OIFP-Civil also investigate the same types ofinsurance fraud handled by their counterpartsin OIFP-Criminal. As in the case of the otherOIFP-Civil investigative teams, these civilinvestigators are often able to successfullyimpose civil fines where a criminal prosecutioncannot be pursued. These cases arise out ofdifferent types of insurance policies, includinghomeowners insurance policies andcommercial insurance policies. Fraudulentclaims under these policies often involve theexaggeration or fabrication of claimed lossesdue to theft, burglary or casualty, or themaking of multiple claims for a single loss.OIFP-Civil also investigates instances ofsuspected insurance agent fraud whichtypically involves the embezzlement of clients'premiums or the purposeful misrepresentationof information on insurance applications inorder to obtain lower rates on behalf of aclient.

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Case Screening, Litigation And Analytical Support Section (CLASS)

All referrals to OIFP, whether from insurancecompanies, the OIFP hotline or website,citizen complaint letters or walk-ins,administrative agencies or other lawenforcement agencies, are received by theCase Screening, Litigation and AnalyticalSupport Section (CLASS). CLASS, formerlynamed the Analytical Case Tracking andInformation Unit (ACIU), serves both thecriminal and civil sides of OIFP. The Sectionis headed by a Supervising Deputy AttorneyGeneral (SDAG) and a Supervising StateInvestigator (SSI). It is staffed with threeCivil Investigators, one Civil Supervisor, sixAnalysts, one Paralegal, seven TechnicalAssistants and five clerical/administrativesupport persons.

Upon receipt of referrals by CLASS,documentation is date stamped. Subjects arethen searched and entered into Law Manager,OIFP’s case tracking database. Case numbersare subsequently assigned. The informationreceived in the referral is screened by civilinvestigators who determine whether there issufficient evidence to initiate a civil and/orcriminal investigation. If a referral appears toinvolve a criminal violation, it is reviewed bythe Supervising Deputy Attorney General whodecides whether to accept or decline it forcriminal investigation. The screening processusually includes obtaining additionalbackground information on subjects fromqueries of various governmental and publicrecord databases. All cases are then eitherassigned for investigation, referred to otheragencies or closed and referenced forintelligence purposes.

Cases that warrant investigation are coded bytype of insurance fraud and assigned by OIFPregion. After cases have been assigned,Analysts and Technical Assistants in CLASS

continue to support civil and criminalinvestigators by providing additional databasesupport, as needed, and in-depth analyses ofevidence developed in priority cases.Depending upon the requirements of theinvestigation, various types of analyses areperformed, including association; event flow;insurance claim; commodity flow; financialtransaction; times series; telephone record; andstatistical analysis. Records that are analyzedcan include insurance billings; financialrecords; corporate filings; investigativereports; surveillance reports; telephone tolls;electronic surveillance transcripts or tapes;interviews; testimony and public databases.Typically, the products generated by theanalyst include reports; tables; graphs; charts;flow diagrams and free form charts, many ofwhich are used as Grand Jury or trial exhibits.

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Information Management SystemsOIFP maintains several informationmanagement systems. These systems containinformation for tracking and managing casesreferred to, and from, OIFP, as well asinformation which can be tapped forinvestigative research to identify possiblepatterns and trends in insurance fraud. OIFP'sLaw Manager Database IntegratedComputerized Case Tracking System wassignificantly enhanced in 2002. OIFP’s LawManager Database had previously assimilatedall civil case tracking data from a pre-existingdatabase inherited from the Department ofBanking and Insurance. In 2002, significantprogress was made towards fully integratingthe system with information from the criminalcase tracking database for the Division ofCriminal Justice. The final integration of bothsystems is scheduled for completion in 2003.

The Law Manager system is used by OIFP’sCLASS Section to capture data with respectto incoming referrals to OIFP. The system isalso used to record the progress ofinvestigations stemming from those referrals.Responsibility for the maintenance of the LawManager system is assumed by the InformationManagement Section of InformationTechnology Services of the Division ofCriminal Justice. Staffers within the NetworkServices Section of Information TechnologyServices are responsible for maintaining, andcontinually upgrading, OIFP's computernetwork, which provides numerous othercomputer based services such as e-mail, legalresearch, word processing, and Internetaccess.

In addition to the Law Manager Database,OIFP has established several other databasesto track various types of specializedinformation for a variety of purposes. OIFP’scriminal investigations continue to beindependently entered and tracked by a

database within the criminal investigativesection of OIFP. That database incorporateslitigation and case status reports, arrestreports, warrant information and otherinformation reflecting the progress of thematter through the criminal justice system.The criminal section of OIFP has alsodeveloped, and on a case-by-case basis uses, adatabase application to analyze complexrelationships among individuals, businessesand their financial dealings.

As required by AICRA, databases aremaintained in OIFP to record and trackinformation with respect to all matters underinvestigation by County Prosecutors’ Offices,as well as with respect to all matters referredby OIFP to those offices. This information isalso forwarded for entry into the LawManager database. Matters reported byCounty Prosecutors’ Offices are often assignedto OIFP-Civil for civil investigation where itappears that the subject or subjects of theinvestigation may be liable for civil insurancefraud penalties, in addition to, or in lieu of,criminal prosecution by the county offices.

OIFP also maintains a specialized databasecontaining information with respect toprofessional and occupational licenseesregulated by the Division of Consumer Affairswho are suspected of committing, orparticipating in, insurance fraud. Thisdatabase serves to ensure that the activities ofthe professional licensing boards and OIFP areeffectively coordinated and that any licenseewho is suspected of involvement in insurancefraud is brought to the attention of bothagencies. This information is alsoincorporated into OIFP's Law Managerdatabase.

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Liaison and CoordinationIn order to be effective in addressing theproblem of insurance fraud, OIFP must beable to marshal and coordinate New Jersey'sdiverse resources as effectively and efficientlyas possible. The New Jersey Legislatureprovided for this by consolidatingresponsibility for leading and coordinatingNew Jersey's fraud fighting efforts under theumbrella of a single agency, OIFP, whose solepurpose is to address insurance fraud.

As required by AICRA, OIFP has established,and maintains, a section of the officedesignated as the Liaison Section. The LiaisonSection ensures that OIFP's efforts to combatinsurance fraud are coordinated with those ofthe private insurance industry and other lawenforcement and public agencies which, byvirtue of their authority or responsibilities, arelikely to encounterthe problem ofinsurance fraud.

The Liaison Sectionis comprised of fourliaisons, and theirs u p p o r t s t a f f ,assigned to work,respectively, with professional licensingboards, private insurance companies, CountyProsecutors and other law enforcementagencies. The responsibilities of the Liaisonsinclude maintaining databases of cases andcontacts, holding regularly scheduledcoordination meetings and training sessions,coordinating investigations, making andreceiving referrals, resolving issues on behalfof their counterparts in other agencies andentities, and implementing programs whichfurther enhance the State's goals in fightinginsurance fraud.

County Prosecutors

County Prosecutors in New Jersey play acritical part in the State's efforts to combatinsurance fraud. As the local prosecutingagencies in each county, County Prosecutors’Offices are particularly well suited toinvestigate and prosecute cases which mightotherwise "fly below the radar screen" of Stateauthorities. Because of their unique familiaritywith local demographics and trends, and theirability to cultivate informants through theirown investigations and prosecutions, CountyProsecutors provide an important complementto the efforts of the Insurance FraudProsecutor.

In recognition of the important role thatCounty Prosecutors play in the fight against

insurance fraud, theLegislature authorizedOIFP to providefinancial and technicalassistance and supportto enhance their fraudfighting capabilities, andto ensure that theirefforts are coordinated

with those of other law enforcement agencies.In 2002, OIFP continued to provide funding to19 of the 21 County Prosecutors’ Offices inNew Jersey. This funding, which totaled over$3 million in grants, supported the salaries ofprosecutors, investigators and support staffassigned to insurance fraud units, as well astraining and equipment needs of those units.The 2002 funding enabled CountyProsecutors’ Offices to dedicate nine assistantprosecutors, thirty three investigators anddetectives and five technical and administrativesupport staff to fighting insurance fraud.

OIFP, through the County Prosecutor Liaison,has established, and maintains, a

The Press of Atlantic CityJune 22, 2002

19 counties share $3M. to fightinsurance fraud

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comprehensive system for the coordination ofreferrals between OIFP and CountyProsecutors’ Offices. All County Prosecutors'Offices in New Jersey provide OIFP with aCumulative Monthly Report which lists thenames, addresses and other appropriateidentifying information with respect to allsubjects under investigation for insurancefraud within their respective offices. Thesereports are updated monthly and also set forthinformation as to the nature of the suspectedinsurance fraud and the current status of anyefforts undertaken by the local prosecutor'soffice in the investigation or prosecution of thereported subject. The information from thesereports is added to OIFP's own database as itis received from the counties, and is reviewedto ensure that OIFP's own investigative effortsdo not overlap or duplicate those of thereporting counties.

The information from these reports is alsoused to enable OIFP-Civil to open civilinvestigations in those reported cases where itappears that the imposition of a civil penaltyby OIFP-Civil investigators might beappropriate. Reporting by the counties in2002 enabled OIFP-Civil to open 505 cases forinvestigation. Whenever OIFP-Civil opens aninvestigation resulting from a matter reportedby a County Prosecutor's Office, OIFP-Civilcontacts an assistant prosecutor or investigatorin the reporting office to identify a point ofcontact and to establish a channel ofcommunication for coordinating the criminalprosecution efforts of the reporting countywith the investigative efforts of OIFP-Civil. Through this mechanism, OIFP-Civil issometimes able to obtain a voluntary consentorder requiring the defendant to pay a civil finein the context of the negotiation of a possibleguilty plea. Many of the most significant civilpenalties obtained by OIFP-Civil investigatorswere a direct result of the cooperation andassistance provided by investigators orassistant prosecutors in County Prosecutors'

Offices.

In their most productive year to date, CountyProsecutors’ fraud units charged a total of277 defendants by indictment or accusation,obtaining 148 convictions by guilty plea ortrial, resulting in the imposition of 97 years ofincarceration. Summaries of some of theirmost notable cases are included in this report.

In 2002, the County Prosecutor Liaison metwith assistant prosecutors, countyinvestigators and other law enforcementofficials at monthly regional law enforcementcoordination meetings hosted by OIFP at itsthree regional offices. The County ProsecutorLiaison also conducted annual training forassistant prosecutors and county investigatorsat the OIFP office in Lawrenceville, andconducted roundtables for County Prosecutorpersonnel at the annual conference of the NewJersey Special Investigators Association and atthe New Jersey Insurance Fraud Summit. Inaddition, the County Prosecutor Liaisonattended meetings with several CountyProsecutors and their staff at their offices toreview OIFP's programs, and to discuss suchissues as funding, reporting requirements andthe coordination of investigations.

Providing for the exchange of informationamong law enforcement agencies, and betweenthe law enforcement and insurance industrycommunities, is a responsibility shared byOIFP's liaisons. Such sharing of informationis, however, sometimes complicated by thecompeting interests of law enforcement inmaintaining the integrity and confidentiality ofits investigations and observing the privacyinterests of those with whom it comes incontact, while observing its legal obligations toprovide information to the public and others.In 2002, the County Prosecutor Liaison, alongwith the Law Enforcement and InsuranceIndustry Liaisons, worked closely with policedepartments throughout New Jersey to

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provide assistance to insurance companyinvestigators in obtaining automobile accidentreports. By serving as immediate, designatedcontacts to address issues as they arise amongagencies and insurers, the liaisons assigned tothe Liaison Section ensure that open lines ofcommunication are maintained among allpublic and private entities in New Jerseyconcerned with insurance fraud, and thatproblems and issues are promptly addressed.

Law Enforcement

Because every law enforcement agency in NewJersey has occasion to encounter or investigatesome aspect of insurance fraud, it is essentialthat these law enforcement agencies establishand maintain continuing channels ofcommunicat ion with one another.Accordingly, OIFP has also assigned a liaisonto work with law enforcement agencies, otherthan County Prosecutors’ Offices.

OIFP's Law Enforcement Liaison acts asOIFP's representative in coordinating OIFP'sactivities with other law enforcement agenciesat every level of government, whethermunicipal, county, state or federal, and infacilitating avenues of communication amongthese agencies in the realm of insurance fraud.The Law Enforcement Liaison also representsOIFP at leadership meetings of lawenforcement officials, including the annualconference of the New Jersey Chiefs of PoliceAssociation and periodic meetings of the Mid-Atlantic States Insurance Fraud Association.In addition, the Law Enforcement Liaisonprocesses and maintains a database ofrequests for fictitious insurance cards and"pretext insurance policies" for use inundercover investigations by OIFP and otherlaw enforcement agencies.

Among the responsibilities of the LawEnforcement Liaison are the scheduling andhosting of regional law enforcement

coordination meetings on a quarterly basis ineach of OIFP's three regional offices. Officialsfrom law enforcement agencies both withinand without New Jersey are invited to attendand participate in these meetings. Thesemeetings offer guest speakers with expertise inan insurance fraud related subject. Thesemeetings also provide an opportunity to shareinformation and intelligence and establishprofessional relationships with counterparts inother law enforcement agencies assigned towork in the area of insurance fraud.

Guest speakers at the 2002 regionalcoordination meetings included, among others,experts in the areas of heavy constructionequipment thefts, insurance fraud databasesand ethnic crime rings. Those in attendanceincluded representatives from the FederalBureau of Investigation, the Bureau ofAlcohol, Tobacco and Firearms, the NewJersey State Police, the United States PostalInspectors’ Office, the Philadelphia DistrictAttorney's Office, the Pennsylvania Office ofthe Attorney General, various New JerseyCounty Prosecutors' Offices and several localpolice departments throughout New Jersey. In2002, the Law Enforcement Liaison laid thegroundwork to expand the participation oflocal police officers in these regional meetingsby publicizing the time and place of theregional coordination meetings in the “NewJersey Police Chief,” the official publication ofthe New Jersey Chiefs of Police Association.

Local police departments have been aparticularly important focal point of theactivities of OIFP's Law Enforcement Liaisonin 2002 because of their unique place at thefront lines in the battle against insurance fraud.Due to the importance of addressingimmediate local concerns relating directly tothe safety of their neighborhoods, such asviolent crime and traffic control, mostmunicipal police departments have nothistorically been attuned or equipped to

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identify or investigate cases of suspectedinsurance fraud.

Municipal police are often, however, the firstofficers likely to encounter many situations inwhich there are indicators of possibleinsurance fraud. This is particularly true withrespect to one of the most common types ofinsurance fraud, which involves the possession,display or manufacture of a counterfeit orfictitious automobile insurance card. Quitesimply, if an officer who undertakes a motorvehicle stop fails to identify a possiblyfictitious insurance card, it is unlikely that theperson exhibiting that card will be caught.Similarly, if an officer who responds to thereport of a residential burglary, a car theft oran accident fails to recognize the commonindicators of insurance fraud, it is likely thatthe person who makes such a false report asthe predicate to the filing of a fraudulentinsurance claim will succeed in "beating thesystem.”

OIFP has undertaken a number of steps toenhance the ability of local police officers toidentify the indicators of various types ofinsurance fraud which they are likely toencounter, and to undertake the appropriateinvestigative steps following that detection.OIFP, through the direction and oversight ofthe Law Enforcement Liaison, offers acomprehensive roster of training opportunitiesfor local police officers at county policetraining academies throughout New Jersey,which are tailored to the level of experience ofthe officers in attendance. OIFP also conductsdirect training for some of the State's largestpolice departments and for recruits at theDivision of Criminal Justice Training Academyat Sea Girt, New Jersey.

OIFP has also produced and distributed tolocal police departments statewide roll-calltraining videos addressing fictitious insurancecards, staged accidents and fraudulent auto

theft claims. OIFP has also published anddisseminated to local police a publicationknown as the Uninsured MotoristIdentification Directory (UMID). UMIDprovides information to enable local policeofficers to verify the authenticity and currentvalidity of automobile insurance cards bymaking direct contact with appropriateinsurance company personnel.

In 2002, OIFP's Law Enforcement Liaison wasalso instrumental in providing assistance andsupport to industry investigators seeking toobtain automobile accident reports from policedepartments. Over the past year, the LawEnforcement Liaison has fielded dozens ofrequests for assistance from insurance carriersand provided guidance to many policedepartments with respect to the guidelines forreleasing information to the public andinsurance company investigators. Insurance Industry

As recognized by AICRA, success in the battleagainst insurance fraud requires an effectivepartnering of the public and private sectors.OIFP has facilitated this partnership in NewJersey by assigning an Insurance IndustryLiaison within OIFP's Liaison Section toestablish and maintain a close workingrelationship with insurance industryexecutives, insurance industry trade groups,insurance company special investigations units,and officials from New Jersey's Department ofBanking and Insurance and Division of MotorVehicles. Since most of the cases of suspectedinsurance fraud referred to OIFP originatewith insurance carriers, and since the insuranceindustry has a significant stake in the successof law enforcement's efforts to combatinsurance fraud, it is important that OIFP andthe industry maintain open and ongoingchannels of communications.

In his role as the primary point of contact withthe insurance industry, the Insurance Industry

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Industry and OIFP officials speak to the press. Left to right: Insurance Fraud Prosecutor Greta Gooden Brown; OIFP

Insurance Industry Liaison John Butchko; John Tiene, President,Insurance Council of New Jersey;

Ken Pringle, Esq , General Counsel, N.J.S.I.A.; Acting AttorneyGeneral Peter C. Harvey

Liaison routinely provides advice, guidanceand technical assistance on a wide variety ofmatters, including the sharing of information,the release of accident reports andinvestigative information from lawenforcement officials to insurance companyinvestigators, and statutory requirementsrelating to the referral of insurance fraudmatters to OIFP.In 2002, theI n s u r a n c eIndustry Liaisonand his assistantlo g g e d 7 1 0ins t ances inw h i c h t h e yp r o v i d e dassistance orguidance throught e l e p h o n econtacts or e-mail inquiries.

The InsuranceIndustry Liaison is also responsible forscheduling and hosting the OIFP/ InsuranceIndustry Working Groups, OIFP's primaryvehicle for engaging in the discussion of issuesof most importance to the insurance industry.Both the Property & Casualty and Life &Health Working Groups serve as soundingbo ar ds fo r t heconsideration of freshideas to improve ourcommon efforts tofight fraud, and asforums to discussissues of policy andcoordination. Some of the ideas which haveevolved from the working groups have beenembodied in recommendations for regulatoryand legislative reform, including some of therecommendations which have been included inOIFP's annual reports.

In 2002, OIFP established another workinggroup of industry representatives and OIFP

executive staff designated the All ClaimsDatabase Working Group. This workinggroup was created to provide OIFP withindustry input with respect to OIFP's efforts toimplement the All Paid Claims Databaserequired under AICRA. This working grouphas met periodically to review and discussOIFP proposals and offer appropriate

f e e d b a c k .Proposals fromt h is wo r k inggroup will bereflected in thepublication ofp r o p o s e dregulat ions in2003.

T hr o ug h t heI n s u r a n c eIndustry Liaison,O I F P a l s oparticipates inmeetings of other

insurance associations, which provide theopportunity for the candid exchange of ideasand information. In 2002, the InsuranceIndustry Liaison represented OIFP at meetingsof the Anti-Fraud Association of theNortheast, the Insurance Council of NewJersey, the New Jersey Vehicle Theft

I n v e s t i g a t o r sAssociation, the NewJ e r s e y S p e c i a lI n v e s t i g a t o r sAssociation, and theDel-Val InternationalAssociation of Special

Investigative Units.

In addition, in 2002, the Insurance IndustryLiaison provided training to more than 1,350insurance industry professionals from severalinsurance companies doing business in NewJersey. These sessions addressed thecoordination of insurance fraud investigations,OIFP operations, and insurance company

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reporting requirements pursuant to N.J.A.C11:16-6(b), which sets forth the criteriapursuant to which insurance companies in NewJersey are required to refer suspiciousinsurance claims to OIFP.

The Insurance Industry Liaison also acts asthe principal point of contact with respect tothe flow of information between OIFP and theDepartment of Banking and Insurance. Amajor aspect of this responsibility is thecoordination and tracking of OIFP casesinvolving licensed producers, public adjustersand real estate agents. In 2002, 46 such caseswere identified for tracking. As a result ofOIFP’s investigations, the Department ofBanking and Insurance revoked the licenses ofthree of the 46 licensees, all of whom werelicensed insurance producers.

In 2002, the Insurance Industry Liaison wasalso responsible for overseeing production ofOIFP's most recent roll-call training video,"Identifying the Suspicious Auto Theft," whichwas distributed to each police department andCounty Prosecutor's Office in New Jersey. Inaddition, the Insurance Industry Liaisonestablished a mechanism in 2002 to distributeOIFP press releases to over 125 individualswithin the executive and investigative staffs ofinsurance carriers, industry trade groups andvarious governmental agencies in order tokeep them apprised of significant events in theprosecution of OIFP cases.

Over the course of the year, the InsuranceIndustry Liaison also distributed thousands ofFraud Awareness posters and brochures tocommunity and civic groups. Further, theInsurance Industry Liaison participated in andplayed a key role in the planning of the AnnualConference of the New Jersey SpecialInvestigators Association and the New JerseyAnnual Insurance Fraud Summit, which wereattended by key leaders of government andindustry.

Professional and Occupational Boards

OIFP also coordinates its activities with NewJersey's professional and occupational boardswithin the Division of Consumer Affairs.Because insurance fraud is frequentlycommitted by, or involves the participation of,licensed professionals such as physicians,chiropractors, dentists, pharmacists, therapists,insurance agents, allied medical providers andlawyers, it is imperative that prosecuting andprofessional licensing authorities pursue theirrespective responsibilities in tandem. Withouta mechanism for ongoing communication andcoordination, complaints of fraud received byprofessional licensing boards might otherwiseescape criminal investigation. Conversely,without a protocol for sharing information,matters under investigation by OIFP andCounty Prosecutors’ Offices could escape thescrutiny of the agencies which regulate theconduct of, and may take disciplinary actionagainst, the licensees under their jurisdiction.

The Professional Boards Liaison within OIFP'sLiaison Section is responsible for maintaininga comprehensive database of insurance fraudcomplaints involving professional licensees,which includes information concerning thenature and source of the information and itsstatus within the Enforcement Bureau of theDivision of Consumer Affairs. Pursuant to theprocedures established for OIFP by theProfessional Boards Liaison, OIFP providesprompt notification to the professionallicensing boards whenever it commences aninvestigation of one of their licensees. Theseprocedures provide similarly for professionallicensing boards to notify OIFP with respect tocomplaints they have received against licenseessuspected of engaging in insurance fraud.

OIFP's Professional Boards Liaison alsoschedules quarterly meetings to review thestatus of the investigation or prosecution ofevery licensee in the active databasemaintained by the Professional Boards Liaison.

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These meetings are attended by supervisoryinvestigative and prosecutorial OIFP staff andkey members of the Division of ConsumerAffairs Enforcement Bureau. In 2002, thisgroup, known as the Liaison and ContinuingCommunications Group, monitored 549 activeinsurance fraud related cases. Since itsestablishment in October of 1998, the grouphas reviewed and disposed of 545 cases byway of civil or criminal dispositions by OIFP,licensing sanctions by the appropriateprofessional board or administrative closure.In 2002, seven monitored licensedprofessionals were indicted, ten pled guilty orwere found guilty after trial, and sevenr e c e i v e d s e n t e n c e s w h i c h

ranged from two years of probation withrestitution and fines, to terms of three to fiveyears in State prison and fines. Thiscollaborative effort also facilitated disciplinaryaction by professional and occupational boards within the Division ofConsumer Affairs against 29 individuals in2002, as follows:

2002 Disciplinary Actions by Professional and Occupational Boards

Suspension Revocation VoluntarySurrender

Reprimand TOTAL

Accountancy 0 0 0 0 0

Chiropractic 3 4 0 0 7

Cosmetology 0 0 1 0 1

Dental 4 0 0 0 4

Medical 4 6 1 1 12

Nursing 0 1 0 0 1

Pharmacy 1 0 0 0 1

Psychology 0 1 0 0 1

SocialWorker

0 0 0 1 1

X-ray 0 0 0 1 1

TOTAL 12 12 2 3 29

As OIFP's point of contact with respect tomatters touching upon licensee conduct, theProfessional Boards Liaison also providestechnical assistance and advice as needed tothe professional licensing boards, and works

closely with OIFP's Case Screening Litigationand Analytical Support Section (CLASS) toensure that matters involving professionallicensees are properly assigned andcoordinated within OIFP.

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Other Coordination and Liaison Activities

In addition to the Liaisons assigned to OIFP'sLiaison Section, others in OIFP work closelywith other agencies and associations on acontinuing basis. OIFP criminal and civilinvestigators conduct many of theirinvestigations jointly with other lawenforcement agencies, including local policedepartments, County Prosecutors' Offices andvarious federal agencies. OIFP investigatorsalso, on occasion, work together oninvestigations with law enforcement and othergovernmental agencies outside of New Jersey.In 2002, for instance, OIFP investigatorsworked with officials from the PennsylvaniaAttorney General's Office with respect to theinvestigation of interstate rate evaders, as wellas with officials from several law enforcementagencies in New York and Tennessee withrespect to the investigation of an interstateauto theft ring.

OIFP's Medicaid Fraud Section has historicallyworked closely with its counterpartsthroughout the United States, and continuedto do so in 2002. The Supervising DeputyAttorney General of the Medicaid FraudSection has, over the past seven years, servedas a member of the Executive Committee ofthe National Association of Medicaid FraudControl Units (NAMFCU), which iscomprised of the Medicaid Fraud ControlUnits from 47 other states and the District ofColumbia.

NAMFCU serves as a vehicle for coordinatingthe activities of states' Medicaid Fraudprograms throughout the country, andfacilitates, in particular, the investigation,prosecution and settlement of civil andcriminal claims against Medicaid providerswhose activities transcend state borders.OIFP's Medicaid Fraud Section continued in2002 to actively participate in nationwide

settlements with NAMFCU involvingproviders who had submitted billings underNew Jersey's Medicaid Program. NAMFCUalso provides a forum for the sharing ofgeneral information on matters relating toMedicaid Fraud and provides training for itsmembers, which is accredited by the FederalLaw Enforcement Training Center.

Representatives from OIFP, including theSpecial Assistant to the Insurance FraudProsecutor and the Law Enforcement andCounty Prosecutor Liaisons, continued toparticipate in 2002 in the Mid-Atlantic StatesInsurance Fraud Association (MASIFA).MASIFA is a group of law enforcementofficials from insurance fraud agencies in NewYork, Pennsylvania, Maryland, Delaware,Virginia and Washington, D.C., who meetregularly to discuss matters of commoninterest and share information and intelligencewith respect to current insurance fraudinvestigations and trends.

Throughout the past year, OIFP’s executivestaff have met on many occasions with theircounterparts in other state agencies, such asthe Department of Banking and Insurance, theDepartment of Health, the Department ofHuman Services, the Division of MotorVehicles and the Department of Labor todiscuss issues of mutual concern and toexplore remedial measures. These measuresinclude possible proposals for legislative andregulatory reform relating to those issues.

New Jersey State Police

In 2002, OIFP continued to fund, and workclosely with, the Insurance Fraud Unit of theNew Jersey State Police. Created in 1999under a grant provided by OIFP, the StatePolice Insurance Fraud Unit has establisheditself as a key agency in the State's efforts tocombat motorist related insurance fraud. TheUnit is staffed by two squads of five Troopersunder the supervision of a Sergeant. While the

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principal focus of the Unit's activities has beenthe identification and investigation offraudulent motor vehicle insuranceidentification cards, the Unit has alsoconducted or participated in investigationsinvolving workers compensation fraud, autotheft fraud and auto injury claims fraud.

In 2002, the State Police Insurance Fraud Unitconducted 170 investigations of insurancefraud, most of which targeted counterfeitinsurance cards. Investigations by the Unitresulted in the arrests of 177 insurance fraudsuspects. The Unit's investigations alsoresulted in uncovering approximately$400,000 in potential insurance fraud. As anadjunct to its investigative efforts, the Unitalso participated in OIFP’s law enforcementtraining program, instructing officers in thedetection and investigation of motorist relatedinsurance fraud.

OIFP has also continued to maintain anongoing working relationship with the NewJersey State Police Auto Unit. That Unitconducts a wide variety of investigationsrelating to motor vehicles, includingcounterfeit documentation, salvage titleoperations, odometer rollbacks and autothefts, sometimes giving rise to theinvestigation of different types of vehicularinsurance fraud.

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Insurance Fraud TrainingPrograms and Publications

Central to its mission to combat insurancefraud on every front is OIFP's comprehensivetraining program. In addition to ensuring thatall OIFP personnel receive adequate andcontinuous training, OIFP provides trainingopportunities for industry and law enforcementinsurance fraud investigators of every level ofexperience. In 2002, OIFP provided insurancefraud training on nearly 100 occasions for over3,300 law enforcement and industryprofessionals. Among those receiving trainingwere members of all 21 County Prosecutors'Offices in New Jersey, 62 other New Jerseylaw enforcement agencies as well as insurancefraud investigators from numerous insurancecompanies.

OIFP Basic Training Course for CivilInvestigators

All OIFP Civil investigators are required tosuccessfully complete a five-week trainingprogram which is designed to provide a broadfoundation in basic investigative skills andinsurance principles. The training programincludes the review of various types ofinsurance coverage and training in basicinvestigative tools and techniques associatedwith insurance fraud investigations. Newlyminted civil investigators are also providedwith information regarding investigativeresources and case management techniques.They also receive intensive training in thetechniques of writing reports, conductingsurveillance and interviewing witnesses andsubjects. Other areas of instruction introducecivil investigators to the intricacies ofcomputer fraud, relevant areas of the rules ofevidence and techniques to cultivate andmanage informants. The training programconcludes with a training exercise in which thetrainees apply their skills to a hypothetical casescenario, which includes the preparation of a

report reflecting their investigative efforts andtestifying as a witness in a moot court trial.

OIFP In-Service Training

OIFP also offers in-service trainingopportunities for civil and criminalinvestigators and Deputy Attorneys General.OIFP staff participate in the same in-servicetraining opportunities provided to allemployees of the Division of Criminal Justice.These training opportunities allow experiencedOIFP staff to build upon their existinginvestigative and prosecutorial skills. Trainingin a variety of subject matter areas is providedfor Deputy Attorneys General through theNew Jersey Attorney General AdvocacyInstitute. Criminal investigators within theDivision of Criminal Justice are providedtraining opportunities through the Division ofCriminal Justice Academy. In addition,computer training for all OIFP staff is availablethrough regular computer training programsoffered by the Department of Law and PublicSafety. Additional training opportunities in avariety of subjects are also available to OIFPemployees through the Human ResourceDevelopment Institute of New Jersey.

In 2002, the OIFP Insurance Industry Liaisonlaid the groundwork for implementing a newtraining program utilizing the expertise ofinsurance industry professionals designated asthe OIFP/Industry Joint Training Program. This program will offer training to allinvestigators and Deputy Attorneys General,both civil and criminal, within OIFP,encompassing a broad range of subjectsgermane to the investigation and prosecutionof various types of insurance fraud. Byenlisting the expertise of insurance fraudinvestigators with years of experience in theinsurance industry, the training willcomplement the instruction offered by lawenforcement professionals by adding anindustry perspective and familiarizing OIFPstaff with an array of the insurance industry's

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investigative tools which have proven to bevaluable over the years. The training will beconducted at OIFP's home office inLawrenceville, New Jersey, and telecast to itsregional offices in Whippany and Cherry Hill.OIFP also plans to make this training availableto assistant prosecutors and CountyProsecutor investigative personnel.

County Prosecutors’ Offices TrainingProgram

In conjunction with its program to offerfinancial and technical assistance to CountyProsecutors’ Offices in the investigation andprosecution of insurance fraud, OIFP alsoprovides insurance fraud training to assistantprosecutors and County Prosecutorinvestigative personnel. The goal of thistraining program is to acquaint those inattendance with the most current trends,technologies and techniques to combatinsurance fraud. At its annual training forCounty Prosecutor personnel on June 13,2002, OIFP provided a day of training entitled“Tips, Tools and Techniques for FightingInsurance Fraud.” Presentations includedinstruction in electronic surveillance and lockand key analysis in conjunction with fraudulentauto theft investigations. The training alsoprovided information regarding new quarterlystatistical reporting requirements, and anupdate with respect to monthly case reportingrequirements. The training concluded withpanel discussions presented by OIFPinvestigators and Deputy Attorneys General,who reviewed actual case studies ofinvestigations and prosecutions of schemesinvolving a staged accident ring, providerfraud and life insurance fraud.

As it has done in the past, OIFP also providedtraining at the 2002 Annual N.J.S.I.A.Conference in Atlantic City, moderating apanel discussion of assistant prosecutors.These discussions addressed the manner in

which County Prosecutor personnel coordinatetheir activities with insurance industryinvestigators and other law enforcementagencies. Assistant prosecutors also reviewedsome of their most significant insurance fraudcases over the prior year. The OIFP CountyProsecutor Liaison also hosted a roundtablediscussion for County Prosecutors and otherlaw enforcement executives at the New JerseyInsurance Fraud Summit in October, 2002.This discussion provided informationregarding OIFP's programs and the manner inwhich OIFP coordinates its activities withother law enforcement agencies.

Municipal Police Departments TrainingProgram

OIFP also conducts an ambitious trainingprogram for local police officers, which istailored to each officer's level of experience.For police officer recruits who are enrolled inthe basic training course in a police trainingacademy, OIFP offers an introductoryinsurance fraud training class on a levelconsistent with basic police recruit trainingobjectives. For experienced officers, OIFPoffers a number of training modules of varyinglength and content, depending upon the needsand interests of the officers receiving thetraining. Training is conducted at countytraining academies throughout New Jersey, aswell as at some of New Jersey's largest policedepartments, and at the New Jersey StatePolice and Division of Criminal Justice trainingacademies at Sea Girt, New Jersey. In 2002,OIFP conducted training for nearly 790 policeofficers from over 62 different police agenciesduring 29 separate training sessions.

OIFP also offers training for police officersthrough a series of roll-call training videosaddressing various types of insurance fraud apolice officer is likely to encounter. In 2002,OIFP produced the third, and most recent, ofthe series, entitled "Identifying the SuspiciousAuto Theft." Earlier videos offered training in

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the identification of counterfeit and fictitiousautomobile insurance cards and in theinvestigation of suspicious "automobileaccidents". The videos include enactments ofsituations commonly encountered by mostpolice officers in the course of their dailyduties. The videos provide information on"red flag" indicators of fraud as well aspractical tips on investigative steps that may beundertaken by police officers who suspectpossible insurance fraud. The videos providepolice departments with flexibility by enablingpolice officers to view them when mostconvenient. OIFP has distributed each of thetraining videos to every police department andCounty Prosecutor's Office in New Jersey.The value of the training videos has beenrecognized by police departments in otherstates, which have requested copies for theirown training needs.

Insurance Industry Training Program

OIFP also offers training for insurance industryprofessionals. Training is provided onindustry reporting requirements relating toinsurance fraud. Training is also provided onOIFP operations in general and thecoordination of carriers’ Special InvestigationsUnits with OIFP investigations. In 2002, theOIFP Industry Liaison provided training toapproximately 1,350 industry professionals,often providing training at the carriers' ownoffices for the convenience of their employees.Others in OIFP offered training to industryprofessionals in 2002, including the SpecialAssistant to the Insurance Fraud Prosecutor,and the OIFP County Prosecutor and LawEnforcement Liaisons.

OIFP Publications

In 2002, OIFP published and disseminated thefirst edition of the Uninsured MotoristIdentification Directory (UMID). UMID waspublished by OIFP to enable law enforcementofficials to telephonically contact insurance

companies for the purpose of confirmingwhether a driver who presents proof ofinsurance is, in fact, insured with the insurancecompany set forth on the insuranceidentification card. The Directory is dividedinto two parts. Insurance companiesauthorized to insure vehicles in New Jersey arelisted alphabetically in Part A of the Directory.Part B of the Directory lists insurancecompanies numerically by their three digitDMV code number. In some cases, thetelephone number provided for a giveninsurance company is the general telephonenumber of a parent company with one or moresubsidiaries or affiliated companies. Due to avariety of factors such as corporaterestructuring, withdrawal from the New Jerseyautomobile insurance market and telephonenumber reassignments, it is anticipated thatsome of the information contained in theDirectory will change periodically. As a result,OIFP anticipates updating UMID on a regularbasis.

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New Jersey Governor unveils insurance fraud agenda. Left to right:Governor James E. McGreevey; former Attorney General David

Samson; Insurance Fraud Prosecutor Greta Gooden Brown

Public Awareness Programs

Insurance fraud, and its impact upon thecitizens of New Jersey, remains an issue ofgreat interest to the public. As the designatedagency to lead New Jersey's fight againstinsurance fraud, OIFP continues to conductprograms toeducat e thepublic aboutinsurance frauda nd s o l ic i tpublic supportin the detectionof insurancefraud. Theseprograms aredesigned tohelp the publicr e c o g n i z einsurance fraudin the makingas well as toco nve y t heconsequencesof committing insurancefraud as a deterrence.These programs also communicate methods bywhich members of the public can reportinsurance fraud to OIFP.

OIFP Media Campaign

In 2002, OIFP continued to air itsprofessionally produced, award-winning multi-media campaign, consisting of television andradio ads, billboard and bus posters andInternet website banner ads. The theme of thecampaign is to underscore the fact that NewJersey has a “no tolerance” policy with respectto the commission of insurance fraud andfraudsters will be criminally prosecuted to thefullest extent of the law. The advertisementscontinued to feature an affluent “yuppie,”known as Richard, who has been caughtcommitting insurance fraud and is facing theconsequences in the criminal justice system.

For the first time, in 2002, the media campaignwas also publicized by way of publication ofnewspaper ads in the print media. In additionto setting forth a clear message of deterrence,the media campaign encourages members of

the public tor e p o r ti n s u r a n c efraud. Thec a m p a i g nf u r t h e rd i r e c t smembers ofthe public tov a r i o u smethods forr e p o r t i n ginstances ofs u s p e c t e din s u r a n c ef r a u d t oOIFP.

F o l l o w - u ptracking studies,

the most recent of which were completed bythe media campaign vendor in June of 2002,have clearly demonstrated the effectiveness ofOIFP's media campaign in raising publicawareness of the insurance fraud problem.The studies demonstrate that the mediacampaign's deterrent message has beenmemorable, influential and effective. Alltracking measures in the most recent studyeither remained at prior tracking levels, orshowed improvement over prior trackingstudies. The studies have demonstrated thatthe campaign has raised awareness of the issueof insurance fraud, memorably promoted theidea that insurance fraud is a serious crime,and effectively conveyed that insurance fraudcarries significant penalties, including jail timeand fines. It also effectively communicatedthat insurance fraud is a problem that has asignificant and direct monetary impact upon

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New Jersey residents. The tracking studiesalso demonstrate the effectiveness of the mediacampaign in making the public aware ofOIFP's toll-free telephone hotline.

The most recent tracking study conducted in2002 was based on interviews with 486 NewJersey residents between the ages of 35 and64. Among the highlights of the trackingstudies are the following findings:

• Awareness of the issue of insurancefraud increased as a result of thecampaign. Forty one percent of thosesurveyed responded that they were“extremely” or “very” familiar withinsurance fraud, compared with a priorresponse rate of 32 percent.

• The perceived importance of insurancefraud to New Jersey residentsincreased as a consequence of themedia campaign. Seventy five percentof those surveyed indicated that theyfelt that insurance fraud was asubstantial problem in New Jersey, anincrease of 17 percent over priortracking studies.

• The media campaign convinced moreNew Jerseyans that insurance fraud iscosting them money. Eighty ninepercent of those surveyed believed thatinsurance fraud was costing themmoney and that it was worth the effortto combat the problem of insurancefraud. This figure compares with 68percent and 73 percent of respondentsin prior tracking studies.

• Awareness of the OIFP mediacampaign had increased markedly bythe time the most recent tracking studywas conducted. Among the targetaudience, 60 percent indicated thatthey had seen advertising aboutinsurance fraud within the prior three

months, compared to 39 percent and50 percent in prior tracking studies.

OIFP expects to resume its media campaign inthe latter part of 2003.

OIFP Website

OIFP's state-of-the-art website, atwww.njinsurancefraud.org, is an integral partof OIFP's overall program to provide thepublic with timely and comprehensiveinformation regarding insurance fraud. Itprovides general information regarding OIFP'smission and activities, as well as specificinformation about OIFP's criminalprosecutions. The website includes examplesof common types of insurance fraud and postspress releases reporting the indictment,conviction and sentencing of defendantsprosecuted by OIFP. Comprehensivehistorical information regarding OIFP may befound in OIFP's prior Annual Reports, whichare also posted in their entirety on the website.

The website also provides several alternativemeans for the reporting of insurance fraud toOIFP by members of the public. These includethe posting of OIFP's toll-free hotlinetelephone number, an on-line reporting form,and OIFP's e-mail address for reporting fraud.OIFP's media campaign television ads may alsobe easily viewed by visiting the OIFP websiteand clicking on the image links featuring thecharacters portrayed in the media campaign.

The OIFP website also serves the interests ofthe insurance industry. The website providesaccess to forms which the insurance industry isrequired to use for reporting insurance fraudto OIFP. Requirements for Fraud PreventionDetection Plans, which the industry mustperiodically file with the Department ofBanking and Insurance, are also provided onthe website as a convenience to the industry.

OIFP Community Outreach

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In addition to its media campaign, website andnews offerings, OIFP conducts a multi-facetedprogram to inform and enlist the support of thepublic through participation in a variety ofprivate and public agencies and organizations.In 2002, the Insurance Fraud Prosecutorcontinued to appear as a frequent speakerbefore audiences seeking to learn more aboutinsurance fraud and the activities of OIFP.The Prosecutor's speaking engagements in2002 included appearances before the Anti-Fraud Association of the Northeast, the NewJersey Auto Theft Summit, the New JerseyHealthcare Financial Management Association,the Association of Black Women Lawyers ofNew Jersey, the 24th Annual Training Seminarof the New Jersey Vehicle Theft InvestigatorsAssociation, the Annual Conference of theNew Jersey Special Investigators Association,the Annual Symposium of the InsuranceCouncil of New Jersey, the National HealthCare Anti-Fraud Association and the NewJersey Insurance Fraud Summit. In Decemberof 2002, the Insurance Fraud Prosecutor wasalso invited to participate as a keynote speakerat the Asia Pacific Fraud Conventionscheduled for September of 2003 in Australia.

OIFP's Insurance Industry Liaison was also afrequent speaker on behalf of OIFP, acting asmoderator at the New Jersey Insurance FraudSummit and appearing as a guest speaker atinsurance companies throughout New Jersey.He also addressed gatherings of the NewJersey Special Investigators Association, theNew Jersey Vehicle Theft InvestigatorsAssociation and the Insurance Council of NewJersey Insurance Symposium. He also spokeon behalf of OIFP at meetings of such civicand community groups as the Lions HeadCivic Group and the Ansche ChesedSynagogue. The OIFP Law Enforcement andCounty Prosecutor Liaisons also spoke onbehalf of OIFP, moderating a session at theNew Jersey Insurance Fraud Summit forCounty Prosecutors and other law

enforcement executives and offeringpresentations in other venues such as theannual New Jersey Chiefs of PoliceConference.

OIFP also staffed informational and displaybooths at such functions as the New JerseyLeague of Municipalities Annual Conference,the New Jersey Special InvestigatorsAssociation Annual Conference, the NewJersey Chiefs of Police Annual Exposition andthe New Jersey Insurance Fraud Summit.These booths enabled OIFP to distributeinformational materials such as OIFPbrochures and to showcase its lawenforcement training materials, such as its lineof roll-call training videos. OIFP's publicawareness efforts are designed to reach asmany people as possible, and are tailored toprovide information of the greatest interest andrelevance to the particular audience.

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OIFP recognized by New Jersey Special Investigators Association. Left to right: ActingAttorney General Peter C. Harvey; Kevin Crimmins, NJSIA Board Member; Insurance Fraud

Prosecutor Greta Gooden Brown; Joseph Utter, NJSIA President.

Public Recognition

OIFP's accomplishments as New Jersey'sleader in the battle against insurance fraudhave not gone unnoticed by others in the fraudfighting community, both here and abroad. Inrecent years, OIFP’s Medicaid Fraud Sectionhas been nationally recognized for its

achievements. OIFP's media campaign hasreceived awards for its excellence inaddressing insurance fraud. OIFP's roll-calltraining videos have been requested by officialsthroughout the United States. OIFP's caseshave been regularly reported by nationalpublications. In addition, OIFP's officialshave been sought out for guidance and advicefrom many other jurisdictions.

OIFP's reputation as a national leader in thefight against insurance fraud continued togrow in 2002. Responding to a request forassistance from Canada's Insurance Crime

Prevention Bureau, OIFP hosted a meeting ofthe Mid-Atlantic States Insurance FraudAssociation (MASIFA) in October to providethe Canadian Bureau with an overview ofOIFP's operations and fraud training methods.OIFP also responded to requests for assistance

and advice from other states, from New Yorkto Hawaii. In May of 2002, Hawaiianauthorities consulted with OIFP to obtainguidance with respect to conducting covert,undercover criminal investigations intoautomobile insurance fraud. OIFP alsocontinued to respond to numerous requestsfrom officials from other states for copies ofOIFP's roll-call training videos, which offerinstruction to local police on the identificationand investigation of staged accidents andstaged auto thefts.

OIFP's investigations and prosecutions

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continued to be reported by nationalpublications, such as Mealey's Insurance FraudLitigation Report and Fraud Focus, publishedby the Coalition Against Insurance Fraud, aswell as by newspapers of regional and nationalscope. OIFP's experience was also citedfavorably in a leading college textbook,Criminology, as an example of one of the fewstates in the country that has undertaken suchan effective effort to fight fraud at all levels.

OIFP Investigators and Deputy AttorneysGeneral were also recognized for theirachievements in 2002. In its Fraud QuarterlyBulletin, the American International Group,Inc., recognized an OIFP investigator for hisefforts in leading a successful undercoverinvestigation which led to the arrests of aPassaic County physician and his officemanager on charges of conspiracy, health careclaims fraud, theft by deception and usingrunners. In its May, 2002, newsletter, the

Detectives Crime Clinic of Metropolitan NewJersey and New York commended OIFPDeputy Attorneys General and Investigatorsfor their efforts in successfully investigatingand prosecuting a complex insurance fraudcase involving fraudulent billings by anoptometrist.

The extent to which OIFP’s reputation hasgrown in the insurance fraud community is,perhaps, best reflected by the stature of theorganizations which, in 2002, sought theparticipation of the Insurance FraudProsecutor as a keynote speaker at their mostimportant conferences. These organizationsinclude the New Jersey Vehicle TheftInvestigators Association, the New JerseySpecial Investigators Association, theInsurance Council of New Jersey, the NewJersey Chapter of the Healthcare FinancialManagement Association, the National HealthCare Anti-Fraud Association, and the AsiaPacific Fraud Convention in Australia.

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PART II CASE STATISTICS AND SUMMARIES

OIFP Criminal Investigations and Prosecutions

Statistics January 1, 2002 - December 31, 2002

New Cases Opened in 2002 508

Indictments/Accusations Filed Number of Defendants Charged

173225

Number of Defendants Convicted 154

Number of Defendants Sentenced 159

Number of Defendants Sentenced to State Prison Total Number of Years

22107

Number of Defendants Sentenced to County Jail Total Number of Years

2414

Total Criminal Fines Imposed $ 177,680.00

Total Civil Medicaid Fines Imposed $ 909,832.00

Total Restitution Imposed $6,787,645.00

Narrative

In 2002, OIFP-Criminal opened 508 newinvestigations of persons suspected ofcommitting insurance or Medicaid fraud, 24%more than the number of new cases opened in2001. OIFP also lodged criminal charges byaccusation or indictment against 225defendants, and obtained convictions of 154defendants, representing increases of 91% and79%, respectively, over 2001 figures. Inaddition, OIFP’s conviction rate exceeded thestatewide average. OIFP's criminalprosecutions resulted in the imposition ofsentences totalling 121 years in jail fordefendants convicted of insurance or Medicaid

fraud. In addition, defendants prosecuted byOIFP in 2002 were required to pay criminalfines totalling $177,680, $909,832 in civilMedicaid fraud fines, and $6,787,645 inrestitution to their victims. The following casesummaries highlight some of the mostsignificant developments in OIFP's criminalprosecutions in 2002.

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Criminal Case Summaries

AUTO FRAUD

Altering Vehicle Identification

State v. Rafael "Bugzy" Ramos, CeaserLabregoIn August 2002, OIFP investigators arrestedRafael "Bugzy" Ramos and Ceaser Labrego oncharges of conspiracy to alter motor vehicletrademarks. The complaint alleged thatRamos and Labrego engaged in a scheme tosell re-tagged vehicles, including high endluxury vehicles, in some cases usingfraudulent ly generated automobiledocumentation. The matter is pendingpresentation to a Grand Jury.

Vehicular Theft

State v. Leonard Wise, et al.On January 10, 2002, Leonard Wise andLamont Sconiers were arrested by OIFPinvestigators on charges of attempted theft andconspiracy. The two were accused ofscheming to steal a pair of Infiniti Q45's, eachvalued at $60,000, from an Elizabeth, NewJersey storage lot rented by thePort Authority to Foreign AutoPrep Services, an automobileimp o r t e r . Sco nie r ssubsequently pled guilty on May3, 2002, to an Accusationcharging him with attemptedtheft and hindering apprehensionor prosecution. He wasadmitted into the Pre-Trial InterventionProgram (PTI). Wise also pled guilty to anAccusation on June 20, 2002, and wassentenced to three years probation. Anotherparticipant in the scheme, Willie Hopkins, wasarrested on February 5, 2002, and chargedwith two counts of forgery and conspiracy toreceive stolen property. Hopkins wasaccussed of selling a fictitious temporary NewJersey motor vehicle registration tag and

inspection sticker to an undercover StateInvestigator. The documents Hopkins soldwere for a stolen 2002 Jaguar, valued at over$75,000, which Hopkins was driving. On June3, 2002, Hopkins pled guilty to an Accusationcharging him with conspiracy. Hopkins wassentenced on August 30, 2002 to three yearsin State prison. As part of the sameinvestigation, on February 15, 2002, TerronSessions was arrested by OIFP investigatorswith assistance from officials of Conrail, thePort Authority and the Irvington PoliceDepartment. Sessions was charged withreceiving stolen property and conspiracy tocommit fencing. Sessions' case is pendingGrand Jury action.

State v. James SanockiOn August 8, 2002, OIFP investigators, incooperation with the Jefferson County,Kentucky Police Department, arrested JamesSanocki and charged him with receiving stolenproperty and fencing. The complaint allegesthat Sanocki was involved in a multi-state theftand fencing ring targeting motorcycles,automobiles, ATV's, construction equipmentand jet skis. On the same date, search

warrants were executed atSanocki's residence in Ewing,Mercer County, and at hisp a r e n t s ' r e s id e n c e inFrenchtown, Hunterdon County.Sanocki's case is pending GrandJury action.

Criminal Use of Runners

State v. Lt. Jerome Bollettieri, Sgt. ThomasDiPatri (ret.), Sgt. Philip Ferrari (ret.), &Charles Warrington, IIOn March 27, 2002, a State Grand Juryreturned an indictment charging formerCamden PoliceDepartment Lt. JeromeBollettieri and retired Sgt. Thomas DiPatriwith conspiracy, official misconduct, bribery,and criminal use of runners. At the time of the

Courier PostMarch 28, 2002

Cop, retired officerindicted

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conduct alleged in the indictment, Bollettieriwas the officer in charge of the Camden PoliceDepartment's Traffic Records Bureau.According to the indictment, DiPatri, a retiredCamden police officer, illegally obtained policeaccident reports from Bollettieri by paying himbribes. The indictment also alleges thatDiPatri obtained the police accident reports toidentify persons who were in automobileaccidents in order to solicit prospectivepatients for treatment at American SpinalCare, Inc. (ASC), a Collingswood chiropracticfacility. Both DiPatri’s and Bollettieri’s casesare pending trial. Also on March 27, 2002, aseparate but related State Grand Juryindictment was returned against retired Sgt.Philip Ferrari and Charles Warrington II,charging them with conspiracy, bribery inofficial matters and criminal use of runners.According to the indictment, Ferrari, a retiredCamden police officer, and Warrington, aregistered agent for ASC, requested and paidfor the illegally obtained police accidentreports in order to solicit prospective patientsfor treatment at ASC. Ferrari’s andWarrington's cases are also pending trial.

State v. Cyrano GreenOn October 17, 2002, following a 12 day jurytrial, Cyrano Green was convicted for his rolein paying bribe money to an undercover policeofficer. The jury found Green guilty of sevencounts of bribery for purchasing NewarkPolice Department automobile accident reportsfrom an undercover Newark Police Officer.Acting as a “runner,” Green intended to solicitaccident victims listed in the reports asinsurance claimants. Green awaits sentencing.

State v. Michael Gardiner & Kim RobinsonOn November 19, 2002, a State Grand Juryreturned an indictment against MichaelGardiner, a licensed chiropractor, charging himwith conspiracy, health care claims fraud, theftby deception, and criminal use of a runner.His office assistant, Kim Robinson, was alsocharged with conspiracy and health care claimsfraud. The indictment alleges that between

April and July of 2000, Gardiner paid aperson he believed to be a "runner," but whowas actually an undercover investigator forOIFP, to provide Gardiner with patients for hischiropractic practice so that he could generatePersonal Injury Protection (PIP) insuranceclaims. The indictment alleges that theundercover investigator, posing as a "runner,"brought two persons to Gardiner's chiropracticoffice, both of whom Gardiner believed to bepatients, but who were actually undercoverNewark Police Officers. According to theindictment, Gardiner submitted fictitious PIPbills to GSA Insurance Company, falselyclaiming that he had provided health careservices. The indictment also alleges that KimRobinson knowingly prepared the fraudulentPIP bills for submission to GSA. The Stateintends to prove at trial that the fraudulentbilling submitted by Gardiner and Robinsontotaled approximately $4,980.

Fraudulent Automobile "Give-Up"Claims

State v. Bindraban Deosaran & PercyHudsonOn July 26, 2002, Percy Hudson pled guilty toan Accusation charging him with conspiracy tocommit attempted theft by deception. Hudsonadmitted conspiring with Bindraban Deosaranto file a fraudulent auto theft claim withLiberty Mutual Insurance Company for thepurported theft of Deosaran's 1986 ChevroletCorvette. After Deosaran falsely reported tothe Newark Police Department that hisCorvette had been stolen, Deosaran left the carwith Hudson and paid him $200 to "strip" hiscar. On November 22, 2002, Hudson wassentenced to three years probation and 36 daysin the county jail. Deosaran also pled guilty toan Accusation which charged him withattempted theft by deception and conspiracy.Deosaran was admitted into the PTI programon March 22, 2002, and ordered to serve 50hours of community service. He also paid a$5,000 civil insurance fraud fine.

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State v. Michael Nardone, et al.On March 5, 2002, Michael Nardone enteredthe PTI program and was ordered to pay$29,500 in restitution to Liberty MutualInsurance Company after pleading guilty to anAccusation which charged him with theft bydeception and conspiracy. Nardone, who wasleasing a 1997 Ford Mustang from VP, Inc.,admitted that, in order to avoid making furtherlease payments, he solicited Joseph Marchittoto assist him in disposing of the vehicle.Nardone reported the vehicle stolen to the SeaBright Police Department and filed a falsevehicle theft insurance claim with LibertyMutual. Nardone's fraud resulted in LibertyMutual issuing a settlement check in theamount of $29, 250. State v. Joseph MarchittoAs part of the Nardone investigation, above,on January 8, 2002, Joseph Marchitto pledguilty to an Accusation charging him withconspiracy to commit theft by deception.Marchitto admitted picking up Nardone's 1997Ford Mustang after being notified of itslocation by a co-conspirator and eventuallyturning it over to another co-conspirator tohide so that Nardone could avoid makingfurther lease payments for the vehicle. OnMarch 22, 2002, Marchitto was sentenced tothree years probation and ordered to pay a$1,000 criminal fine. Marchitto was alsopreviously ordered to pay a $4,000 civilinsurance fraud fine.

State v. John Wilson & James ChristensenOn February 15, 2002, a Grand Jury returnedan indictment against John Wilson and JamesChristensen charging them with conspiracy andtheft by deception as part of the Nardoneconspiracy, above. Christensen was alsocharged with criminal mischief. According tothe indictment, Wilson conspired with MichaelNardone to have Nardone's 1997 FordMustang left at or near Wilson's place ofbusiness with the key in the ignition, where itwas to be removed by co-conspirator JosephMarchitto. The indictment also alleged that

Christensen took possession of the vehiclefrom Marchitto and dismantled it, in order tofacilitate its disposal and prevent its recovery,so that a stolen vehicle insurance claim couldbe filed by Nardone. Following the entry ofguilty pleas, on June 28, 2002, Wilson wassentenced to three years probation,conditioned upon serving 50 hours ofcommunity service and paying a $4,000 civilinsurance fraud fine. Christensen wassentenced to two years probation.

State v. Scott Walterschied

On December 6, 2002, Scott Walterschied wassentenced to 13 years in State prison andordered to pay $120,000 in restitution to StateFarm Insurance and First Union Bank afterpleading guilty to charges related toconspiracy, theft, criminal usury and insurancefraud. Walterschied had been indicted forconspiring to file fraudulent automobileinsurance theft claims with Chubb InsuranceCompany, State Farm Insurance Company,Liberty Mutual Insurance Company andHanover Insurance Company. Among thevehicles Walterschied falsely claimed werestolen were a 1996 Lexus ES300, a 1997 LandRover Discovery and its contents, a 1999Volkswagen Passat and a 1996 Jaguar XJ 6.

State v. Ben Yu ChangAs part of the investigatin into the automobilegive-up scheme involving Walterschied above, on May 28, 2002, Ben YuChang, a friend and former employer of

36

pled guilty to an Accusationcharging him with false swearing. Changadmitted that, on June 24, 1999, he gave falseinformation regarding the purported theft of 1997 Land Rover. Chang admittedthat, under oath, he falsely told arepresentative of Hanover Insurance Companythat had called him (Chang) on his(Chang's) cell phone and told him that hisLand Rover had been stolen from the parkinglot of a restaurant, and that he had askedChang for a ride home. On May 28, 2002,Chang was accepted into the PTI Program andwas ordered to pay a $2,000 civil insurancefraud fine.

State v. Doreen BadaanOn March 4, 2002, Doreen Badaan pled guiltyto theft by deception for falsely reporting thetheft of her BMW to the New York CityPolice Department. Badaan had actually"given-up" the car to another person in orderto get out from under her rental lease.Following the false police report, shesubmitted a fraudulent insurance claim withState Farm Insurance Company. State Farmpaid the BMW Finance Company over$40,000 to satisfy the balance on the lease andrelieve Badaan of any further financialobligation. She was admitted into PTI on theday of her plea conditioned upon her paymentof $17,000 in restitution and payment of a$2,500 civil insurance fraud fine.

State v. Randy TavarezOn November 7, 2002, Randy Tavarez pledguilty to an Accusation charging him withpossession with intent to distribute ac o n t r o l l e dd a n g e r o u ssubstance andconspiracy tocommit theftas part of ana u t o mo bi leg i v e - u pscheme. Tavarez admitted that Guadalupe

Sotomayer, the owner of the vehicle, "gave-up" the vehicle to another to be disposed of soas to prevent its recovery by law enforcementauthorities. On March 23, 1999, Sotomayerhad reported the vehicle stolen to the UnionCity Police Department and on April 8, 1999,Sotomayer submitted a false Affidavit ofVehicle Theft to Allstate Insurance Company,resulting in the issuance of claim checkstotalling $7,141.06. While investigation of thegive-up scheme was underway, Tavarez wasalso arrested for possession of cocaine withintent to distribute. On December 20, 2002,Tavarez was sentenced to seven and a halfyears in State prison for the drug charges anda concurrent four year State prison sentencefor the conspiracy charge, with a 30 monthperiod of parole ineligibility and credit for 306days served. This investigation resulted fromthe cooperation of Pablo Cordero, who agreedto assist State law enforcement authoritiesafter his arrest for his participation in a "chopshop" ring. Cordero had previously beensentenced for his role in the ring to three yearsprobation, conditioned upon his cooperation insubsequent investigations.

State v. Jose AlvarezOn September 27, 2002, a State Grand Juryreturned an indictment against Jose Alvarezfor conspiracy, theft by deception, tamperingwith public records and falsifying records. The indictment charges that, on September 7,1999, Alvarez, a former West New YorkPolice Officer, arranged the "give-up" of his1997 Toyota Camry with co-conspirator, AlenHernandez, for the purpose of submitting afraudulent theft claim with his insurancecarrier. Alvarez allegedly turned the vehicle

o v e r t oHernandez andreported to theJe r sey Cit ypolice that thevehicle had beenstolen. Theindictment also

alleges that Alvarez submitted a fraudulent

The Jersey JournalNovember 9, 2002

Pleads guilty to insurance fraud, drugs

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Affidavit of Vehicle Theft to New JerseyManufacturers Insurance Company resulting ina payment to Alvarez of $15,665 to settle hisclaim. This case also resulted from Cordero'scooperation with authorities. Alvarez isawaiting trial.

State v. Cathy PitbladdoOn March 1, 2002, a Grand Jury indictedCathy Pitbladdo for attempted theft bydeception, alleging that, on May 18, 2000, shefalsely reported her 1993 Dodge Intrepidstolen from the Garden State Plaza Mallparking lot to a Paramus Mall Security Guardand a Paramus Police Officer. The indictmentalleged that the vehicle was actually recoveredin Newark, New Jersey, by the Newark PoliceDepartment's Arson Squad on May 15, 2000,three days before Pitbladdo claimed it hadbeen stolen in Paramus. According to theArson Squad, the vehicle was found engulfedin flames, was a total loss, and arson wassuspected. On August 9, 2002, Pitbladdo wasadmitted into PTI conditioned upon paying a$4,000 civil insurance fraud fine.

State v. Daniel Mazur, James Freeman &Douglas PowellOn March 14, 2002, a Grand Jury returned anindictment charging Daniel Mazur, JamesFreeman and Douglas Powell with conspiracyand theft. Mazur was also charged withfalsifying or tampering with records.According to the indictment, Mazur, Freemanand Powell conspired to make it appear thatMazur's 1997 Toyota RAV-4 was stolen fromthe Cherry Hill Mall so that Mazur could file afraudulent theft claim and avoid further leasepayments for the vehicle. The indictmentfurther alleged that Mazur and Freemanbrought the vehicle to Ultimate Collision II,which was owned by Powell, left the keys inthe vehicle and arranged to have it removedfrom Ultimate Collision. Mazur and Freemanthen allegedly returned to the Cherry Hill Mall,where Mazur falsely reported the RAV-4stolen to the Cherry Hill Police Department.Mazur subsequently submitted a claim to

Liberty Mutual Insurance Company, resultingin Liberty Mutual's issuance of a check of$16,085 to the leasing company. All threewere ultimately admitted into the PTI Programconditioned upon their jointly payingrestitution to Liberty Mutual in the amount of$16,085.

State v. Anna SypniewskiOn June 14, 2002, Anna Sypniewski pledguilty to an Accusation charging her withattempted theft by deception. She admittedthat, on June 13, 2001, she had falselyreported to the Woodbridge PoliceDepartment that her 1999 Toyota 4Runnerhad been stolen from the Woodbridge Mallparking lot. Sypniewski also admitted filing afalse Affidavit of Vehicle Theft with MotorClub of America Insurance Company inconjunction with her insurance claim.According to Sypniewski, at the time of thealleged theft, her vehicle was actually parkedin the long term parking lot at JFK Airport.On September 18, 2002, Sypniewski wasadmitted into the PTI Program, ordered to payrestitution in the amount of $1,327.34 andagreed to pay a civil insurance fraud fine of$5,000.

State v. Geuris Valdez-FernandezOn September 26, 2002, Gueris Valdez-Fernandez pled guilty to an Accusationcharging him with conspiracy. He admittedthat, on October 17, 2001, he purposely gavehis 1998 Toyota Camry to another individualto dispose of in order to file a fraudulentinsurance claim and have the insurancecompany pay off his outstanding loanobligation.

False Automobile Insurance Claims

State v. Peter HalabiOn December 19, 2002, Peter Halabi wasadmitted into the PTI program conditioned onpaying a civil insurance fraud fine of $1,000,continuing gainful employment, andcommunity service. Halabi previously pled

38

guilty to an Accusation charging him withconspiracy for lying to a fraud investigatorfrom American International Group regardinga fraudulent automobile insurance claim filedby a colleague.

State v. Okpon InokonOn January 16, 2002, a Grand Jury returned anindictment charging Okpon Inokon withconspiracy, attempted theft by deception,tampering with public records or informationand falsifying records. The indictment allegedthat Inokon rented a car from Alamo Rent-A-Car for one day and purchased a PersonalProperty Protection Plan insurance policyoffered by Alamo. Inokon allegedlysubsequently reported to the Newark PoliceDepartment that the rental car had beenbroken into and that personal items valued at$4,800 were stolen from the vehicle. Theindictment further alleged that Inokon filed afalse Personal Effects Loss Report to theinsurance claims administrator for Alamo,claiming the value of the items stolen totaledapproximately $6,821.96. On August 22,2002, Inokon was arrested on unrelatedcharges and was remanded to the HudsonCounty Jail on both the unrelated charges andthe fugitive bench warrant issued in this case.Inokon subsequently pled guilty to conspiracy,attempted theft by deception, and tamperingwith public records or information. OnDecember 19, 2002, Inokon was admittedinto PTI, conditioned upon performing 100hours of community service and paying a$1,500 civil insurance fraud fine.

State v. Narenda SolankiOn December 12, 2002, Narenda Solanki pledguilty to an Accusation charging him withfalsifying records. Solanki admitted that, onMay 29, 1998, he falsely reported to the NorthBrunswick Police Department that his car hadbeen burglarized and that his car had beenlooted of approximately $8,000 in cash andgift items. Solanki also admitted that he madea fraudulent theft claim to State FarmInsurance Company in the amount of $8,000.

In order to support his claim, Solanki admittedsubmitting phony receipts that were providedto him by Timetron Watch Company, locatedin Edison, New Jersey. This investigation iscontinuing, and additional civil or criminalinsurance fraud penalties against other personswho may have assisted Solanki are pending.

False Automobile Insurance Theft Claims

State v. James CalabreseOn January 4, 2002, James Calabrese wassentenced to 120 days in the electronicmonitoring program, two years probation, andordered to pay restitution in the amount of$2,240. Calabrese pled guilty to attemptedtheft by deception for falsely reporting thetheft of his Cadillac to a Margate City policeofficer the day before the car's lease was toexpire. After reporting the theft to police, hefiled a fraudulent theft claim with his insurancecompany, Prudential. The car had been foundabandoned by Philadelphia police officers priorto the day on which Calabrese claimed thevehicle had been stolen.

State v. Trisha TownsendOn June 25, 2002, Trisha Townsend wasindicted and charged with attempted theft bydeception. According to the indictment, onMay 26, 2001, Townsend falsely reported tothe Trenton Police Department that her 1994Dodge Intrepid had been stolen. Townsendallegedly filed a fraudulent auto theft claimwith her insurance company, New JerseyManufacturers Insurance Company, four dayslater. Townsend's case is pending trial.

State v. Ivan AlasOn October 25, 2002, Ivan Alas wassentenced to three years probation and orderedto pay a $4,500 civil insurance fraud fine. Alaspled guilty to attempted theft by deception forfiling a fraudulent insurance claim for the theftof his 1996 Dodge Stratus.

State v. Antonio GilOn August 22, 2002, Antonio Gil pled guilty

39

to an Accusation charging him with falsifyingrecords. Gil admitted that on June 18, 2001,he knowingly submitted a false Affidavit ofVehicle Theft to Palisades Safety andInsurance Association for the purpose ofobtaining insurance claim money under falsepretenses. Gil was admitted into the PTIProgram, conditioned upon paying restitutionin the amount of $3,391. Gil was also orderedto pay a civil insurance fraud fine in theamount of $2,500.

State v. Robert E. SmithOn October 17, 2002, a Grand Jury returnedan indictment charging Robert E. Smith withtheft by deception, unsworn falsification toauthorities and falsifying or tampering withrecords. According to the indictment,sometime between October 14 and November22, 1999, Smith reported to the MoorestownPolice Department that his former wife's 1994Saab 900 had been stolen from theMoorestown Mall parking lot. The indictmentfurther alleges that on October 26, 1999,Smith signed and submitted an Affidavit ofTheft to Allstate Insurance Company falselystating that the vehicle had been stolen fromthe Moorestown Mall and that AllstateInsurance Company paid approximately$12,000 on the theft claim. The State intendsto prove that, two weeks prior to thepurported date oftheft on October14, 1999, the carhad been involvedin a police chaseand abandoned inC a md e n Cit y.I n v e s t i g a t i o nrevealed that theCamden police impounded the car and that itwas towed to a garage in Pennsauken where itremained until June 18, 2001. Smith's case ispending trial.

State v. Anna WhiteOn December 19, 2002, a Grand Jury returnedan indictment charging Anna White with

falsifying records. According to theindictment, on June 2, 2001, White submitteda falsified Affidavit of Theft for her 1992Dodge Caravan to Ohio Casualty InsuranceCompany in conjunction with a fraudulentinsurance claim. The State intends to provethat White had, in fact, loaned her van toanother person who was then involved in anaccident, but instead, White wanted theinsurance carrier to believe her car wasdamaged because it was stolen. White's caseis pending trial.

State v. Donald BraccoOn December 23, 2002, Donald Bracco pledguilty to an Accusation charging him withtampering with public records or information.Bracco admitted that, on November 30, 2001,he submitted a fraudulent report to the OldBridge Police Department, claiming that his2001 Ford Explorer, which he was leasingfrom Ford Motor Credit, had been stolen.Bracco knew that the vehicle had not beenstolen, but had, in fact, been abandoned inMarlboro, New Jersey where it was recoveredby the Marlboro Police Department.

Phony Personal Injury Protection (PIP)Claims

State v. Richard Williams, Suzette Tanner &William EbronOn June 6, 2002,Suzette Tanner andWilliam Ebron pledguilty to separateAccusations eachcharging theft bydeception. In theirpleas, Tanner and

Ebron admitted that they, along with twoother persons who have not yet been charged,were involved in a phony automobile accidenton May 16, 2001, in Newark. The stagedaccident had been reported as a hit and run tothe Newark Police Department and listedTanner as the driver and Ebron and two otherpersons as passengers. PIP claims in the

THE STAR LEDGERAugust 17, 2002

Judge fines Irvington pair forinsurance claim

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approximate amounts of $5,593 for Tannerand $5,622 for Ebron, as well as propertydamage claims in the approximate amount of$5,248 for damage allegedly sustained to thevehicle in the phony accident, were submittedto Metropolitan Property and CasualtyInsurance. Metropolitan paid only theproperty damage claim to Tanner in theamount of $5,248. Tanner and Ebron alsoadmitted that, on August 6, 2001, they hadfalsely reported to the East Orange PoliceDepartment that Tanner's 2000 Ford Focushad been stolen, when they had actually hiddenit behind a house near their residence inIrvington. Ebron and another person strippedparts from the vehicle and attempted to sell theparts to an auto body shop in Newark. Tannerand Ebron also submitted a fraudulent stolenvehicle insurance claim to Metropolitan, forwhich they received $9,442. On July 26,2002, Tanner was sentenced to four yearsprobation, ordered to pay $14,690 inrestitution and a $5,000 civil insurance fraudfine. On August 16, 2002, Ebron wassentenced to four years probation and orderedto pay $14,690 in restitution and a $5,000 civilinsurance fraud fine.

State v. Dolores StoverOn July 17, 2002, Dolores Stover pled guiltyto an Accusation charging her with attemptedtheft by deception. Stover admitted that shehad submitted a false PIP claim to LibertyMutual Insurance Company for an automobileaccident that took place on April 5, 2001, inNewark, New Jersey. Stover explained that,although the automobile accident actually didoccur as claimed, she had not been injured inthe accident. Stover's phony claim for $5,094was denied by Liberty Mutual. On September17, 2002, Stover was sentenced to four yearsprobation and ordered topay a $5,000 civilinsurance fraud fine.

State v. John Datus &Bellamy AntoineOn January 4, 2002,

Bellamy Antoine was sentenced to five yearsprobation, conditioned upon 200 hours ofcommunity service, and ordered to payrestitution in the approximate amount of$12,000 and a civil insurance fraud fine of$7,500, on charges of conspiracy, health careclaims fraud and theft by deception. The theftby deception charges stemmed from anautomobile accident which Antoine admittedto staging on July 16, 1997. Following thatstaged accident, Antoine began a course ofchiropractic treatment at Allied Trauma andHealth Care Center for injuries alleged to havebeen sustained in the purported accident. PIPclaims for Antoine's treatment were submittedto Newark Insurance Company, for whichNewark Insurance Company paid $4,619.75.Antoine, a former Irvington resident, alsofiled a bodily injury claim for non-economiclosses with Allstate Insurance Company andsettled it for $4,500. The conspiracy andhealth care claims fraud charges related toanother scam in which he had conspired withJohn Datus to assume a fictitious identity andfake injuries from a purported automobileaccident. Datus had previously been sentencedto four years probation, payment of restitutionin the amount of $2,500 and payment of a civilinsurance fraud fine in the amount of $2,500for his role in that scheme.

State v. Yvonne Blakney, et al.On November 15, 2002, Lareen Blakney-Reedand Danielle Miller were sentenced for theirroles in a conspiracy to falsely claim that theywere injured in an automobile accident in orderto generate substantial bills for medicaltreatment, which was paid by the GeneralAccident Insurance Company. The schemestarted when Loreen Blakney falsely reportedto the Camden Police Department on August

9, 1997, that, whiledriving, her vehiclewas struck by anunidentified hit andrun driver. Shealso claimed thatLareen Blakney-

THE STAR LEDGERJanuary 6, 2002

Ex-Irvington man gets probationand fine for car insurance scam

41

Reed, Loreen's twin sister, Yvonne Blakney,Lareen's daughter, and Danielle Miller, afriend, were passengers in the vehicle.Following the falsely reported accident, allfour allegedly received treatment from medicalservice providers, causing General AccidentInsurance to pay PIP medical paymentstotalling over $47,000. Lareen Blakney-Reedwas sentenced to 18 months probation andordered to pay $12,041 in restitution, whileDanielle Miller was sentenced to one yearprobation and ordered to pay $9,143 inrestitution. On December 13, 2002, LoreenBlakney was sentenced to three yearsprobation and ordered to pay $15,916 inrestitution.

State v. Ali Harvey, Roy Bailey & IreneSmithOn September 30, 2002, a Grand Juryreturned an indictment charging Roy Baileyand Irene Smith with conspiracy andattempted theft by deception. According tothe indictment, on February 11, 1997, AliHarvey, Bailey and Smith reported to theNewark Police Department that they werepassengers in an automobile which was struckby another vehicle that ran a stop sign andfled. The indictment alleges that the accidentnever occurred and that they treated at an EastOrange chiropractic clinic for purportedinjuries they claim to have sustained in thephony accident so that PIP claims could besubmitted to the insurance company. Theindictment further alleges that, Harvey, Baileyand Smith submitted phony bodily injury andPIP claims to State Farm Insurance, whichclaims were denied. Harvey had previouslypled guilty to an Accusation charging him withconspiracy for his role in the alleged scheme.He was later admitted into the PTI Programand ordered to complete 50 hours ofcommunity service. On November 22, 2002,Bailey was arrested pursuant to a benchwarrant issued for unrelated charges andarraigned in Essex County Superior Court.Bailey's and Smith's cases are now pendingtrial.

State v. Rene ObredorOn November 18, 2002, Rene Obredor pledguilty to an Accusation charging him withattempted theft by deception. Obredoradmitted that he caused a purported GlenwoodPolice Department automobile accident reportto falsely reflect that, on February 11, 1999, hehad been injured in an automobile accident.Obredor also admitted that he used thefalsified police accident report to pursue anautomobile insurance PIP claim which hesubmitted, along with several other falsifiedclaim documents, to First Trenton IndemnityInsurance Company and New JerseyManufacturers Insurance Company. At hisguilty plea hearing, Obredor admitted that hesought medical treatment for purportedinjuries arising from the accident, even thoughhe was not really injured as he had claimed tothe insurance companies. Fraudulent PIPclaims totalling approximately $5,000 weresubmitted to the insurance companies beforethe scam was uncovered. The insurancecompanies denied the claims, however, andreferred the case to OIFP for investigation.

State v. Philip Major, et al.This complex OIFP case advanced significantlyduring the past year as 21 defendants pledguilty to charges of theft or attempted theft bydeception as part of the continuinginvestigation and prosecution of former EastOrange police officer, Philip Major, andothers. Major previously pled guilty to officialmisconduct and related charges for writingfalse police accident reports to be used inmaking phony insurance claims. The pleasfrom these 21 defendants accounted for some$193,000 of the approximately $900,000 infraudulent PIP insurance claims which havebeen tied to Major's malfeasance. Of the 21defendants, all have been sentenced to termsranging from admission into the PTI Programto five years probation, and ordered to payrestitution in the approximate total amount of$48,094.06. It is anticipated that additionalsubjects may be charged.

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Nicholas Rosania & Annette LiceaOn April 12, 2002, Nicholas Rosania, co-owner of the West New York ChiropracticCenter, was sentenced to four years in Stateprison following his conviction for conspiracy,official misconduct and bribery after aFebruary, 2002 jury trial. Rosania paid anintermediary, Annette Licea, to bribe a NorthBergen Police Department CommunicationsSupervisor to obtain accident reports,including computer printouts. The reports andprintouts were obtained to identify personswho had been involved in accidents who mightbe recruited as patients in order to submit PIPmedical claims to insurance companies.Previously, on March 15, 2002, Licea wassentenced to two years probation and orderedto pay a $1,000 civil insurance fraud fine.

Receiving Stolen Property

State v. Paul StrullerOn April 12, 2002, Paul Struller was sentencedto five years State prison, and ordered to pay$111,243.93 in restitution and a $10,000 civilinsurance fraud fine for pleading guilty toreceiving stolen vehicles. Struller, the ownerand operator of an auto body shop in Garfield,New Jersey, hadreceived, or broughtinto New Jersey, a1997 Land Rovertruck, a 1997 BMW,a 1995 BMW and a1999 Acura, knowingthat the automobileshad been stolen. Thevehicles, having atotal "book value" inexcess of $140,000, had been reported stolenand their owners had submitted theft claims toseveral insurance companies, including LibertyMutual Insurance Company, Allstate InsuranceCompany, and First Trenton InsuranceCompany.

State v. Frank Thomas Holgate

On June 24, 2002, Frank Thomas Holgate pledguilty to an Accusation charging him withreceiving stolen property. Holgate, the ownerof Best Buys Auto Parts and an auto scrapyard, admitted to receiving approximately 48vehicles, and parts of other vehicles, whichwere identified by the West Milford PoliceDepartment, the New Jersey State Police andOIFP as having been previously reportedstolen. Some of the automobiles wereinvolved in owner initiated "give-ups" so thatfraudulent auto insurance claims could be filedby their owners. Holgate is awaitingsentencing.

Staged Accidents

State v. ABP Chiropractic, Anhuar Bandy,Alejandro Ventura, Elvin Castillo, RaynaldoCuevas, Cesar Caba, Victor Almonte and 22Other DefendantsOIFP made significant progress in 2002 in itsfirst large scale investigation and prosecutionunder the Health Care Claims Fraud Actinvolving a staged accident ring. On April 15,2002, a grand jury returned ten indictmentscharging 28 defendants with a variety ofcharges, including racketeering, conspiracy,

health care claimsfraud, attempted theftand theft by deception,use of a 17 year old oryounger juvenile tocommit a criminaloffense and possessionof a weapon without ap e r m i t . T h eindictments allege thatt h e d e f e n d a n t s

participated in phony automobile accidents inand around Union County in order to submitfalse insurance PIP claims. Arrest warrantswere issued in conjunction with the unsealingof the indictments on May 16, 2002. In theensuing days, 11 of the defendants werearrested. Six of the 28 defendants, AnhuarBandy, Alejandro Ventura, Elvin Castillo,Raynaldo Cuevas, Cesar Caba and Victor

THE BERGENRECORD

April 13, 2002Shop owner gets 5 years in

stolen-vehicles case

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Almonte, were charged as racketeers. Thesesix defendants, including Anhuar Bandy, whoowned, controlled and/or operated as the chiefcorporate officer of six North Jerseychiropractic clinics, allegedly "constructed"eight phony automobile accidents. As a resultof these phony automobile accidents, PIPinsurance claims in excess of $331,000 wereallegedly submitted to several insurancecompanies. In addition, the ring was allegedlyresponsible for more than 90 other automobileaccidents, generating insurance claims inexcess of $2 million. According to theindictments, accidents were staged or"constructed" by obtaining vehicles to be usedin the crashes, recruiting people to act asdrivers and passengers, causing the crashes tooccur, and sending the recruited drivers andpassengers to treat as patients at chiropracticclinics in order to generate phony medical billsunder their PIPinsurance coverage.One of the indictmentsalleges that Ventura,Castillo, Cuevas, Caba,and Almonte acted as"runners" and recruitedpersons to participatein the phony automobile accidents. Accordingto the indictments, the persons whoparticipated in the phony accidents becamepatients at several of the Bandy owned,controlled or operated chiropractic clinics, aswell as at other medical service provideroffices, even though they had not been injuredin any of the phony accidents. As explained inthe indictment, the runners were sometimesknown as "constructors" because theyallegedly constructed these automobileaccidents. In some of the phony accidents, thepeople occupying the cars were allegedlyaware of the phony nature of the automobileaccidents, while, in others, they were not. The remaining twenty two defendants werecharged as participants in the eight phonyautomobile accidents, allegedly submitting, orcausing to be submitted, fraudulent PIPinsurance claims for chiropractic treatments

rendered by the Bandy or other clinics toinsurance companies for injuries allegedlysustained. The indictments, collectively, allegethat, in total, PIP claims were submitted toapproximately 24 insurance companies,including Allstate Insurance Company,Kemper Insurance Company, MDA/NewarkInsurance Company, Prudential InsuranceCompany, Republic Western InsuranceCompany (U-Haul of Arizona), SelectiveInsurance Company, Sentry InsuranceCompany, State Farm Insurance Company,Bayside Casualty, Clarendon National,Continental Insurance, Farm Family InsuranceCompany, Liberty Mutual InsuranceCompany, Maryland Insurance Company, TheMoxon Company, National ContinentalProgressive, National General InsuranceCompany, N.J. Cure, Ohio Casualty InsuranceCompany, Parkway Insurance, Progressive

Casualty, Red OakInsurance Company,U n i t e d S t a t e sA u t o m o b i l eAssociation (USAA),and New JerseyM a n u f a c t u r e r sInsurance Company.

Some counts of the indictments alsoallege that defendants used children toparticipate in these fake accidents and filephony insurance claims. Ventura was chargedwith two counts of using a 17 year old oryounger juvenile to commit a criminal offense,both counts in the first degree. Additionally,Angelita Guerrero was charged with use of a17 year old or younger juvenile to commit acriminal offense. The juveniles were notcharged. Ventura was also charged with onecount of possession of a weapon without apermit. The weapon was located andconfiscated during the execution of a searchwarrant by OIFP. Previously, as part of theinvestigation leading to these indictments, onJuly 13, 1999, OIFP obtained 12 arrestwarrants and arrested 11 persons for chargesrelated to this investigation. In addition tothe 1999 arrests, OIFP executed search

Home News TribuneJuly 24, 2002

Insurance-fraud ring is claimed

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warrants at five chiropractic clinics which wereallegedly Bandy owned, operated orcontrolled, namely, the Elizabeth InjuryCenter, Inc., P.C., the Amboy Injury Center,Inc., Prospect Spinal Trauma Center,Plainfield Injury Center, Inc., and GoldenMedical Center, P.C. Search warrants werealso executed at Bandy’s and Ventura’sprivate residences. Of the eleven personsarrested in July of 1999, OIFP has obtainedguilty pleas from six. Three additionaldefendants, who were not arrested as part ofthe July 1999 raid, have also pled guilty. Anumber of the conspirators pled guilty tovarious counts in the indictments in 2002,stemming from their participation in the ring.On October 31, 2002, Raynaldo Cuevas pledguilty to conspiracy to commit racketeering.On August 13, 2002, Dignorah Flores pledguilty to theft by deception for submitting afalse PIP insurance claim. On September 16,2002, Humberto Diaz pled guilty to theft bydeception, also for submitting a false PIPinsurance claim. On September 23, 2002,Mayreni Guerrero pled guilty to theft bydeception for submitting a false PIP insuranceclaim. On September 26, 2002, MohammedAttalla pled guilty to theft by deception basedon the submission of a false PIP insuranceclaim. On October 7, 2002, Joel Cuevas pledguilty to conspiracy to commit health careclaims fraud. On November 4, 2002, WidaniaMontanez pled guilty to theft by deception. OnNovember 8, 2002, Angelita Guerrero pledguilty to theft by deception and using a minorto commit a criminal offense. On November12, 2002, Ramon Reyes pled guilty toconspiracy to commit health care claims fraudand theft by deception.

State v. John Groff, et al.On September 25, 2002,John Groff pled guilty toat t empted theft bydeception. Groff admittedthat he conspired withmore than two dozen otherdefendants to stage

automobile accidents in various municipalitiesin and around Camden County. Groff andLuis Ruiz, a co-defendant, essentially acted as"runners" in conspiring with 27 otherdefendants to stage a total of seven automobileaccidents involving some 27 claimants. Thephony accidents resulted in the submission offalse police reports to police departments inPennsauken, Voorhees, Cherry Hill, Belmawr,Camden and Gloucester Township and thesubmission of fraudulent PIP medicalinsurance claims totalling more than $96,000to five insurance carriers. These carriersincluded Allstate Insurance Company, StateFarm Insurance Company, Liberty MutualInsurance Company, Prudential InsuranceCompany and Material Damage AdjustmentCorporation. When the insurance carriersbecame suspicious of the claims, they declinedto make any payments to the conspirators.Groff's main co-defendant, Luis Ruiz, wassentenced on March 15, 2002, to three yearsState prison, with a one year period of paroleineligibility. Ruiz was also ordered to pay a$20,000 civil insurance fraud fine. On May15, 2002, another participant, Anthony Flores,was sentenced to three years probation andordered to pay a $1,000 civil insurance fraudfine after pleading guilty to his participation inthe conspiracy. On May 17, 2002, anotherparticipant, Elvin Flores, was sentenced to 364days as a condition of probation, which he waspermitted to serve under house arrest afterpleading guilty. Elvin Flores also signed aconsent order agreeing to pay a $1,000 civilinsurance fraud fine. Eighteen otherdefendants were admitted into PTI,conditioned upon their payment of a $1,000

civil insurance fraud fineand cooperation with theState in its prosecution ofGroff. Groff is nowawaiting sentencing.

State v. Robin Ellison,Denise Gaines, PatriciaOglesby & DeborahThomas

BURLINGTONCOUNTY TIMES

October 29, 2002Woman admits role in

fake car accident

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On October 21, 2002, Denise Gaines, PatriciaOglesby, and Deborah Thomas each pledguilty to theft by deception for falsely claimingthat they had been injured in an automobileaccident while passengers in an automobiledriven by co-defendant, Robin Ellison, inPhiladelphia, Pennsylvania, on April 10, 1998.They admitted that, despite Ellison's report toher insurance company, State Farm, to thecontrary, no accident had occurred, nor hadthey sustained any injuries as passengers inEllison's vehicle. Ellison, herself, pled guilty toconspiracy and health care claims fraud onOctober 28, 2002. All four are awaitingsentencing.

State v. Nelson SoaresOn December 20, 2002, a State Grand Juryreturned an indictment charging Nelson Soareswith conspiracy, theft by deception, andhindering apprehension. The indictmentalleges that, on August 21, 1998, Soares andseveral others, who were not identified in theindictment, rented a U-Haul truck with theintent to use it to purposely cause an accidentto generate a phony insurance claim. Theindictment specifically alleges that Soaresdrove the U-Haul truck into a 1994 BMW andfalsely reported to the Newark PoliceDepartment that an automobile accident hadoccurred. This case is pending trial.

Fictitious Documents

State v. Jenette Thomas-Malik, ReginaBryan, Yolanda Daniels a/k/a YolandaAdams & Kareem YoungOn March 8, 2002 a Grand Jury indictedJenette Thomas-Malik and Yolanda Daniels,a/k/a Yolanda Adams, charging them withconspiracy, theft by deception, simulating amotor vehicle card, forgery and possession ofCDS. The indictment specifically alleges thatfor a fee of $600, Thomas-Malik, ReginaBryan and Daniels sold "insurance" in the formof phony identification cards and phonydeclaration pages. On February 26, 2002,Kareem Young, a co-conspirator who had pled

guilty to theft by deception, was sentenced to27 days in jail as a condition of a three yearprobationary sentence. He was also orderedto seek, obtain and maintain employment as acondition of probation. On February 26, 2002,Regina Bryan, another conspirator who hadpreviously pled guilty to conspiracy, wassentenced to one year probation, conditionedupon maintaining employment and continuedattendance in a drug rehabilitation program.On October 15, 2002, Thomas-Malik pledguilty to conspiracy, simulating a motorvehicle insurance card, and possession of acontrolled dangerous substance. Thomas-Malik is awaiting sentencing. Daniels' case ispending trial.

State v. Herbert Jackson & Hector TorresOn April 17, 2002, a Grand Jury returned anindictment charging Herbert Jackson andHector Torres with conspiracy, sale ofsimulated documents and forgery. Jacksonand Torres allegedly obtained personalinformation from several individuals and usedthese personal identifiers to create and sellfictitious motor vehicle licenses for $450 each.Both pled guilty. On November 1, 2002,Jackson was sentenced to 3 years probationand ordered to serve 150 hours of communityservice. Torres awaits sentencing.

Jorge Fonseca & Joe HojasOn July 9, 2002, in the course of a Division ofMotor Vehicles related investigation into thesale of fraudulent motor vehicle documents,OIFP investigators arrested and charged JorgeFonseca with conspiracy to commit officialmisconduct and the sale or transfer of asimulated document. Joe Hojas was alsoarrested and charged with official misconductand sale or transfer of a simulated document.Bail was set at $500,000 for Fonseca and$100,000 for Hojas. These cases are pendingaction by the Grand Jury.

State v. Lisa BrownOn October 15, 2002, Lisa Brown pled guiltyto an Accusation charging her with simulating

46

a motor vehicle insurance identification card.Brown admitted that, on February 13, 2002,she presented a counterfeit automobileinsurance identification card, purportedlyissued by State Farm Insurance, while havingher automobile inspected at the DMVInspection Station in Lawrenceville. OnDecember 6, 2002, she was admitted intoPTI, conditioned upon serving 25 hours ofcommunity service.

State v. Jimmy GurzkovicOn September 26, 2002, a Grand Juryreturned an indictment charging JimmyGurzkovic with simulating a motor vehicleinsurance identification card. According to theindictment, between May 16 and 21, 2001,Gurzkovic, who owned and operated F&GAuto Repair, sold two phony, blankautomobile insurance identification cards to anundercover State Investigator. The case ispending trial.

State v. Axel AvilesOn August 23, 2002, Axel Aviles pled guiltyto an Accusation charging him with simulatinga motor vehicle identification card. Aviles alsopled guilty to a separate Accusation charginghim with receiving stolen property. Theinvestigation leading to his guilty pleas beganwhen State Police detectives went to Aviles'residence on May 13, 2002, to serve a fugitivebench warrant and arrest him for priorunrelated charges for possessing a controlleddangerous substance. When the officersarrived at Aviles' residence, they located acomputer and related equipment which Avilesused to create phony New Jersey insuranceidentification cards in the name of the CamdenFire Insurance Association. In the back ofAviles' residence, New Jersey State Police alsolocated a 2001 Suzuki GSX 600 motorcyclewhich had been reported stolen on February24, 2002, in Camden. Aviles was arrested bythe State Police and charged with fraudulentinsurance identification cards and receivingstolen property. On October 4, 2002, Avileswas sentenced to three years in State prison.

State v. Eddy JosephOn November 4, 2002, Eddy Joseph pledguilty to an Accusation charging him with saleof simulated documents. Joseph admitted thathe produced counterfeit U.S. Department ofDefense DD214 Discharge forms. A DD214form is used to verify military service anddischarge status and can be used foridentification purposes to obtain a driver'slicense. On December 16, 2002, Joseph wasadmitted into PTI, conditioned upon serving50 hours of community service.

State v. Gerry FrederiqueOn November 26, 2002, a Grand Jury returnedan indictment charging Gerry Frederique withsimulating a motor vehicle insuranceidentification card. The indictment allegesthat, on August 2, 2001, Frederique presenteda phony motor vehicle insurance identificationcard to an Irvington Police Officer, knowingthat the insurance I.D. card, purportedly issuedby the Colonial Penn Insurance Company, wasfake. Frederique allegedly presented the cardto the Irvington Police Officer when the policeofficer questioned him about an illegallyparked 1999 Honda Accord. Frederique's caseis pending trial.

State v. Regina LasaneOn November 26, 2002, a Grand Jury returnedan indictment charging Regina Lasane withsimulating a motor vehicle insuranceidentification card. Lasane is accused ofpresenting a phony motor vehicle insuranceidentification card to an Irvington PoliceOfficer, knowing that the insurance I.D. card,purportedly issued by the Allstate InsuranceCompany, was counterfeit. Lasane was tryingto retrieve her impounded 1989 Honda fromthe Irvington Police Department impoundyard. When asked for proof of insurance, sheallegedly presented the fictitious I.D. card.Lasane's case is pending trial.

State v. Howard GreenbergOn December 6, 2002, Howard Greenbergpled guilty to an Accusation charging him with

47

simulating a motor vehicle insuranceidentification card. Greenberg admitted thathe created a fictitious automobile insuranceI.D. card, purportedly issued by GeneralAccident Insurance Company, and displayed itat the Division of Motor Vehicles as proof ofinsurance. DMV personnel, suspecting thecard was fake, called the State Police.Greenberg is awaiting sentencing.

State v. John GaliazziOn December 3, 2002, John Galiazzi pledguilty to an Accusation charging him withsimulating a motor vehicle insuranceidentification card. Galiazzi admitted that heproduced and sold phony motor vehicleinsurance identification cards, purportedlyissued by Selective Insurance Company ofAmerica and the Barclay Insurance Company.He also admitted presenting a fictitious motorvehicle insurance identification card to a lawenforcement officer during a traffic stop.Galiazzi is awaiting sentencing.

State v. Jose Rafael PerezAs part of the ABP Chiropractic staged autoaccident investigation, in which 28 defendantswere indicted for racketeering, conspiracy,theft and health carecla ims fraud, onOctober 7, 2002, JoseRafael Perez wasc h a r g e d b y a nAccusation with onecount of fourth degreesale of a simulateddocument, a falsedriver's license. The case is pending trial.

HEALTH, LIFE AND DISABILITYFRAUD

Provider Fraud

State v. Larry KramerOn July 11, 2002, Larry Kramer owner and

operator of Englewood Cliffs Pharmacy , pledguilty to an Accusation which charged himwith theft by deception. Kramer admitted that,between December of 1996 and March of1999, he submitted approximately $60,000 infraudulent prescript ions to PAIDPrescriptions, LLC, a third party payor, bymaking it appear that eight doctors hadexamined patients and prescribed themedications when, in fact, the doctors had notseen the patients or prescribed the medicines.Kramer thereafter falsely billed PAIDPrescriptions as if his pharmacy had filled theprescriptions. Previously, on December 13,2000, the State Board of Pharmacy revokedKramer's pharmacist license based on thisconduct. On September 20, 2002, Kramerwas sentenced to five years probation andordered to pay $46,760 in restitution to PAIDPrescriptions, LLC. He was also ordered topay costs and fines of the Pharmacy Board inthe amount of $27,000.

State v. John AmabileOn January 11, 2002, John Amabile, formerlya licensed optometrist from MonmouthCounty, was sentenced to seven years Stateprison, and ordered to pay a criminal fine of$100,000 and $97,975 in restitution. In

addition, the Statebegan the process ofimposing $810,000in civil insurancefraud penalt ies.A m a b i l e h a dpreviously beenconvicted, followinga 34 day jury trial, of

conspiracy, theft by deception, falsifyingrecords, and falsification of records relating tomedical care. Amabile had attempted todefraud 29 insurance carriers and healthbenefits plans of more than $200,000 bysubmitting false health insurance claims.Amabile attracted large numbers of patients tohis offices by offering routine eye exams andglasses at little or no cost. Amabile then usedthe patients' insurance information to bill their

Courier PostJanuary 12, 2002

Former bob sledder gets 7 years infraud scheme

48

carriers for optometric services which he hadnot provided. Amabile directed his staff tocreate approximately 997 false patient recordsand charts in the event an insurance companyconducted an audit of the health insuranceclaims Amabile submitted for payment.Amabile's license had previously been revokedby the State Board of Optometrists and a $1.1million civil penalty had already been imposed.Prior to his prosecution by OIFP, Amabile hadgained recognition as a member of the PuertoRican National Bobsled Team that participatedin the 1998 Winter Olympics.

State v.David Fink, Ph.D.On August 5, 2002, David Fink, a licensedpsychologist, was sentenced to three yearsprobation and ordered to pay a civil insurancefraud fine of $3,000 after pleading guilty tohealth care claims fraud. Fink admittedsubmitting fraudulent claims to Oxford HealthPlans for medical services he never provided.Fink had been paid $1,198 for the phonyclaims. Fink also surrendered hispsychologist's license.

State v. Elliot Heller, M.D.On December 18, 2002, Dr. Elliot Heller, aplastic surgeon who owned and operated theEar, Nose, Throat Group of N.J./PlasticSurgery Associates of N.J. ENT in Edison,was sentenced to three years State prison forfraudulently billing for plastic surgery relatedprocedures he had not rendered. Heller hadalso paid $321,000 in restitution and a$100,000 civil insurance fraud fine prior to hissentencing. Heller apparently committed thecrimes because most health insurancecompanies will ordinarily not pay for plasticsurgery related to the nose or sinuses unlessthat surgery is necessary to correct anunderlying medical condition. Otherwise, suchsurgery is deemed to be "cosmetic" and notmedically necessary. If patients of ENT didnot have a serious enough underlying medicalsinus condition to justify payment for thesurgery by the health insurance carriers, Hellerbilled the insurance companies for multiple

sinus procedures that he fraudulently reportedas "medically necessary," but which he neverperformed. Heller also bilked insurancecompanies by performing a surgical procedurewhich was compensable by health insurance,but billed the insurance companies as if an out-of-network doctor provided the service, sothat Heller could bill for a greater amount forthe surgery. As a result, the insurance carrierwould reimburse Heller and ENT at the higherout-of-network rate based on themisrepresentation that the other doctor hadperformed the surgery. Heller also altered oradded diagnosis codes and service codes onpatient records that were submitted to theinsurance carriers in order to inflate theamount of the reimbursements he receivedfrom them. In total, Heller submitted billsexceeding $1 million, which generatedpayments of approximately $500,000 from thevictimized insurance carriers, which includedAetna, All America Financial, Blue Cross/BlueShield, Celtic Life, Chubb Colonial Life,Cigna, Great West Life and Annuity,MetraHealth, New Jersey Car, Pacific Life,Prudential, Unicare, United Healthcare,Guardian, HealthNet, Humana, Indecs Corp.,MagnaCare, USI Administrators, U.S. Life,Allstate, Insignia Financial Group, OxfordHealth, U.S. Healthcare, and Local 734Employee Welfare Fund of AFL-CIO.

State v. Robert CohenAs part of OIFP's investigation into the fraudcommitted by Dr. Heller, above, Robert Cohenpled guilty to an Accusation on March 15,2002, charging him with conspiracy and theftby deception. Cohen, licensed as a CertifiedRegistered Nurse Anesthetist (CRNA), was anindependent contractor who administeredanesthesia to patients undergoing surgicalprocedures in Heller's medical office. Cohenadmitted that, as a CRNA, he submittedapproximately $11,600 in fraudulent billings toinsurance companies for anesthesia services hefalsely claimed to have administered to patientsat the Ear, Nose, Throat Group of N.J./PlasticSurgery Associates of N.J. (ENT), in Edison,

49

New Jersey. Cohen collected approximately$8,800 from the insurance companies for thesefraudulent billings before he was caught. OnMay 20, 2002, Cohen was sentenced to twoyears probation and ordered to pay $9,677.35in restitution and a $4,000 civil insurance fraudfine.

State v. Maria CacoiloIn another case stemming from the Hellerinvestigation, above, on June 14, 2002, MariaCacoilo pled guilty to an Accusation chargingher with falsification of medical recordsrelating to several thousand dollars offraudulent billings. Cacoilo, who was Heller'soffice manager, admitted that she falsifiedcertain records to obtain insurance coveragefrom certain health insurance carriers forpatients. Among the records she falsified wererecords that insurance carriers required to"pre-certify" certain sinus surgical proceduresbefore they would agree to pay for thoseprocedures. Carriers will ordinarily not payfor plastic surgery related to the nose orsinuses unless that surgery is necessary tocorrect an underlying medical condition. If thepatient didnot have as e r i o u se n o u g hu nder lyingmedical sinuscondition toj u s t i f ypayment forthe surgery by the health insurance carriers,Cacoilo, in some cases, would falsify the "pre-certification" forms by "cutting and pasting"from the records of other patients. In sodoing, Cacoilo made it appear as if a particularpatient had a more serious underlying sinuscondition so that the plastic surgery related tothe nose would be paid by the carrier. Theinvestigation conducted by OIFP identifiedseveral files where false pre-certification forms

were submitted to health insurance carriers toinduce them to pay for surgery. On September27, 2002, Cacoilo was sentenced to threeyears probation and ordered to pay a civilinsurance fraud fine of $2,500.

State v. Martin Weinstein, D.P.M.On November 18, 2002, OIFP investigatorsarrested Martin Weinstein, a licensedpodiatrist, on a bench warrant issued for hisfailure to appear at a contempt hearing. Thehearing pertained to his failure to respond toa Subpoena demanding that he producerecords during the course of an insurancefraud investigation. It is alleged that between1997 and 1998, Weinstein billed Horizon BlueCross/Blue Shield more than $250,000 forpodiatric services he never rendered. Theinvestigation is continuing.

State v. Arthur DinkelOn December 17, 2002, Arthur Dinkel, aformer psychologist who owned and practicedat two Paramus psychotherapy clinics, pledguilty to an Accusation charging him with theftby deception. Dinkel admitted that, betweenJanuary of 1998 and March of 1999, hesubmitted fraudulent billings to variousinsurance carriers. These fraudulent billings

i n c l u d e doverbilling forp s yc ho lo g ic a lservices rendered,falsely billing theinsurance policiesof certain patientsfor psychologicalservices rendered

knowing that these psychological serviceswere rendered to other patients not coveredfor psychological health benefits under theirinsurance policies and billing for servicespurportedly performed by a staff medicaldoctor on dates prior to the medical doctor'semployment or dates after the termination ofthe medical doctor's employment. Dinkel waspaid by the various insurance companies forthese fraudulent billings in the amount of

THE BERGEN RECORDWednesday, December 18, 2002

Psychologist admits insurance fraud

50

$45,281.40. Dinkel awaits sentencing.

False Health Care Claims

State v. Michael FormaOn January 28, 2002, Michael Forma wassentenced to two years probation, conditionedupon serving 90 days in the Middlesex CountyAdult Correctional Center, and ordered to paya $2,500 criminal insurance fraud fine. Formapled guilty and admitted submittingapproximately 73 false health insurance claimsto Oxford Health Insurance/Oxford HealthPlans for reimbursement for medicaltreatments he neither received nor for whichhe paid. Forma previously made restitution toOxford Health Insurance in the amount of$12,798.

State v. Jennifer BozsikOn January 11, 2002, Jennifer Bozsik, a billingclerk in a doctor's office, was sentenced tothree years probation and ordered to pay$34,044.10 in restitution and a civil insurancefraud fine of $5,000. Bozsik pled guilty totheft by deception. She admitted submittingapproximately 74 claims to PrudentialInsurance Company of America for medicalservices that were either never rendered orwere rendered to her free of charge. Theclaims submitted to Prudential totaled morethan $46,000, of which approximately $34,000was paid to Bozsik.

State v. VivianBorges, Ana Rivera,Sobeida Velazquez,Lashunda Smith &Anna MurphyFive employees ofUniversity PhysicianAssociates (UPA), abilling service used byphysicians working for the University ofMedicine and Dentistry of New Jersey andUniversity Hospital (UMDNJ), were sentencedin 2002 for their participation in a scheme tosubmit phony health insurance claims to

Guardian Life Insurance Company of America.Ana Rivera, Vivian Borges and Anna Murphyhad submitted approximately 22 fraudulenthealth care claims to Guardian on behalf ofthemselves or their children totalling $15,960,for which they received approximately$12,297.50 from Guardian. Lashunda Smithand Sobeida Velazquez had submittedfraudulent health care claims to Guardian onbehalf of themselves and their childrentotalling $62,965, for which they receivedapproximately $38,072.55 from Guardian. OnJanuary 25, 2002, Rivera was sentenced tothree years probation, ordered to pay $8,745in restitution to Guardian and a $5,000 civilinsurance fraud fine. On April 19, 2002,Velazquez was sentenced to five yearsprobation, ordered to pay restitution in theamount of $5,854.87 and signed a CivilConsent Order for $5,000. On April 26, 2002,Smith was sentenced to three years Stateprison and ordered to pay restitution in theamount of $31,638.68. Borges and Murphywere each sentenced to two years probationand ordered to pay restitution in the amountsof $3,102.50 and $450, respectively. Allthree are required to each pay a $5,000 civilinsurance fraud fine.

State v. Nateasha RobinsonOn January 25, 2002, Nateasha Robinson wassentenced to five years probation and orderedto pay restitution to Blue Cross/Blue Shield inthe amount of $34,530.58. Robinson pled

guilty and admittedher role in a scheme tosubmit fraudulentclaims to HorizonBlue Cr o ss /BlueShield for healthservices that had notb e e n r e n d e r e d .Robinson had received

four claim checks totalling $35,030 before shewas caught.

State v. Matt LilenfeldOn December 6, 2002, Matt Lilenfeld was

THE STAR LEDGERJanuary 29, 2002

Woman bilks Blue in $34,530fraud case

51

sentenced to two years probation, conditionedupon serving 180 days in the County jail, forcommitting health care claims fraud, theft bydeception and the falsification of records. Hewas also ordered to pay $30,000 in restitutionand a $5,000 civil insurance fraud fine.Between January 15 and December 17, 1998,Lilenfeld submitted approximately 121 phonyprescription receipts from two Rahway, NewJersey, pharmacies to Celtic Life InsuranceCompany for reimbursement for prescriptionsthat he neither received nor for which he paid.The phony receipts he submitted exceeded$38,000.

State v. Karl Stass & Tina StreaterOn July 26, 2002, Karl Stass was sentenced tofive years probation, conditioned upon serving364 days in County jail, for allowing TinaStreater, a friend, to assume his wife's identityin order to availherself of his wife'shealth insurancecoverage under theState Health BenefitsPlan, which isadministered byH o r i z o n B l u eCross/Blue Shield. Stass and Streatersubmitted health insurance claims to Horizon,resulting from Streater's stay at GreenvilleHospital in Jersey City, totalling some$86,000, of which more than $57,000 waspaid. Streater was sentenced to four yearsState prison. Joint restitution was imposed onboth defendants in the amount of $57,595.

State v. Claudia BellinoOn May 29, 2002, Claudia Bellino, an officemanager at a medical office, was sentenced totwo years probation and ordered to payrestitution to the Prudential InsuranceCompany in the amount of $476. She wasalso ordered to pay a civil insurance fraud fineof $2,000. Bellino pled guilty to theft bydeception and admitted submitting nearly$600 of medical claims for services that shenever received.

State v. Ruth SchwartzOn June 5, 2002, a State Grand Jury returnedan indictment against Ruth Schwartz chargingher with health care claims fraud and theft bydeception. According to the indictment,Schwartz submitted a number of legitimateprescriptions to several pharmacies, butintentionally did not pick them up or pay forthem. The State intends to prove thatSchwartz knew that she would receivepayment for these prescription drugs fromHorizon Blue Cross and Blue Shield,administrator of her husband's prescriptionplan, even if she never received them.Schwartz was reimbursed $19,569.20 byHorizon for the prescriptions. Schwartz's caseis pending trial.

State v. Lev NatovichOn March 13, 2002, OIFP investigators

a r r e s t e d L e vN a t o v i c h a n dcharged him withhealth care claimsfraud. Natovich hadb e e n u n d e rinvestigation forpracticing dentistry

without a license. At his arraignment,Natovich was required to post $100,000 bail.This case is pending presentment to a GrandJury.

State v. Andrea WahligOn October 1, 2002, Andrea Wahlig pledguilty to an Accusation charging her withhealth care claims fraud. Wahlig admittedsubmit t ing claims for prescriptionreimbursements to which she was not entitled.Wahlig was injured at LML Supermarkets inthe course of her employment at thesupermarket and subsequently filed a WorkersCompensation Claim with New JerseyManufacturers Insurance Company, whichcovered her medical services and prescriptionmedications. Wahlig was also covered underher husband's prescription plan, which requireda co-pay of $5 per filled prescription. Wahlig

The Jersey JournalMay 14, 2003

Woman pleads guilty to $87G Fraud

52

admitted that, between 1997 and 2000, shesubmitted false insurance claims to New JerseyManufacturers for full reimbursement of herprescription medications, when in fact, herhusband's prescription plan had paid for thecovered prescriptions, less the $5.00 co-pay.New Jersey Manufacturers paid Wahlig a totalof $11,771.15 for the full cost of 18prescription transactions, though Wahligshould have only been reimbursed for heractual co-payments.

State v. Patricia & Paul SullivanOn August 22, 2002, two indictments werereturned by a State Grand Jury against Patriciaand Paul Sullivan. Patricia Sullivan wascharged in the first indictment with health careclaims fraud, theft by deception anddestruction, falsification or alteration ofrecords relating to medical care. The firstindictment alleges that, between July 27 andNovember 2, 2000, Patricia Sullivan submittedfraudulent claims to MetLife Auto and HomeInsurance Company in order to seekreimbursement for prescriptions purportedlypaid for by her, when, in fact, she was notentitled to reimbursement for the cost of theprescriptions. The indictment also alleges thatPatricia Sullivan altered and/or falsifiedprescription medicationrecords in support of thefraudulent claims. In aseparate indictment,Patricia, along with herhusband Paul Sullivan,were charged withconspiracy, health careclaims fraud, attemptedtheft by deception anddestruction, falsification or alteration ofrecords relating to medical care. The secondindictment alleges that between December 17,2001 and March 5, 2002, Patricia Sullivan, inconcert with her husband, Paul Sullivan,conspired to defraud Blue Cross/Blue Shieldby submitting fraudulent insurance claims

totalling over $75,000 for reimbursement forprescriptions they purportedly purchased fromMarquet Pharmacy when, in fact, themedications were not purchased by theSullivans. According to the indictment, theyfalsified medical records and submitted themto Blue Cross/Blue Shield in support of theirphony claim. The Sullivans' case is pendingtrial.

State v. Xun-Cheng HuangPreviously, a State Grand Jury returned a tencount indictment against Xun-Cheng Huang, aformer professor of mathematics at NewJersey Institute of Technology (NJIT). Huangwas charged with one count of health careclaims fraud, three counts of theft bydeception, falsification of records relating tomedical care, and three counts of forgery. Theindictment alleges that from January 1995through September 1996, while employed atNJIT, Huang submitted over 100 false claimsfor medical services in excess of $40,000 forreimbursement through the State HealthBenefits Program. Upon leaving hisemployment at NJIT, he is alleged to havesubmitted an additional 20 fraudulent claims inexcess of $2,500 under insurance coverageobtained by his daughter while a student at theUniversity of Pennsylvania. For most claims,the named medical provider did not exist and

was allegedly afictitious providercreated by Huang.For those claimswhere the medicalprovider did exist,the claimed serviceswere allegedly neverprovided. Huangfailed to appear for

his arraignment and a warrant for his arrestwas issued. On August 26, 2002, OIFPcaused Huang to be arrested on a fugitivebench warrant in Florida and to be extraditedto New Jersey to answer to the charges in theindictment. On December 18, 2002, Huangwas sentenced to five years probation and

The Jersey JournalNovember 14, 2002

Harrison man pleads toinsurance fraud

53

ordered to pay restitution in the amount of$40,425 following his guilty plea. Prior tobeing sentenced, Huang served 116 days incounty jail.

Fraudulent Disability Claims

State v. Dr. Ngan HiraiOn March 19, 2002, a State Grand Juryreturned an indictment charging Dr. NganHirai, a licensed dentist, with theft bydeception for filing a fraudulent disabilityclaim. According to the indictment, Hiraifalsely claimed to be disabled but continued topractice dentistry while she collected totaldisability insurance payments in theapproximate amount of $155,399 pursuant toa disability insurance policy issued throughGeneral American. The insurance companyterminated her benefits after determining thatshe had been practicing dentistry despite thepurported disability. Hirai's case is pendingtrial.

State v. W. Lance Kollmer, M.D.On May 31, 2002, a State Grand Jury returnedan indictment charging Dr. W. Lance Kollmer,a board certified plastic surgeon licensed topractice medicine and surgery in New Jersey,with theft by deception. According to theindictment, Kollmer filed false disabilityclaims with Sentry Insurance Company andAmerican General Insurance Company,claiming that he was totally disabled andunable to engage in the practice of medicine asa plastic surgeon. Additionally, Kollmerclaimed that he had not performed any surgerysince the commencement of the total disability.The State intends to prove at trial that Kollmerperformed over 60 surgical procedures duringthe period he claimed to be disabled. Theamount of claims paid to Kollmer by bothSentry Insurance Company and AmericanGeneral Insurance Company totaled$300,000. Kollmer's case is pending trial.

State v. Virginia Fatato

O n D e c e m b e r 2 , 2 0 0 2 , aState GrandJ u r yreturned anindictmentc h a r g i n gV i r g i n i aFatato, achiropractor , w i t hat t emptedt he f t bydeception and falsifying records. Fatato hadpreviously been convicted of theft bydeception and falsifying records in 1999 forsubmitting phony PIP insurance claims toinsurance companies from her Hammontonchiropractic practice. On May 21, 2001, theChiropractic Board suspended Fatato'schiropractic license for a period of five yearsfor her earlier crimes. According to thecurrent indictment, following her criminalconviction for insurance fraud related to herchiropractic practice, Fatato submitted adisability claim with Massachusetts MutualLife Insurance Company, seeking $14,982 indisability payments per month for a two yearperiod, with decreasing amounts thereafterduring the course of her lifetime. Sheallegedly advised the insurance company thatshe was unable to work as a chiropractorfollowing an injury suffered in an automobileaccident in 1994. The State intends to prove,however, that, not only did Fatato work outregularly at a Hammonton, New Jersey gym,but that she also obtained employment as achiropractor at another gym located inTurnersville, New Jersey. Fatato's case ispending trial.

State v. Gerard ZaccardiOn March 8, 2002, a State Grand Juryreturned an indictment charging GerardZaccardi with theft by deception and falsifyingrecords. The indictment charges that Zaccardifraudulently applied for disability insurancebenefits with the Social SecurityAdministration (SSA) following a "slip and

The Press of AtlanticCity

December 3, 2002

Ex-chiropractor charged with

54

fall" at his place of employment andtermination of temporary benefits paymentsfrom workers compensation. On the SSAapplication, Zaccardi allegedly claimed aninability to return to work and functionnormally at home due to his disability. TheState will prove that during the time period inquestion, Zaccardi was employed at an auto body shop and did not appear to be disabled.Zaccardi's case is pending trial.

State v. Zena Lecoff a/k/a Zena Lecoff-WalkerOn July 22, 2002, Zena Lecoff-Walker, a/k/aLecoff-Walker, was sentenced to five yearsprobation conditioned upon serving 100 daysin county jail, and ordered to pay a $500criminal fine. She was also ordered to pay$23,917 in restitution to the Social SecurityAdministration and an additional $250 criminalfine. Lecoff pled guilty to theft by deception.She admitted receiving Social Security andWorkers Compensation disability benefitsfollowing a work related injury while she wasalso earning an income from flea marketbusinesses, violating social securityregulations.

State v. Laura PanagosOn July 26, 2002, Laura Panagos wassentenced to five years probation and orderedto pay restitution of $18,260 and a $1,500 civilinsurance fraud fine. Panagos pled guilty andadmitted attempting to defraud the TravelersInsurance Company by failing to notify thecompany of her husband's death, fraudulentlyendorsing her husband's name and cashing hisworker's compensation checks for three yearsfollowing his death..State v. Albert BeebeOn August 5, 2002, a State Grand Juryreturned an indictment charging Albert Beebewith theft by deception and falsifying records.The indictment alleges that, betweenDecember 11, 1997 and May 24, 1999, Beebecommitted theft in connection with his receiptof insurance disability benefits when he

knowingly failed to notify Hartford InsuranceCompany that he had also begun to receiveSocial Security benefits. According to theindictment, Beebe's disability insurancebenefits had to be "coordinated" with anydisability benefits he also received from SocialSecurity, which would reduce his disabilityproportionately. The indictment also allegesthat in support of Beebe's alleged thefts, ontwo occasions when Hartford sent Beebe an"Other Income Questionnaire," Beebeallegedly falsely answered "no" to thequestions which asked whether he wasreceiving, or expected to receive, SocialSecurity benefits. Beebe is alleged to havewrongfully received over $29,000 in disabilitybenefits from Social Security. Beebe's case ispending trial.

Health Insurance Application Fraud

State v. Fred D'Avanzo & Ralph D'AvanzoOn August 12, 2002, Fred D'Avanzo pledguilty to an Accusation charging him with theftby deception and falsifying or tampering withrecords. His brother, Ralph D'Avanzo, pledguilty to a separate Accusation charging himwith theft by deception. Fred D'Avanzo,president of Coverall Staff Services, Inc., atemporary employment agency, admitted that,in October of 1995, he had obtained healthinsurance through a Small Group HealthBenefits Policy insurance contract withHorizon Blue Cross and Blue Shield of NewJersey. The health insurance policy requiredthat employees eligible for group health carebenefits under the policy be permanent, full-time employees who worked a minimum of 25hours per week for Coverall. BetweenSeptember 1997 and October 2000, FredD'Avanzo illegally obtained health insuranceunder the policy for his brother, Ralph, andtwo other persons, by signing a New JerseySmall Employer Certification falsely claimingthat his brother Ralph and two other personswere full time employees of Coverall whoworked 40 hours or more per week. RalphD'Avanzo admitted that he was wrongfully

55

enrolled in Coverall's group health insurancepolicy, that he was not a full time employee ofCoverall and was, in fact, residing in Florida.Ralph also admitted submitting $104,750.33 ininsurance claims to Blue Cross/Blue Shield, ofwhich Blue Cross/Blue Shield paid$53,178.49. The brothers are awaitingsentencing.

Phony "Slip and Fall" Claims

State v. Brian ButlerOn August 19, 2002, Brian Butler pled guiltyto theft by deception for falsely claiming tohave slipped and fallen while a passenger on aCoach USA/O.N.E. bus operating inElizabeth, New Jersey. OIFP's investigationleading to the guilty plea revealed that Butlerhad submitted an insurance claim toAetna/U.S. HealthCare for injuries purportedlysustained in the bus accident and that Aetnapaid the claim money directly to Butler'smedical service providers. Butler alsofraudulently submitted an insurance claim forpersonal injuries to ACE Property andCasualty Company, the insurance carrier forCoach USA/O.N.E., and was paidapproximately $3,000. Butler awaitssentencing.

State v. Bruce Robert TarloweOn November 8, 2002, following a 12 day jurytrial, Bruce Robert Tarlowe, an insuranceagent, was found guilty of health care claimsfraud and attempted theft by deception forplanning and staging a phony "slip and fall"accident at a supermarket. Tarlowe falselyclaimed that, on April 12, 1999, he "slippedand fell" on a piece of lettuce on the floor ofthe product aisle while shopping at the A&PSupermarket on Galloping Hill Road in UnionTownship. Tarlowe had further claimed thathe had sustained serious and permanentinjuries and was unable to work as a result.Tarlowe, however, was unaware that hisphony "slip and fall" at the supermarket wasbeing recorded on videotape by a storecamera. Between April 12, 1998 and March

10, 1999, Tarlowe submitted 20 healthinsurance claims to the United States LifeInsurance Company for medical bills incurredas a result of the “phony slip and fall”totalling$5,730. The United States Life InsuranceCompany paid out a total of $3,002 to themedical service providers on these claims.Tarlowe is awaiting sentencing.

State v. "John Doe", a/k/a Nick Miles, a/k/aNick Freeman, a/k/a Chris BradleyOn May 21, 2002, a Grand Jury returned anindictment charging "John Doe", a/k/a NickMiles, a/k/a Nick Freeman, a/k/a Chris Bradleywith theft by deception and attempted theft bydeception. According to the indictment, "JohnDoe," using different aliases on three separateoccasions, falsely claimed to have sustainednose injuries after reporting phony "slip andfall" accidents while patronizing commercialbusinesses. The indictment specifically allegesthat the first phony claim was for injuries by a"Nick Miles" on October 27, 1998, at the SeaGull Restaurant in Hazlet, New Jersey, andresulted in a fraudulent insurance claim to theSecurity Indemnity Insurance Company whichpaid "Nick Miles" $9,000 to settle the claim.The indictment also alleges that the defendant,using the alias "Nick Freeman," submitted aphony claim to the Great American InsuranceCompany for injuries he allegedly sustained onJune 25, 1999, at the Sony/Loews movietheater in Secaucus, New Jersey. This claim,for $5,975, was denied by Great American.Finally, the indictment accuses the defendantof filing a fraudulent insurance claim for$7,450, using the alias "Chris Bradley," forinjuries allegedly sustained on July 22, 1999, atthe General Cinema in Clifton, New Jersey.This movie theater's carrier, Liberty Mutual,also refused payment on the claim. Thedefendant is currently a fugitive.

Life Insurance Fraud

State v. L.C. Thomas, William & MollieConyersOn May 7, 2002, following a 17 day jury trial,

56

William Conyers, a licensed owner andmanager of a funeral home, was found guiltyof two counts of attempted theft by deception,one count of witness tampering, four counts offalsifying records, and two counts of forgery.Conyers was convicted for his role in a schemeto obtain fraudulent life insurance policies inthe names of persons suffering from terminalillnesses. The jury also found his wife, MollieConyers, guilty of one count of attempted theftby deception. The life insurance policiesfraudulently obtained by Conyers namedmembers of his family as beneficiaries so thathe could collect the proceeds of the lifeinsurance policies when the insureds passedaway. L.C. Thomas, a licensed insuranceagent, allegedlyassisted Conyers bywriting fraudulentmultiple policies andplacing them withseveral insurancecompanies. Deathc l a i m s w e r esubmitted on someof the policies, butthe claims weredenied due tov a r i o u smisrepresentations made on the life insuranceapplications. William Conyers was sentencedon June 28, 2002, to serve an aggregate termof 11 years in State prison. He also receiveda $10,000 criminal fine. On September 27,2002, his wife, Mollie Conyers, was sentencedto two years probation, conditioned uponserving 364 days in county jail. On September13, 2002, L.C. Thomas pled guilty to theft bydeception. Following his guilty plea, Thomaswas remanded to the Bergen County Jail inlieu of $10,000 cash bail. In his plea, Thomasadmitted that he had assisted William andMollie Conyers in falsifying several lifeinsurance applications which were submittedto the American National Insurance Companyand the Lincoln Benefit Life InsuranceCompany. On October 25, 2002, Thomas wassentenced to five years probation, conditioned

upon serving 500 hours of community serviceand paying a $5,000 civil insurance fraud fine.His case was also referred for action withrespect to his insurance agent's license.

State v. Lucille DennisOn January 28, 2002, Lucille Dennis pledguilty to two counts of attempted theft bydeception, one count of falsifying records andone count of forgery for attempting to collectaccidental death benefits for her late husbandand brother, both of whom had previously diednatural deaths. Dennis admitted that, between1995 and 1998, she altered police reports anddeath certificates to reflect accidents whichnever occurred, one of which she used in an

attempt to collect ona $ 1 m i l l i o naccidental deathpolicy for which sheenrolled her husbandthree months afterhis death. OnSeptember 6, 2002,D e n n i s w a ssentenced to fiveyears probation,conditioned on herhaving served 143

days in county jail. She was also ordered topay a $23,000 civil insurance fraud fine.

INSURANCE AGENT, INSURANCE EMPLOYEE AND PUBLIC ADJUSTER

FRAUD

Insurance Agent Fraud

State v. David BuysOn March 15, 2002, David Buys, formerly alicensed insurance agent, was sentenced to twoyears probation, conditioned upon payingrestitution in the amount of $86,755.61, forembezzling that amount from a trust headministered on behalf of two trustbeneficiaries. Buys' probation was alsoconditioned upon his performance of 200hours of community service, continued

THE BERGENRECORD

May 8, 2002

Hackensack funeral home ownerguilty of fraud

57

participation in an alcohol treatment programand maintaining gainful employment. He alsosigned a Consent Order to surrender hisinsurance producer's license. State v. Farid ElgebalyOn March 12, 2002, a Grand Jury returned anindictment charging Farid Elgebaly with theftby deception, misapplication of entrustedproperty and simulating a motor vehicleinsurance identification card. The indictmentcharges that Elgebaly, formerly a licensedinsurance producer who transacted business onbehalf of the New Jersey Personal AutomobileInsurance Plan (PAIP), accepted money fromvarious individuals for automobile insurancepremiums but failed to remit the money toPAIP or secure automobile insurance for theindividuals who paid the premium money. Theindictment also alleges that Elgebalydistributed fraudulent insurance identificationcards to some of his clients. Elgebaly'sinsurance producer’s license was revoked inFebruary of 2001. His case is pending trial.

State v. Steven FreymarkOn February 1, 2002, Steven B. Freymark wassentenced to two yearsprobation, conditionedupon serving 180 hoursof community service,o r d e r e d t o p a yrest itut ion in theamount of $11,471 toFarm Family InsuranceC o m p a n y , a n dsurrender his NewJersey insurance licenses. Freymark pledguilty to an Accusation charging him with theftby failure to make required disposition ofproperty received. Freymark, a licensedinsurance agent, admitted collectingapproximately $15,000 in insurance premiumsfor automobile insurance policies fromapproximately 24 individuals and keeping themonies for his own use instead of remitting thepremium payments to the insurance carriers.

State v. Stanley Gulkin & National PremiumPlan Inc.On March 8, 2002, Stanley Gulkin, an attorneylicensed in the State of New Jersey andoperator of National Premium Plan Inc., wassentenced to fiveyears inS t a t ep r is o n.G u lk inp l e dguilty totheft bydeception. He admitted engaging in aconspiracy by arranging approximately $5.6million in bogus insurance premium financingloans that resulted in losses to the banks whichfinanced the loans as well as to severalinvestors who invested in National PremiumPlan, Inc. Gulkin made restitution ofapproximately $5 million prior to sentencing.

State v Michael Miller, National PremiumPlan, Inc., & A-1 Credit Corporation andAgency Services, Inc.

On June 18,2002, MichaelMiller, a licensedi n s u r a n c eproducer andformer owner ando p e r a t o r o fCounty InsuranceAgency, Inc. ,pled guilty to an

Accusation charging him with conspiracy andtheft by deception for fabricating phonyinsurance premium finance loans, totallingapproximately $5.6 million. Miller was assistedby Stanley Gulkin, above, in preparing andsubmitting the phony insurance premiumfinancing loans. On September 3, 2002, Millerwas sentenced to six years in State prison andordered to pay restitution in the amount of$843,963.77. His corporation was alsosentenced to five years probation and

ASBURY PARK PRESSOctober 30, 2002

Ex-Stafford insurance agentfaces 7 years for fraud

The Associated PressJune 19, 2002

Former Insurance agent admits stealingmore than $5 million in premiums

58

restitution in the same amount. The case wasalso referred for action with respect to Miller’sinsurance agent's license.

State v. Robert Massa, Massa & MillerAgency, Inc., & the Associated ProgramsAgency, Inc.On October 28, 2002, Robert Massa, alicensed insurance producer and operator of aninsurance business in Lakewood, New Jersey,pled guilty to an Accusation which chargedhim with conspiracy and theft by deception.Massa admitted his part in a conspiracy withStanley Gulkin and Michael Miller, above, tofraudulently obtain and cash checks totallingapproximately $5.6 million from NationalPremium Plan, A1 Credit Corporation andAgency Services, Inc., premium financecompanies that loaned small businesses fundsto pay for their business insurance. The casewill also be referred for action with respect toMassa's insurance agent's license.

State v. Marissa FischerOn May 6, 2002, a State Grand Jury returnedan indictment charging Marissa Fischer, alicensed insurance agent and owner of MarrickCorporation, with theft by failure to makerequired disposition of property received,misapplication of entrusted property andmisconduct by a corporate official. Accordingto the indictment, between July 20, 1997 andSeptember 30, 1998, Fischer misappropriatedapproximately $131,965 in insurancepremiums which she was required to remit toGAN for general liability and commercialautomobile insurance policies for threeambulette companies, Medivan, StateAmbulette Service, Inc., and CommunityTransportation, Inc. Fischer is alleged to haveused some of the money for her own personalexpenses. Her case is pending trial.

State v. Thomas BegynOn May 10, 2002, Thomas Begyn, a licensedinsurance agent with Unity Mutual LifeInsurance Company, was sentenced to fiveyears probation and ordered to pay $22,660.32

in restitution. Begyn pled guilty to theft bydeception and admitted stealing cash premiumpayments entrusted to him for 12 of theinsurance policies he serviced on behalf ofclients.

State v. John BuhlOn August 2, 2002, John Buhl, anindependent licensed insurance agent who soldpolicies for American Investors Life InsuranceCompany, Inc., was sentenced to five yearsprobation and ordered to pay $41,374 inrestitution. Buhl pled guilty to theft bydeception and admitted stealing money froman annuity insurance policy belonging to aninsured. The case was also referred for actionwith respect to Buhl’s insurance agent'slicense.

State v. Peter Pascarella, Jr.On December 6, 2002, Peter Pascarella, Jr., alicensed insurance agent, was sentenced to 18months probation and ordered to pay a$12,500 civil insurance fraud fine. Pascarellapled guilty to theft by deception forfraudulently attempting to obtain claims moneyfrom the Pacific Mutual Company under apolicy of life insurance on the life of JoseAguiar. Pascarella, the owner and operator ofAssociated Consulting Group, an insurancesales and financial consulting business,submitted a phony enrollment form to PacificMutual Company claiming that Jose Aguiarwas an employee who was eligible for healthand life coverage under an employersponsored plan. Pascarella attempted tofraudulently obtain insurance claims moneyfrom Pacific Mutual Company by claiming thatJose Aguiar had a valid life insurance policywith Pacific Mutual Company and thatPascarella was entitled to collect benefits as abeneficiary upon the death of Aguiar. Aguiarwas not, however, an employee and thus noteligible for life or health insurance coverage. State v. Vito GrupposoOn May 30, 2002, OIFP investigators, armedwith an arrest warrant for Vito Grupposo and

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a search warrant to search his businesspremises located in Parsippany, Cedar Knollsand Washington, New Jersey, seized the booksand records of Grupposo’s insurance agencyand insurance premium finance businesses.Grupposo, a licensed insurance agent, wasarrested and charged with three counts of theftby failure to make required disposition ofinsurance premiums obtained from variousinsurance customers. Grupposo is alleged tohave wrongfully engaged in insurance premiumfinancing transactions and to have embezzledinsurance premiums entrusted to him byinsureds. Grupposo was arraigned and bail wasset in the amount of $100,000. Grupposo'scase is currently pending Grand Jury action.

State v. Joseph BinczakOn November 8, 2002, a State Grand Juryreturned an indictment against JosephBinczak, a licensed insurance agent, charginghim with theft by deception and falsifyingrecords. According to the indictment, Binczakwas employed by the Ukranian NationalAssociation (UNA) as an insurance salesmanager responsible for maintaining lifeinsurance annuity accounts for members ofUNA. Binczak allegedly withdrew over$600,000 from the annuity accounts of sevenmembers of UNA without authorization,deposited the money into his own bankaccounts and used the money for his ownpurposes. The indictment also alleges thatBinczak falsified two documents purportedlyauthorizing him to withdraw $30,000 and$45,000, respectively, from two insured'sUNA annuity accounts. Binczak's case ispending trial.

State v. Robinson BarleycornOn August 14, 2002, a State Grand Juryreturned an indictment against RobinsonBarleycorn, a licensed insurance agent,charging him with theft by failure to makerequired disposition of funds received.According to the indictment, Barleycorn wasemployed by the Capacity Marine InsuranceAgency, in Montvale and Upper Saddle River,

New Jersey, as an insurance agent. Theindictment alleges that between June 1, 1994and September 15, 1997, Barleycorn, whileacting as an insurance agent for CapacityMarine Insurance, received $321,000 ininsurance premium payments from aConnecticut tugboat operator to purchasemarine insurance for the corporation's tugboatoperation. According to the indictment,Barleycorn used the money to pay his ownpersonal expenses instead of forwarding it tothe insurance carrier. Barleycorn was arrestedin Louisiana on August 21, 2002 and wasextradited to New Jersey on September 4,2002 to answer to the charges in theindictment. The case is pending trial.

State v. Vincent BicklerOn August 19, 2002, Vincent Bickler, alicensed insurance agent, pled guilty to anAccusation charging him with failure to makerequired disposition of funds received. Bickleradmitted that he forged the names of hisinsurance clients to several life insurancepremium refund checks, deposited the forgedchecks into his own account, and used themoney for his own personal expenses. Bickleralso took several checks from another client,which should have been deposited into aninsurance policy investment account managedby Bickler's employer, the Equitable LifeAssurance Company, but instead deposited thechecks without the client's knowledge orconsent into Bickler's personal account.Bickler then used that money to pay personalexpenses. On November 12, 2002, Bicklerwas admitted into the PTI Program andordered to pay $15,500 in restitution. Thecase was also referred for action with respectto Bickler’s insurance agent's license.

State v. Douglas RossOn August 23, 2002, OIFP investigatorsarrested Douglas Ross, a licensed insuranceagent, and charged him with two counts oftheft by failure to make required disposition of

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property received and one count of sellingphony insurance cards. The case is pendingGrand Jury presentment.

State v. Marc FloraOn November 7, 2002, Marc Flora, a licensedinsurance agent, pled guilty to an Accusationcharging him with theft by deception andfalsifying records. Flora admitted that,between January of 1998 and December of2001, he fraudulently cashed 11 checkstotalling $284,882.48 from the MetropolitanLife Insurance Company and kept theproceeds for himself. Four of the checks hadbeen payable to Flora's clients while seven ofthe checks had been made payable toMetropolitan Life. Flora's case will be referredfor action with respect to his insurance agent'slicense.

Insurance Carrier Employee Fraud

State v. Carl Prata, et al.On December 18, 2002, Carl Prata, formerlyemployed as an insurance claims adjuster withthe St. Paul Insurance Company and AllmericaInsurance Company, was indicted by a StateGrand Jury and charged with conspiracy andtheft by deception. The indictment alleges thatPrata issued approximately 57 fraudulentbodily injury automobile insurance settlementchecks totalling some $625,000 to co-conspirators who were not entitled to them.Prata is accused of accessing his company’sclaims computer and issuing insurance claimssettlement checks for injuries purportedlysustained by individuals who had not actuallybeen in automobile accidents. He would thenallegedly accept part of the stolen money fromthe co-conspirators as a kickback. In thecourse of the investigation, which has spannedseveral years, a number of alleged co-conspirators have pled guilty and beensentenced for participating in the allegedscheme with Prata. In addition to thedefendants specifically identified below,between January 4 and December 31, 2002,the following defendants in the Prata

investigation pled guilty to Accusationscharging them with theft by deception:Michael Schmidberger, Frances Leston,William Totaro, Steven Mattison, Carol Rios,Farima Ianuale, Erica Rosedietcher, JackieSeife, Jeremias Toledo, Antonio Meola, JohnTolla, George Bottarini, Michele Scurti, LukeSerafin, John Woodburn, Kimberly Zito,Tyrone Harmon, George Garcia, DonnaLangeraap and Lance Howell. All have eitherbeen placed on probation or entered into thePTI Program and ordered to pay restitution inan amount equal to the amount of the claimchecks they received. Each of thesedefendants was also ordered to pay civilinsurance fraud fines ranging from $2,500 to$8,000. In total, approximately 45 individualsallegedly received and cashed fraudulentbodily injury automobile insurance settlementchecks in this conspiracy.

State v. Peter NicholsonOn April 26, 2002, Peter Nicholson pled guiltyto an Accusation charging him with conspiracyand theft by deception. Nicholson admittedthat he had personally accepted a fraudulentlyobtained settlement check issued by AllmericaInsurance Company in the amount of $13,500.Nicholson also admitted depositing thesettlement check into his bank account andgiving $4,500 to Prata and another co-conspirator. Nicholson also admitted that herecruited eight people to participate in theconspiracy. These eight individuals laterreceived fraudulent settlement checks totalling$68,500. Seven of these eight people havepled guilty to theft by deception for their rolesin the conspiracy. On July 1, 2002, Nicholsonwas sentenced to five years probation,conditioned upon serving 364 days in thecounty jail, ordered to pay restitution toAllmerica Insurance Company in the amountof $13,500 and required to pay a civilinsurance fraud fine in the amount of $15,000.

State v. Anastasios ApostolopoulosOn April 26, 2002, Anastasios Apostolopoulospled guilty to an Accusation charging him with

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conspiracy and theft by deception in the abovealleged Prata scheme. Apostolopoulosadmitted that he had accepted twofraudulently obtained settlement checks issuedby Allmerica Insurance Company in theamounts of $12,000 each. Apostolopoulosadmitted endorsing one of the settlementchecks over to Good Nature Foods, a businesswhich Apostolopoulos owned, and todepositing the second settlement check into hisbank account. Apostolopoulos also cashedseveral checks, totalling $28,000, at therequest of Mustafa Azme, another conspirator.Apostolopoulos kept $9,333 from thesechecks and gave the balance to Azme.Apostolopoulos further admitted that herecruited one person to participate in theconspiracy. That recruit later received$10,000. That recruit has also pled guilty totheft by deception for his role in theconspiracy. On July 1, 2002, Apostolopouloswas sentenced to five years probation. He wasalso required to serve 120 days in the countyjail at the end of the probationary period,ordered to pay restitution to AllmericaInsurance Company in the amount of $24,000and required to pay a civil insurance fraud finein the amount of $10,000.

y

State v. Mustafa AzmeOn June 4, 2002, Mustafa Azme pled guilty toan Accusation charging him with conspiracyand theft by deception in the above allegedPrata scheme. Azme admitted that betweenJanuary of 1998 and November of 2000, heconspired with several others to defraudAllmerica Insurance Company and the St. PaulInsurance Company by falsely claiming to havebeen injured in automobile accidents andfraudulently accepting insurance settlementsfor these bodily injury insurance claims. Azmeaccepted one settlement check in the amountof $12,500 from Allmerica and settlementchecks from the St. Paul Insurance Companyin the amounts of $10,000 and $38,000.Azme recruited nine other conspirators toreceive additional fraudulent insurance claims

checks. Thenine personsrecruited byAzme receivednine insurances e t t l e m e n tchecks totalling$113,500. Ofthe nine persons

recruited by Azme, six have pled guilty tocharges of conspiracy and/or theft bydeception, while charges against the remainingthree persons are pending.

State v. Christopher Nangano

THE DAILY RECORDSeptember 6, 2002

Randolph man sentenced to jail fortaking part in insurance fraud

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On September 5, 2002, Christopher Nanganopled guilty to an Accusation charging him withconspiracy and theft by deception in the abovealleged Prata scheme. Nangano admitted that,between January and October of 2000, heconspired with others to defraud the AllmericaInsurance Company and the St. Paul InsuranceCompany by claiming to have sustained bodilyinjury in automobile accidents and fraudulentlyaccepting insurance claim checks fromAllmerica and St. Paul as compensation for hisphony injuries. Nangano accepted onesettlement check from Allmerica in the amountof $10,000 and another from St. Paul in theamount of $9,100. As part of the conspiracy,Nangano recruited four other persons toreceive fraudulent insurance claims checks.The four persons recruited by Nangano wereissued four insurance settlement checkstotalling $35,000. On November 22, 2002,Nangano was sentenced to five yearsprobation, conditioned upon serving 364 daysin the county jail. He was also ordered to pay$40,810 in restitution to Allmerica InsuranceCompany and St. Paul Insurance Company, aswell as a $14,500 civil insurance fraud fine.

State v. Carol CappuccioOn December 18, 2002, a State Grand Juryreturned an indictment charging CarolCappuccio with conspiracy and theft bydeception. According to the indictment,Cappuccio was recruited by Mustafa Azme inthe above alleged Prata scheme and accepteda fraudulently obtained settlement check issuedby Allmerica Insurance Company in theamount of $16,000 for a purported accident inwhich she was not involved. Cappuccioallegedly deposited the settlement check intoher bank account and kept $4,000 after giving$12,000 to Azme. The indictment also allegesthat Cappuccio recruited three more personsto participate in the conspiracy. These threereceived settlement checks totalling $23,500and have since pled guilty to theft bydeception for their roles in the conspiracy.Cappuccio's case is pending trial.

State v. Timothy HanjianOn December 18, 2002, a State Grand Juryreturned an indictment charging TimothyHanjian with conspiracy and theft bydeception. The indictment alleges that Hanjianaccepted a fraudulently obtained settlementcheck issued by Allmerica Insurance Companyin the amount of $9,200 for a purportedaccident in which he was not involved.Hanjian is alleged to have deposited thesettlement check into his bank account andrecruited four other persons to participate inthe conspiracy. Those four persons recruitedby Hanjian accepted settlement checkstotalling $59,200. They have since pled guiltyto theft by deception for their roles in theconspiracy. Hanjian's case is pending trial.

State v. Joseph ScafidiOn June 7, 2002, Joseph Scafidi, formerlyemployed as a Regional Director at CIGNAInsurance Company, was sentenced to twoyears probation and ordered to pay $33,800restitution to CIGNA. Scafidi admittedstealing employee incentive checks or bonuseswhich had been issued to reward employeesreporting to Scafidi for their extraordinarywork accomplishments.

State v. Max BirtcilOn February 11, 2002, Max Birtcil pled guiltyto an Accusation charging him with theft bydeception and falsifying records. Birtcil, aclaims representative for Cunningham LindseyClaims Management, Inc., a third partyadministrator of workers compensation claimsfor Legion Insurance Company, admitted tosubmitting several false workers compensationclaims through Coordinated MedicalConsultants, an entity Birtcil wholly ownedand controlled. Cunningham Lindsey paid atotal of approximately $25,230 to CoordinatedMedical Consultants for these false claims. OnMarch 15, 2002, Birtcil was sentenced to threeyears probation, conditioned upon payingrestitution to Cunningham Lindsey in theamount of $25,230 and ordered to pay a$2,500 civil insurance fraud fine.

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State v. Jemal Williams & Letticia WaymerOn October 8, 2002, a Grand Jury returned anindictment charging Jemal Williams withconspiracy and theft by deception. Accordingto the indictment, Williams, a customerservice representative for Great West Life andA n n u i t yI n s u r a n c eC o m p a n y ,conspired withLetticia Waymerand fraudulentlyauthorized andissued six GreatWest insuranceclaim checks toW a y m e r ,t o t a l l i n gapproximately$7,415, for a phony insurance claim. Williams'case is pending trial. Previously, on June 20,2002, Letticia Waymer pled guilty to anAccusation which charged her withconspiracy. Waymer admitted that betweenJune 3 and August 8, 1998, she received fromJemal Williams, four fraudulently issued claimchecks drawn by the Great West Life andAnnuity Insurance Company, totalling $3,965.She also admitted cashing the checks andturning over the balance of the proceeds toWilliams after keeping $800 for herself.Waymer admitted knowing that Williamsworked for an insurance company when heapproached her to see if she wanted to makesome money. On August 6, 2002, Waymerwas admitted into the PTI Program, subject toproviding full cooperation with the State in itscase against Jemal Williams. Waymer wasordered to maintain gainful employment andmake full restitution to the Great West Lifeand Annuity Insurance Company.

State v. Le T. HarlinOn October 30, 2002, a State Grand Juryreturned an indictment against Le T. Harlin, aclaims specialist in the Mt. Laurel office ofOhio Casualty Insurance Company, charginghim with theft by deception and forgery.

According to the indictment, between July 17,2000 and March 27, 2002, Harlin stoleapproximately 44 checks from third partieswhich were payable to Ohio Casualty, forgedendorsements on the checks using an OhioCasualty rubber stamp, and deposited the

checks into his bankaccount. Harlin's caseis pending trial.

Public/InsuranceAdjuster Fraud

State v . JosephDeGregorioOn December 6, 2002,Joseph DeGregoriopled guilty to theft byd e c e p t i o n f o r

misappropriating as much as $87,000 ininsurance claims settlement checks fromvarious claimants, while working as anadjuster/paralegal for personal injury lawyers.Following his indictment, DeGregorio had fledto Florida, where OIFP investigators trackedand arrested him.

State v. Marc RossiOn July 18, 2002, a State Grand Jury returnedan indictment charging Marc Rossi, a licensedpublic insurance adjuster, with conspiracy,arson for hire, theft by deception, forgery andfalsifying records. As described below, fourother defendants were also charged as a resultof this investigation. According to theindictment, Rossi, President of RossiAdjustment Services, conspired with and paidseveral of his employees, including OtisBoone, Michael Winberg and JeromeAdderley, to commit arson fires or acts ofvandalism to cause property damage so RossiAdjustment Services could obtain commissionsby representing the insureds in their insuranceclaims. The indictment alleges that in somecases, the owners of the properties were awareof the fraudulent nature of the insuranceclaims, while, in other cases, the defendantstargeted properties where the owners had no

The TrentonianJuly 20, 2002

Former Mercer County detective MarcRossi has been indicted by a stategrand jury as the “mastermind” of aTrenton-Hamilton area arson-for-profitand insurance fraud scheme, it was

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idea their properties had been purposelydamaged. Rossi’s case is pending trial.

State v. Michael WinbergOn May 28, 2002, a State Grand Jury returnedtwo indictments against Michael Winberg, alicensed public insurance adjuster, eachcharging him with theft by deception,conspiracy and arson for hire. According tothe indictments, Winberg participated in theplanning and setting of several arson fireswhich were part of the Rossi AdjustmentServices conspiracy. On December 3, 2002, aState Grand Jury handed up supersedingindictments charging both Rossi and Winbergwith four additional fires involving a residencelocated at 506-510 West Hanover Street,Trenton, a rental property located at 41-43Prospect Street, Trenton, a residence locatedat 1732 East State Street, Hamilton Townshipand a residence located at 350 St. JoesAvenue, Trenton. Winberg's case is pendingtrial.

State v. Otis BooneOn February 27, 2002 a State Grand Juryreturned an indictment against Otis Boone, alicensed insurance agent and public adjusterwith Rossi AdjustmentServices, charging himwith theft by deception,conspiracy, arson forhire and possession of aweapon for unlawfulpurposes. Boone pledguilty on October 21,2002, to conspiracy ands i x c o u n t s o faggravated arson for hisrole in the alleged RossiAdjustment conspiracy. Boone awaitssentencing.

State v. Jerome AdderleyOn December 20, 2002, Jerome Adderley,who was also associated with RossiAdjustment Services, was sentenced to twoyears probation, conditioned upon time served

of 364 days in county jail. Adderly admittedhis role in the alleged Rossi conspiracy, whichinvolved setting an arson fire at Graziano’sFlorist Shop.

State v. Marc GrazianoOn February 11, 2002, Marc Graziano, ownerof the former Graziano Florist Shop, pledguilty to an Accusation charging him withconspiracy to commit arson and theft bydeception. Graziano admitted that, with hisconsent, Marc Rossi arranged to haveGraziano's florist shop set on fire as part of thealleged Rossi Adjustment Services conspiracy.Graziano awaits sentencing State v. William Taintor, IIIOn June 3, 2002, William Taintor, III, alicensed public insurance adjuster, was chargedin two separate State Grand Jury indictments.The first indictment charged Taintor with theftby failure to make required disposition ofproperty and alleged that, in September of2001, Taintor received an insurance claimsettlement check in the amount of $3,743 onbehalf of an insured and kept the proceeds forhimself. The second indictment chargedTaintor with attempted theft by deception and

forgery. Accordingto this indictment,in order to inflate aproperty damagec laim, T a int o rsubmitted a forgedinvoice to OmahaProperty InsuranceCompany bearingt he p u r po r t e dsignature of anotherinsured Taintor

represented. The allegedly phony invoice,dated October 10, 1995, purported that T&KKitchens had previously repaired damage toproperty located in Avalon, New Jersey. It isalleged, however, that the previous damagehad not been repaired by T&K Kitchens andthat the invoice did not accurately reflect therepairs done. The State intends to prove that

The TrentonianOctober 22, 2002

A Trenton man yesterday pleadedguilty to his role as "the torch" in theTrenton-Hamilton arson ring allegedlyrun by former Mercer County Detective

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Taintor submitted the forged invoice to obtaina larger commission in his capacity as thepublic adjuster representing the insured insettling the insurance claim. Taintor's case ispending trial.

PROPERTY AND CASUALTY FRAUD

False Homeowners Claims

State v. Dorothea LongoOn April 11, 2002, Dorothea Longo pledguilty to an Accusation charging her withattempted theft by deception. Longo admittedthat she had submitted a false lost propertyclaim with Great Northern Insurance Companyon March 10, 2001, alleging that she had losther engagement and wedding rings at the TajMahal Casino in Atlantic City. She alsosubmitted two appraisals from GemologicalAppraisal Laboratory of America, Inc., datedFebruary 15, 1999 in support of the claim.Investigation revealed that Longo hadpreviously filed a similar claim with NewarkInsurance Company on July 27, 1999, relyingupon the same two appraisals, and claiming thesame two rings had been stolen. Longowithdrew her 2001 claim with Great NorthernInsurance Company before it was paid. OnMay 24, 2002, Longo was admitted into thePTI Program and required to pay a $2,500civil insurance fraud fine.

State v. Donna SegarraState v. Kevin HealyOn April 15, 2002, Donna Segarra pled guiltyto an Accusation charging her with theft bydeception. Segarra admitted making threedifferent insurance claims for the same allegedwater damage to her residence. In Novemberof 1996, Segarra submitted the first claim forproperty damage to her residence, allegedlyc a u s e d b y t h e d e f e c t i v einstallation/construction of a shower stall.That claim was settled by the manufacturer ofthe shower stall. In October 1997, however,Segarra submitted a second claim for the samewater damage to Selective Insurance

Company. Segarra never repaired theNovember 1996 water damage nor disclosedthat the November 1996 water damage hadoccurred and that there had been an earlierinsurance claim. Segarra also used the samephotographs from the November 1996 waterdamage claim in support of the October 1997water damage claim. Unaware of the earlierwater damage claim, Selective Insurance paidSegarra $2,220.25. Then, in March of 1998,Segarra submitted yet another claim for "newlydiscovered" water damage, all based on thesame November 1996 water damage at herhome. Segarra admitted that, in order tosubstantiate this third claim, she and acarpenter, Kevin Healy, of Massapequa Park,New York, submitted a phony receipt forcarpentry services which purported that the"newly discovered" damages had been repairedat an approximate cost of $4,000. This thirdclaim was denied by Selective InsuranceCompany. Following her guilty plea, Segarrawas admitted into PTI and ordered to pay acivil insurance fraud fine of $7,000. She hadpreviously paid restitution to the insurancecarrier. On May 13, 2002, Kevin Healy pledguilty to an Accusation charging him withfalsifying a record. Healy admitted that heprovided Segarra with the false receiptindicating that he had repaired the damage toSegarra's floor. Healy stated, and Segarracorroborated, that he was not aware ofSegarra's earlier Selective claim. Healy wasalso admitted into the PTI Program andordered to pay a $1,000 civil insurance fraudfine.

State v. Martha RiveraOn July 1, 2002, a Grand Jury returned anindictment charging Martha Rivera withattempted theft by deception. According tothe indictment, Rivera filed a false propertyloss claim with Liberty Mutual InsuranceCompany, her homeowners insurance carrier.Rivera allegedly falsely reported to police thata burglary had occurred in her apartment.Rivera allegedly claimed that the value of thestolen property, which supposedly included an

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engagement ring and other jewelry, as well asa camera and $2,000 in cash, totaledapproximately $15,800. Liberty Mutualdenied the claim. On October 7, 2002, Riverawas admitted into the PTI Program, oncondition that she serve 75 hours ofcommunity service.

State v. Sharon CoxOn August 21, 2002, a Grand Jury returned anindictment charging Sharon Cox withattempted theft by deception and forgery.According to the indictment, Cox submitted ahomeowners insurance claim to State FarmFire and Casualty Company with a phonyreceipt reflecting that Somertime Pool and SpaSupplies of Millville, New Jersey, had maderepairs to her swimming pool which hadallegedly sustained wind damage. Theindictment charges that Somertime Pool andSpa Supplies did not do the repairs to Cox'sswimming pool and that she had altered thereceipt to reflect that the pool had beenrepaired in order to collect damages on herinsurance policy. Cox's case is pending trial.

State v. TracieConnellyOn August 8,2002, a GrandJury returned ani n d i c t m e n tcharging TracieConnelly with fourcounts of forgery. The indictment alleges thatState Farm Insurance Company issued fourhomeowners insurance settlement claimchecks, payable jointly to Tracie Connelly andMichael Connelly, Tracie's estranged husband,and that Tracie Connelly illegally endorsed thechecks by forging Michael's name on the backof the checks. The checks which gave rise tothe charges totalled $8,595.35. Connelly'scase is pending trial.

False Commercial Claims

State v. Kevin Bui

On February 15, 2002, Kevin Bui pled guiltyto an Accusation charging him with attemptedtheft by deception. Bui, the owner of P.I.Nails Salon, had reported to the VinelandPolice Department that his business had beenburglarized. Bui submitted a total claim in theamount of $15,496.80 to North American Riskfor stolen items and property damage. Inadmitting his guilt, Bui acknowledged that hehad submitted a fraudulent receipt to NorthAmerican Risk for items he purportedlypurchased, falsely reflecting a value of$10,035. On June 10, 2002, Bui was admittedinto PTI and ordered to pay a $3,500 civilinsurance fraud fine.

State v. Eugene ChusidOn February 1, 2002, Eugene Chusid wassentenced to five years probation, conditionedon serving 364 days in county jail. He wasalso ordered to pay a $2,500 civil insurancefraud fine. Chusid pled guilty to attemptedtheft by deception. Chusid, who was theprincipal agent for IEIEC World HeadquartersCorporation and Russian White HouseRestaurant, Inc., filed a fraudulent claim with

t h e R e l i a n c eI n s u r a n c eCompany claimingthat a water pipehad burst in theRussian WhiteHouse Restaurantand damaged the

hardwood floors. Chusid admitted that thedamage to the hardwood floors had, in fact,been caused by flood waters, which was notcovered under his insurance policy. Chusidalso submitted phony invoices in support ofthe $52,311 claim, and swore under oath thatG.V. Construction Company had repaired theleaky water pipe. The claim was denied byReliance Insurance Company.

Premium Refund Fraud

State v. David Boatswain, et al.A Grand Jury returned three separate

THE BERGEN RECORDFebruary 2, 2002

Fair Lawn man gets year in jail for fraud

67

indictments charging David Boatswain, DanielKern and Gerald Plummer each with theft bydeception. According to the indictments,Boatswain, Kern and Plummer ordered autoinsurance over the telephone from PrudentialInsurance Company and advised Prudentialthat they would pay the premium via wiretransfer. They allegedly called Prudential,canceled the policies, and requested a cashpremium refund without having ever wired themoney for the premiums. Prudential sentrefund checks to Boatswain for $6,288, toKern for $3,337, and to Plummer for $2,488.On October 4, 2002, Boatswain was sentencedto serve three years in State prison andordered to pay $6,288 in restitution toPrudential following his guilty plea. Kern'sand Plummer's cases are pending trial.

INSURANCE FRAUD RELATEDCASES

State v. Elvin CastilloOn April 10, 2002, a State Grand Jury handedup two indictments against Elvin Castillo, aprimary defendant in the ABP Chiropracticcase. In the first indictment, Castillo is chargedwith theft by deception, forgery andfalsification of records relating to an allegedlyphony mortgage loan application. Theindictment alleges that Castillo submitted afraudulent residential mortgage application, aswell as phony documentation in support of theapplication. It also alleges that the informationon the loan application, on the tax returnssubmitted with the loan application and on twoletters submitted in support of the loanapplication were all fraudulent. In addition, itis alleged that Castillo's primary source ofincome, which was from a business heallegedly worked for known as the SpinalHealth Center of Elizabeth, a chiropracticclinic targeted as part of the ABPinvestigation, was not operating as a businessat the time Castillo applied for the residentialloan. Finally, it is alleged that the 1998

income tax returns that Castillo submitted forpurposes of calculating his monthly incomewere not filed with the New Jersey Division ofTaxation. In the second indictment, Castillo ischarged with filing a false or fraudulent NewJersey income tax return, failure to file a NewJersey income tax return and failure to payNew Jersey gross income tax. It is alleged thatCastillo failed to pay State income taxes forthe years 1997, 1998, 1999 and 2000.

State v. Dr. Samuel EvensteinOn November 22, 2002, Dr. Samuel Evensteinpled guilty to an Accusation charging him withfailure to pay New Jersey gross income taxwith intent to evade. The crime wasuncovered during a suspected insurance fraudjoint investigation between OIFP and the NewJersey Division of Taxation. Evensteinadmitted that he failed to report over $500,000in income in 1999 and, consequently, that heowed over $50,000 in New Jersey StateIncome Taxes for the unreported income.

MEDICAID FRAUD

Medicaid Criminal Cases

State v. Frieda HankersonOn January 4, 2002, Frieda Hankerson wassentenced to two years probation, conditionedupon serving 364 days in the Bergen CountyJail. She was also ordered to pay $7,500 inrestitution. Hankerson pled guilty to Medicaidfraud. She admitted fraudulently obtainingprescriptions for vials of Neupogen, a drugused for serious blood disorders, with a valueof approximately $2,590.52.

State v. Facilities Management Associates,Inc. (FMA), Paul Steffens, & HudsonBehavioral Treatment CenterOn December 20, 2002, Paul Steffens,Executive Director of the Hudson BehavioralTreatment Center, an outpatient drug andalcohol treatment center managed by FMA,pled guilty to Medicaid fraud for submittingclaims to the Medicaid Program for group

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therapy services that were not provided.Steffens is awaiting sentencing.

State v. Marcus Solomon, et al.On September 6, 2002, Marcus Solomon, aprincipal in Solomon’s Invalid Coach, wassentenced to serve three years in State prisonfor Medicaid fraud. Solomon admitted billingthe Medicaid Program for mileagereimbursements for trips never taken, servicesnot rendered, mileage claims greater than theamounts allowed by law and misrepresentinghis expenses on his 1999 State income taxreturn. Solomon was also ordered to pay$10,742 to the State for restitution forunemployment insurance and $414 to theDivision of Taxation for tax fraud. JenniferSolomon, his wife, was sentenced to threeyears probation for defrauding Medicaid (NJKidcare) by illegally collecting medical benefitsfor her two minor children. Both were alsoordered to pay restitution in the amount of$59,450, a civil false claims penalty in theamount of $25,000, and $911 to the MedicaidProgram for defrauding the Kidcare program.They were also permanently disqualified fromparticipation in the Medicaid Program.

State v. Hanan Selim, Wael Aly & PatersonCommunity PharmacyOn May 2, 2002, Hanan Selim and Wael Aly,owners and operators of the PatersonCommunity Pharmacy, were each sentenced tothree years in State prison and debarred fromthe Medicaid Program for a minimum periodof five years for Medicaid fraud. Selim andAly admitted engaging in a scheme in whichthey purchased prescriptions for Serostim, anexpensive anti-AIDS medication, andsubmitted false claims for reimbursement tothe Medicaid Program, fraudulently receivingapproximately $170,000 in Medicaidpayments. Selim and Aly also submitted falseinvoices to the Medicaid Program in order toestablish that their inventory contained theamount of drugs allegedly provided. Bothwere ordered to pay restitution to theMedicaid Program in the amount of $166,532.

Selim, a licensed pharmacist, had herpharmacy license suspended for one year. Thecase is being referred to the PharmacyProfessional Boards for further review ofSelim’s pharmacy license.

State v. M&G Livery and TransportationInc., Gregory Sverdlov & Raisa ZeltserGregory Sverdlov, Raisa Zeltser and theircorporation,M&G Livery and Transportation,Inc., were indicted and variously charged withconspiracy, Medicaid fraud, theft by deceptionand misconduct by a corporate official inconnection with their operation of their liverytransportation company. On October 31,2002, Sverdlov was sentenced to four yearsState prison, following the entry of a guiltyplea. Sverdlov admitted fraudulently operatingM&G Livery and Transportation, Inc., bypaying kickbacks to induce Medicaidrecipients to use their company, billing forpeople ineligible to receive Medicaid,transporting Medicaid recipients todestinations not allowable under Medicaidregulations and submitting false information onMedicaid forms to avoid Medicaid scrutiny.He was also ordered to pay restitution to theMedicaid Program in the amount of $214,840,and consented to disqualification as aMedicaid provider for eight years. On thesame date, his wife and business partner, RaisaZeltser, applied to the PTI Program and alsoagreed to be disqualified as a Medicaidprovider for eight years. Their corporation,M&G Livery and Transportation, Inc., wasalso disqualified from being a Medicaidprovider for eight years.

State v. L&Z Corporation & GregorySverdlovOn March 8, 2002, Gregory Sverdlov and hiscompany, L&Z Transportation, Inc., pledguilty to an Accusation charging Medicaidfraud. Sverdlov admitted fraudulentlyoperating L&Z Transportation, Inc., by payingkickbacks to induce Medicaid recipients to usethe company. A consent order for debarmentfrom participation in the Medicaid Program for

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eight years was signed for L&Z .

State v. Venditti Clinical Laboratory, Iftikhar Hussain,

& Abdul Hafeez RajaOn June 14, 2002, Iftikhar Hussain and Abdul Hafeez Raja,owners and operators of Venditti ClinicalLaboratory, were sentenced for theirparticipation in a Medicaid fraud scheme inwhich almost $347,000 in kickbacks were paidto encourage clinic owners to submit bloodsamples t o t helaboratory to undergoan expensive panel ofdiagnostic tests whichwere not related toany medical diagnosesor conditions. All thesamples submittedwere from Medicaidrecipients and paid for by the MedicaidProgram. The scheme also involved theconcealment of the kickback payments bywriting checks from the Venditti businessaccount to fictitious business owners. On June14, 2002,

Hussain was sentencedt o t h r e e ye a r sprobation conditionedupon serving 90 daysin county jail and fined$1,000 for Medicaidfraud. Raja wassentenced to threeyear s probat ion,conditioned uponserving 30 days incounty jail and fined$1,000 for Medicaid fraud.

State v. I&I Transportation, Imad Elbashir,& Imadelin A. KhairImad Elbashir, Imadelin Khair and theircompany, I&I Transportation, an invalidcoach provider that provided non-emergency

medical transportation to Medicaid recipients,were indicted and charged with conspiracy,health care claims fraud, theft by deception,Medicaid fraud and corporate misconduct.The indictment alleges that I&I inflatedmileage on claims submitted to the MedicaidProgram and received $90,000 more than itwas entitled to for services rendered. Inaddition, defendants allegedly paid cashkickbacks to several Medicaid recipients inexchange for their continued patronage. Elbashir’s, Khair’s and I&I’s cases are pendingtrial.

State v. MichaelStavitski, et al.On February 20, 2002,Michael Stavitski, alicensed pharmacist,was arrested by OIFPinvest igators andcharged with theft by

deception, health care claims fraud, andMedicaid fraud. The complaint alleges thatStavitski, the owner of four pharmacieslocated in Belmar, Avon-By-The-Sea, WallTownship and Spring Lake Heights, submittedfraudulent reimbursement claims to, andreceived payment from, the Medicaid Programfor medications that he falsely claimed were

dispensed to Medicaidrecipients. On December17, 2002, a State GrandJury returned an indictmentagainst Stavitski charginghim with health care claimsfr a u d , c o r p o r a t emisconduct and Medicaidfraud. Three of the fourpharmacy corporationswere also charged with

health care claims fraud and Medicaid fraud.The pharmacies operated as retail walk-inpharmacies and filled prescriptions forresidents of approximately 30 nursinghome/assisted living facilities, in addition toproviding services to Medicaid and privateinsurance recipients. According to the

THE STAR LEDGERFebruary 21, 2002

Pharmacist accused ofinsurance fraud

MEALEY’S LITIGATIONREPORT

VOLUME 8, ISSUE #10 3March 2002

New Jersey Lab Owner, Managers Plead Guilty to

Medicaid Fraud

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indictment, between May of 1996 andFebruary of 2002, Stavitski and the threepharmacies submitted numerous claims forpayment whichfalsely reflected thatmedications or refillsof medications wereprovided to Medicaidand privately insuredp a t i e n t s .Additionally, in manyinstances, Stavitski allegedly billed forproviding medications that were neverprescribed by physicians. Stavitski’s case ispending trial.

State v. Family Enrichment, et al. On April 1, 2002, following a month long jurytrial, Alan Daniel, clinical director of theFamily Enrichment Institute of Burlington, wasfound guilty of health care claims fraud andMedicaid fraud. The indictment chargingDaniel was the first Medicaid fraud indictmentfiled under the Health Care Claims Fraud Act.The same jury acquitted his co-defendant,Theresa Daniel. Harold Peart, a thirddefendant in this case, was acquitted of ahealth care claims fraud charge. However, thejury deadlocked on the remaining counts ofconspiracy and Medicaid Fraud, resulting in amistrial as to the deadlocked counts. Duringthe trial, the jury found that Daniel submittedmore than 1,100 claims totalling approximately$24,675 to the Medicaid Program forcounseling services that were never rendered.The jury also found that Daniel submitted eightclaims to Medicaid forcounseling servicesrendered to a patientwho had died prior tothe dates the serviceswer e purpor t ed lyrendered. The juryfurther found thatDanie l submit t edapproximately 350claims for counseling services for patientstwice per week, when the patients were

actually treated only once per week. The totalof these claims was approximately $7,435. OnJuly 1, 2002, Daniel was sentenced to five

years in Stateprison and orderedto pay a criminalfine of $10,000.Daniel’s socialworker’s licensew a s a l s op e r m a n e n t l y

revoked. Peart subsequently pled guilty toMedicaid fraud on December 24, 2002, andwas sentenced to two years probation,conditioned upon permanent revocation of hissocial worker’s license.

State v. Hispanic Counseling & FamilyServices, Inc. , et al.On May 31, 2002, a State Grand Jury returnedan indictment charging Eliezer Martinez, OlgaMarquez, Olga Bonett, JuanitaMelendez, Jose Jimenez, Bartolo Moreno andLuz Senquiz with health care claims fraud andMedicaid fraud. According to the indictment,Martinez, Marquez, Bonett, Melendez,Jimenez, Moreno and Senquiz, werecounselors employed at the HispanicCounseling and Family Services of NewJersey, Inc., a drug and alcohol counselingcenter owned and operated by Martinez.Defendants allegedly submitted fraudulenthealth care claims to the Medicaid Programseeking reimbursement for medical servicesthat were never provided. The cases as toHispanic Counseling and the defendants

are pending trial.

State v. HappyHearts & GildaHernandoOn April 3, 2002,Gilda Hernando,billing coordinator atH a p p y H e a r t s ,formerly a Medicaid

provider that provided mental healthcounseling to Medicaid recipients, pled guilty

The InquirerJune 1, 2002

Mental-health workersindicted on fraud charges

BURLINGTON COUNTY TIMESSeptember 23, 2002

Jury convicts man of

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to recklessly submitting health care claims andwrongfully billing the Medicaid Program.Happy Hearts was previously suspended as aMedicaid provider. Hernando was ordered topay $200,000 in restitution and a criminal fineof $7,500 following her guilty plea.

State v. Seymour BlauOn October 15, 2002, Seymour Blau,formerly a licensed podiatrist, pled guilty toMedicaid fraud. Blau admitted submittingapproximately 150 prescriptions for bothlegend drugs and C.D.S., valued at more than$6,000, in the names of four of his formerpatients who had been enrolled in the MedicaidProgram. The former patients never receivedthe drugs. Instead, Blau picked them uphimself from the pharmacies. Blau awaitssentencing.

State v. Maximus, Inc., et al.On July 31, 2002, a State Grand Jury returnedindictments against Ifeanyi Akemelu, KattiaBermudez, Rayonne Clark, Victor Cordero,Lenora Grant, Iris Sabres, and Akbar Oliver,charging them with multiple counts ofMedicaid fraud. Defendants were employeesof Maximus, Inc., a company the Statecontracted to assist with the task of enrollingeligible persons into the New Jersey FamilyCare Program. The indictments alleged thatthe seven defendants fraudulently obtainedbenefits from the New Jersey Family CareProgram by providing false information aboutincome and dependents on the applications forthe Program. The Program provides healthinsurance benefits to the “working poor,”people who work and earn too much moneyfor Medicaid coverage, but not enough moneyfor privately purchased health insurance. Theindictments also alleged that Akemelu andOliver assisted others in preparing falseapplications for the Program. On November 12, 2002, Akemelu, Bermudez,Cordero, Grant, Sabres, and Oliver wereadmitted into the PTI Program, conditionedupon each serving 50 hours of communityservice. On December 16, 2002, Clark pled

guilty to Medicaid fraud and is awaitingsentencing.

State v. S Brothers Pharmacy, ShahidKhawaja, Milton Barasch & Dr. Axat JaniOn November 8, 2002, a State Grand Juryreturned an indictment charging ShahidKhawaja, who was the owner of the SBrothers Pharmacy, Milton Barasch, a licensedpharmacist, and Dr. Axat Jani, with theft bydeception, Medicaid fraud, and health careclaims fraud. The indictment alleges thatdefendants participated in an alleged schemeto bill the Medicaid Program approximately$293,815 for medications which were eithernever dispensed, or were dispensed to personsusing someone else’s Medicaid recipientnumber. In some cases, phony bills wereallegedly submitted to the Medicaid Programfor medications prescribed for Medicaidrecipients who had died years before. Thesecases are pending trial and will also be referredto the appropriate Professional LicensingBoards for action. Previously, on August 9,2002, Azam Khan, an alleged co-conspiratorin the S Brothers Pharmacy scheme, pledguilty to an Accusation charging him withhealth care claims fraud. Khan awaitssentencing.

State v. Harvey Lee Bellamy & BerniceBellamyOn October 28, 2002, a State Grand Juryreturned an indictment charging Harvey LeeBellamy and Bernice Bellamy with health careclaims fraud and Medicaid fraud. Harvey LeeBellamy was the corporate president of H&BMedical Transportation Services, Inc.,(H&B).H&B, a Medicaid licensed mobility assistancepatient transportation service located inMagnolia, Camden County, providedtransportation to Medicaid patients requiringtransport to and from their medical treatmentappointments. Bernice Bellamy was allegedlyin charge of the billing for H&B. According tothe indictment, Harvey and Bernice Bellamy,through H&B Medical TransportationServices, Inc., falsely billed the Medicaid

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Program for the use of extra crew memberswho purportedly provided assistance toMedicaid recipients during the vehicletransports. The State intends to prove that theBellamys submitted false bills to Medicaid fortransportation services rendered toapproximately 14 Medicaid patients totalling$22,860. Their case is pending trial.

State v. Kwadwo Oei Agyemang & VictoryPharmacy, Inc.On December 13, 2002, a State Grand Juryreturned an indictment charging Kwadwo OeiAgyemang, a licensed pharmacist, with healthcare claims fraud, Medicaid fraud, andcorporate misconduct. Victory Pharmacy, acorporation owned and operated byAgyemang, was also charged in the indictmentwith health care claims fraud and Medicaidfraud. The indictment alleges that, betweenNovember of 2001 and June of 2002,Agyemang submitted in excess of $27,000 infraudulent bills to the Medicaid Programthrough Victory Pharmacy, Inc., for legenddrugs which were never dispensed. The falseclaims were allegedly submitted on behalf ofundercover OIFP investigators who wereposing as Medicaid recipients. Agyemang’scase is pending trial.

State v. Howard Williams, IIIOn December 23, 2002, Howard Williams pledguilty to an Accusation charging him withhealth care claims fraud. Williams admittedthat, between March of 2000 and February of2002, he fraudulently used the names ofMedicaid recipients to obtain, and have filled,phony prescriptions for the non-narcoticdrugs, Diflucan, Viracept and Epivir. TheMedicaid Program was billed approximately$75,388.05 for the phony prescriptions filledby Williams. Williams had been arrested byofficers of the West New York PoliceDepartment on February 8, 2002 and wasfound to have in his possession a small amount of heroin, as well as Diflucan,Viracept, and Epivir. Williams awaitssentencing.

Medicaid Civil Case Settlements

Eckerd Corporation, Inc. A civil Medicaid fraud settlement was reachedbetween the federal government and EckerdCorporation, in which New Jersey will receive$206,167 as its share. The settlementstemmed from a lawsuit filed by several states,including New Jersey, which alleged thatEckerd had billed the Medicaid program forthe full amount of prescriptions that were onlypartially filled.

State v. Corning, Inc., et al.A civil Medicaid fraud settlement was reachedbetween the federal government and Corning,Inc., in which New Jersey will receive$13,125.00. The settlement stemmed from alawsuit brought on behalf of several states,which alleged federal false claims violations.

State v. SJ Nurses, Inc.A civil Medicaid fraud settlement was enteredinto with SJ Nurses, Inc., requiring SJ Nursesto pay $20,570 to the State of New Jersey. SJNurses was alleged to have billed for personalcare assistance services that were notrendered.

State v. Ambulatory Pharmaceutical Services& Raymond MirraA civil Medicaid fraud settlement withAmbulatory Pharmaceutical Services (APS)was entered providing for payment of$1,300,000 to the State of New Jersey. APSallegedly provided higher priced brandmedication, rather than generic, even whengeneric medications were available. State v. National Medical Care, et al.A civil Medicaid fraud settlement was enteredwith National Medical Care in which NewJersey received $178,122 in restitution andpenalties. National Medical Care allegedlyoverbilled for providing end stage renal diseasetreatment. Renex Corp.

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A civil Medicaid fraud settlement agreementwas executed by the State with NationalNephrology Associates. Several dialysisfacilities, known as Renex, were overpaid onthe submission of Medicaid claims for Epogenadministrations. The recovery for the State,including the New Jersey federal share, was$1,658,778.68.

Gambro Healthcare Inc.A partial civil Medicaid fraud settlement wasreached with Gambro Healthcare, Inc., whichovercharged the Medicaid program more than$1 million for Epogen, a blood enhancingsubstance for dialysis patients. The totalsettlement for New Jersey was $2,098,291.87.

County Prosecutors’ Offices Criminal Investigations and Prosecutions

Case Summaries

Atlantic County

State v. Cedric Williams, Dolores Perry &Shelly PerryIn May of 2002, Cedric Williams wassentenced to 10 years in State prison oncharges of arson for hire and conspiracy inconnection with the burning of a home insuredfor $224,500 in Pleasantville, New Jersey.Williams had conspired with his sisters, ShellyPerry and Dolores Perry, to burn their homefor $800 as a predicate to their filing afraudulent insurance claim on the loss of thehome. Williams was to receive an additional$50,000 for his services upon payment of theinsurance claim. In January and February2003, Shelly and Dolores Perry were alsosentenced, respectively to 10 years in State

Prison for their roles in the conspiracy.

State v. Thomas ScottIn July 2002, Thomas Scott, formerly a policeofficer with the Pleasantville PoliceDepartment, was sentenced to 364 days in theAtlantic County Jail, forfeiture of hisemployment as a police officer, and paymentof $4,700.62 in restitution, fines andassessments for his part in a conspiracy to filea fraudulent insurance claim for the allegedtheft of a motorcycle. Scott had previouslyborrowed the motorcycle from codefendant,Norman Gordy, and informed Gordy that themotorcycle had been stolen. Scott advisedGordy to reinstate his lapsed insurance policyand report the motorcycle as having beenstolen on a later date in order to provide

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coverage for the loss. In April 2002, Scotthad been convicted by a jury on charges oftheft by deception after only 15 minutes ofdeliberation. At his trial, Scott appearedwearing a fez and waving a small Moorishflag, claiming that he was not subject to thejurisdiction of the court because he was nolonger a United States citizen but was, rather,Oman Valord Bey, a free Moor exempt fromprosecution pursuant to an ancient treaty withthe Moors who had inhabited Spain in theMiddle Ages. Scott was, nevertheless,convicted in absentia after walking out of thetrial when the court rejected his novel defense.Gordy had previously been accepted into PTIand agreed to testify for the State againstScott.

Bergen County

State v. John GeorgasOn November 12, 2002, John Georgas, ownerand operator of Tri-State Services inRidgefield, New Jersey, pled guilty to chargesof conspiracy, attempted theft by deception,hindering apprehension, and providing falseinformation to law enforcement officials.Georgas falsely reported that his business hadbeen burglarized and subsequently filed afraudulent insurance claim for alleged losses ofover $27,000 in stolen currency andcomputers. Georgas had conspired withanother individual to obtain false businessinvoices to support his fraudulent claim.

State v. Johnny GarciaOn November 14, 2002, Johnny Garcia wassentenced to 18 months in State prison afterpleading guilty to conspiracy to commit theftby deception, hindering apprehension andproviding false information to law enforcementofficials. Garcia participated in a scheme tofile a fraudulent insurance claim with FirstTrenton Indemnity Company for the theft of afriend's vehicle, a 2000 Toyota 4-Runner.

State v. Renata PopiolekOn April 6, 2002, Renata Popiolek was

sentenced to three years probation and orderedto pay restitution of $7,949 for filingfraudulent insurance claims over a period ofsix months for various dental procedures thatshe had never received.

State v. JoAnn McGradyOn December 20, 2002, JoAnn McGrady,a.k.a. JoAnn Schmidt, pled guilty to theft bydeception in connection with a scheme todivert Medicare payments from a physician toher own account.

Burlington County

State v. Auronda BarnesOn August 19, 2002, Auronda Barnes pledguilty to health care claims fraud. Barnesfraudulently obtained prescription drugs in hername and in the names of others, and filedfraudulent insurance claims to pay for thoseprescriptions. The investigation wasconducted jointly with the Mercer CountyProsecutor's Office. Barnes is awaitingsentencing.

State v. April Hines, Maurice Key & LindaHawOn September 13, 2002, April Hines, MauriceKey and Linda Haw were charged withconspiracy and attempted theft by deceptionfor conspiring to file a fraudulent insuranceclaim for the theft of Hines' 1999 Lexus SUV.Hines had reported her vehicle stolen onAugust 2, 2002. The vehicle, driven byMaurice Key, was subsequently stopped by theNew Jersey State Police on August 24, 2002,when Key allegedly admitted that he hadagreed with Hines, through her aunt, LindaHaws, to take the vehicle and have it crushedin a North Philadelphia industrial compactor sothat it could be reported stolen. Instead ofhaving it crushed, as agreed, however, Keysallegedly continued to drive the vehicle for theensuing 22 days as though he were the owner.

State v. Raelisa Kroll aka Jean CrollOn August 16, 2002, Raelisa Kroll, aka Jean

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Croll, was sentenced to three years probation,conditioned upon serving 364 days in countyjail, for health care claims fraud. Krollfraudulently obtained prescription drugs fromseveral pharmacies and used her formerhusband's and father's insurance cards to payfor them.

Camden County

State v. James MerrittOn May 3, 2002, James Merritt was sentencedto three years probation for attempted theft bydeception. Merritt filed a fraudulent $13,000homeowners insurance claim with the HartfordInsurance Company, for an alleged burglary,using the very same receipts he had presentedin a prior insurance claim.

State v. Joseph ShawOn August 16, 2002, Joseph Shaw wassentenced to five years in State prison oncharges of aggravated arson and attemptedtheft by deception. Shaw set fire to hisClementon, New Jersey home and attemptedto collect nearly $190,000 in insuranceproceeds from the Peerless InsuranceCompany. The fire killed the three family dogsand resulted in the injury of a firefighter whoresponded to fight the blaze. Shaw alsoagreed to a civil consent judgment for $17,500in favor of the insurance company to reimburseit for the payment it had to make to Shaw'swife for the loss of her home under the"innocent spouse" doctrine.

State v. Frank Sanchez & Sonya SanchezOn April 22, 2002, Frank Sanchez pled guiltyto theft by deception. Sanchez falsely reportedthe theft of his 2000 Ford Ranger fromVeteran's Stadium in Philadelphia,Pennsylvania, as a predicate to the filing of afraudulent insurance claim by his wife andcodefendant, Sonya Sanchez. Frank Sanchezand Sonya Sanchez, who were admitted intoPTI, agreed to make restitution to the FirstTrenton Indemnity Company in the amount of$17,418.90 and agreed to pay civil insurance

fraud fines of $3,500 and $1,500, respectively.

State v. Carol NesbittOn June 14, 2002, Carol Nesbitt wassentenced to four years in State prison andordered to make restitution of $9,309.55 toAmerican Bankers Insurance, the CamdenCounty Board of Social Services, the NewJersey Division of Taxation and the Division ofMedical Assistance and Health Services.Nesbitt fraudulently collected credit disabilitypayments by forging her doctor's signature ondisability claim forms. Nesbitt also committedwelfare fraud, Medicare fraud, and tax evasionand was held in contempt of court. The lattercrimes were discovered when Nesbitt lied tothe Probation Department after an earlier pleato only the credit disability fraud charges. Theearlier plea would have required only fouryears of probation, 270 days in a house arrestprogram and restitution of $4,295.80. Nesbitt,however, lied to the Probation Departmentregarding her income, which led to aninvestigation by the Camden County Board ofSocial Services which revealed that she hadsubmitted the same forged disability forms tothat agency. The ensuing investigation furtherrevealed that Nesbitt had forged a letter ofemployment to the house arrest program andhad attempted to obtain another letter ofemployment from a school board despitehaving been previously barred by court orderfrom public office. The investigation alsorevealed that Nesbitt had failed to collect therequired State sales tax while conducting aretail business.

State v. Sebastian Bryant & Tanya BundickOn October 28, 2002, Sebastian Bryant pledguilty to theft by deception. Bryant admittedhis role in a scheme to add his name as apassenger to an accident report in order tofraudulently collect first party insurancebenefits from the State Farm InsuranceCompany and file a bodily injury claim againstthe driver insured by Prudential Insurance

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Company. After Bryant's codefendant, TanyaBundick, had been involved in an automobileaccident on April 9, 2000, Bryant and Bundickfalsely reported to the police that Bryant hadbeen a passenger in Bundick's vehicle at thetime of the accident. An interview by thePrudential SIU investigator with the driver ofthe other vehicle revealed that there had beenno adult male passenger in Bundick's vehicle,after which Bundick confessed to the fraud.Bundick was admitted into PTI and ordered topay restitution in the amount of $2,095 toState Farm Insurance Company. Bryant isawaiting sentencing.

Cape May County

State v. John McHughOn October 22, 2002, John McHugh ofPhiladelphia, Pennsylvania, was indicted andcharged with theft by deception and filing afalse police report. The indictment alleges thathe falsely reported his boat stolen in LowerTownship, New Jersey, in August of 2002, inorder to file a fraudulent insurance claim forover $24,000. The boat was subsequentlyrecovered at the home of a friend of McHughin East Pennsboro, Pennsylvania, in Novemberof 2002. The case is pending trial.

State v. Robert Tommassello & AlfredNataleOn June 4, 2002, Robert Tommassello andAlfred Natale were indicted and charged withtheft by deception and conspiracy. Theindictment alleges that the two submitted afraudulent insurance claim for wind damage atTommassello's business in Wildwood, NewJersey. After pleading guilty, Natale wassentenced on November 18, 2002, to twoyears probation and payment of $1,000 inrestitution. Tommassello is pending trial.

Cumberland County

State v. Pete WalshOn September 20, 2002, Pete Walsh was

sentenced to three years probation,conditioned on 90 days in county jail, andordered to pay restitution of $12,311 to theProgressive Insurance Company. Walsh hadhis 1996 Ford Explorer abandoned and burnedin Maurice River Township, New Jersey, inorder to file a fraudulent insurance claim.Prior to filing the fraudulent insurance claim,Walsh had reported to the Newark, DelawarePolice Department, that the vehicle had beenstolen from his residence.

Essex County

State v. Vielka MoralesOn October 8, 2002, Vielka Morales wasindicted and charged with aggravated arson,conspiracy and attempted theft by deception.Morales allegedly falsely reported her 2001Hyundai Santa Fe stolen in Harrison, NewJersey. Although Morales claimed to havedriven the vehicle to work on May 16, 2002,the vehicle had allegedly been discoveredburned the day before. The State intends toprove that the fire had been set to the interiorof the car and there was no attempt to strip thevehicle of its components.

State v. Fausto Acosta-Ceballos & DavidAcostaOn December 10, 2002, Fausto Acosta-Ceballos was indicted and charged withaggravated arson, conspiracy and attemptedtheft by deception. Acosta-Ceballos allegedlyfalsely reported his 1998 Lexus LS400 stolenin Union City, New Jersey. The State intendsto prove that when the vehicle was burned inNewark on February 24, 2002, the fire hadbeen started by an accelerant poured on thedriver's seat and ignited. The fire ultimatelyextinguished itself for lack of oxygen becausethe windows had been left closed. Acosta-Ceballos' son, David Acosta, was also indictedfor attempted theft by deception for makingthe false insurance claim.

State v. Samuel Gonzalez & RaffaeleArcidiacono

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On December 10, 2002, Samuel Gonzalez andRaffaele Arcidiacono were indicted andcharged with arson for profit. Arcidiaconoallegedly paid Gonzalez $500 to burn his 2001Chrysler L. H. S. The State intends to provethat the vehicle was equipped with atransponder and was ignited in its interior inEast Orange, New Jersey.

State v. David HillOn January 25, 2002, David Hill, a former lawenforcement officer, pled guilty to theft bydeception. Hill was sentenced to one yearprobation and a $250 fine and forfeited hisright to ever work again as a law enforcementofficer in New Jersey. Hill falsely reported hiscar stolen and filed a fraudulent insuranceclaim for its theft.

Essex County Vehicle Fire InitiativeFunded by an OIFP grant, the Essex CountyProsecutor's Office has undertaken an initiativeto target insurance cheats who have their carsburned in order to collect the insuranceproceeds. The Initiative operates as a separateunit in the Prosecutor's Arson Task Force andworks closely with local police detectives andinsurance company investigators to ensure thatevery suspicious motor vehicle fire isthoroughly investigated by trained personnel asquickly and effectively as possible. It isexpected that the Initiative could serve as aprototype for similar efforts in other NewJersey counties. In operation since October of2002, the Vehicle Fire Initiative has openedover 80 cases involving over $1.6 million ininsurance claims.

Gloucester County

State v. Isabella Abriola-ParkerOn April 22, 2002, Isabella Abriola-Parkerpled guilty to filing 26 separate fraudulentpersonal injury claims, totalling over $265,000,over a six year period in municipalitiesthroughout South Jersey. On June 7, 2002,Abriola-Parker was sentenced to four years inState prison,and agreed to pay civil fines

totalling $140,000.

State v. James Ambrose & Joshua MettingerOn August 23, 2002, and July 26, 2002, JamesAmbrose and Joshua Mettinger, respectively,were sentenced to 90 days in county jail andthree years of probation for theft by deception.Ambrose and Mettinger were involved in anautomobile theft which the State sought tocharge as an owner "give-up" based upon theautomobile owner's alleged suggestion toAmbrose to "steal" his (the owner’s) vehicle.The undisputed facts revealed that JamesAmbrose and Joshua Mettinger wereneighbors of the vehicle's owner and took thevehicle from the owner's driveway one eveningwith the intention to resell the vehicle inPhiladelphia. Another friend, Bernard Pozzi,was to follow them to the point of sale andprovide them with a ride home. Uponreaching their destination, Ambrose andMettinger were held up at gunpoint and,unable to provide the robbers with cash, gavethem the car instead. Meanwhile, observingthe plight of his comrades, Pozzi promptlydeparted the vicinity, leaving his friends to relyupon public transportation to find their wayhome to New Jersey. Ambrose and Mettingerultimately pled guilty to theft by deception,and Pozzi was admitted into the PTI program.No charges were filed against the owner.

Hudson County

State v. Edgar SaldanaOn April 30, 2002, Edgar Saldana, owner of astate licensed auto body repair shop in UnionCity, was indicted and charged with receivingstolen property. Saldana allegedly operated a“chop shop.” Based upon informationsupplied by one of Saldana's formeremployees, authorities executed a searchwarrant which yielded stolen automobile parts,including a car frame, which was allegedlyused in a scheme to sell a salvage title vehicleto a purchaser who was actually an undercoverinvestigator.

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State v. Josner Rivadineira & Oscar PerezOn July 24, 2002, Josner Rivadineira andOscar Perez were indicted for conspiring tofalsely report the theft of a Ducate motorcycleowned by Rivadineira. The motorcycle wasallegedly actually being hidden in Rivadineira'sbrother's garage, after the title had beentransferred to Perez. The investigation leadingto the indictment was prompted by anargument between the brothers, which causedRivadineira's brother to report him toauthorities. Universal Underwriters paidRivadineira $11,356 on the fraudulent claimbefore his brother turned him in.

State v. DiazOn August 14, 2002, a Hudson County GrandJury handed up the indictment of 22individuals alleged to have been involved in thestaging of four collisions intended to form thebasis of a series of fraudulent insurance claims.Two of the indicted defendants pled guiltybefore the end of the year, and additionalguilty pleas are expected in 2003. Among thecharges faced by the remaining defendants areconspiracy, theft by deception, health careclaims fraud, unsworn falsification, aggravatedassault and employing a minor in thecommission of a crime.

Staged Accident Ring InvestigationIn 2002, the Hudson County Prosecutor'sOffice continued with the prosecution ofdefendants previously indicted in a stagedaccident ring. In the course of 2002, 43defendants entered guilty pleas resulting in theordering of over $105,000 in restitution tovictimized insurance carriers. Many of thedefendants remain fugitives. This investigationalso resulted in the indictment of 32 additionaldefendants in 2002.

Mercer County

State v. Piotr Stachowicz & Piotr JadczakOn March 11, 2002, Piotr Stachowicz pledguilty to aggravated arson and attempted theftby deception. Stachowicz burned his sport

utility vehicle in Hopewell, New Jersey, inOctober of 2001, and reported it missing inorder to file a fraudulent insurance claim.Stachowicz and an accomplice, Piotr Jadczak,had been spotted in the vicinity of the burningvehicle by a passerby who tipped off the policeand provided them with the license platenumber of another vehicle in the area, whichturned out to be driven by Jadczak.Stachowicz was released on probation afterserving three months in jail. For his part in thescheme, Jadczak was also sentenced to threeyears probation.

State v. Douglas WhiteOn February 21, 2002, Douglas White wassentenced to one year probation after pleadingguilty to an Accusation charging him withattempted theft by deception. White falselyclaimed that his vehicle had been stolen froma secured area and filed a fraudulent insuranceclaim with the Clarendon Insurance Company.

Monmouth County

State v. Marc GallucciOn September 3, 2002, Marc Gallucci pledguilty to theft by deception and false swearing.Gallucci falsely reported that his car had beenstolen from a shopping mall in Woodbridge,New Jersey, on December 16, 2000, andsubsequently filed a fraudulent insurance claimwith the Prudential Insurance Company. Priorto reporting his car stolen, Gallucci hadcrashed his Lincoln Town Car into a signoutside of a nightclub while intoxicated, andfled the scene. Police officials did not believeGallucci's story and cited him for motorvehicle violations, to which he pled guilty inMunicipal Court.

Morris County

State v. Danielle PeineOn November 19, 2002, Danielle Peine pledguilty to an Accusation charging her with theftby deception. Peine filed a fraudulent claim

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for the theft of her 2001 Chrysler Sebring.Peine had paid someone $500 to "steal" hervehicle so that she could obtain an insurancesettlement from her insurance company.

State v. Mark J. Romeo & John A. SedlockOn December 12, 2002, Mark J. Romeo andJohn A. Sedlock pled guilty to Accusationscharging them with conspiracy and theft bydeception stemming from a sting operation inwhich they unwittingly contracted to "steal" avehicle so that the purported owner could filea fraudulent insurance claim. Romeo andSedlock were recorded by a confidentialinformant making arrangements to steal anundercover vehicle which had actually beensupplied by the Allstate Insurance Company.They were arrested while attempting to takethe vehicle at the Rockaway Townsquare Mall.

Ocean County

State v. Jeffrey HalpernOn December 13, 2002, Jeffrey Halpern wassentenced to 12 years in State prison onmultiple charges of theft by deception. Halpernfraudulently took title to a home by filing afraudulent deed, generating a false mortgagecommitment letter and using another person'sidentity to obtain a homeowners insurancepolicy and a home equity line of credit with lifeinsurance.

State v. John BrundageOn August 9, 2002, John Brundage wassentenced to four years in State prison oncharges of theft by deception and attemptedtheft by deception in connection with the filingof fraudulent insurance claims involving thealleged theft of two different automobiles inAugust and December of 1999. Theinvestigation revealed that one of the vehicleshad become stuck in the mud as the tide rosewhile Brundage was four wheeling, andBrundage had arranged for the other vehicle tobe removed from a mall parking lot and takento a storage facility.

State v. William Becica & Jessica BecicaOn December 4, 2002, William Becica and hiswife, Jessica Becica, were indicted andcharged with health care claims fraud, theft bydeception and the obtaining of prescriptionpainkillers by fraud in connection with ascheme in which William Becica obtained over2,000 prescription painkiller pills from over 40doctors dating from May of 2000.

State v. Yong Jim KimOn August 6, 2002, Yong Jim Kim, a Tom'sRiver acupuncturist, was indicted and chargedwith health care claims fraud and theunlicensed practice of medicine for allegedlyproviding services and billing for them withoutthe required medical license. His officemanager, Karen Garone, was also indicted forhealth care claims fraud for allegedlysubmitting a misleading bill.

Passaic County

State v. Jose SiriOn August 8, 2002, Jose Siri was sentenced tofour years in State prison for arranging nineseparate staged accidents between 1994 and1997. Siri registered and insured the vehiclesin various fictitious names, recruitedpassengers and paid drivers to stage or causeaccidents. He would then steer the passengersto medical providers in the City of Passaic fortreatment. In return, Siri received a "runner's'"fee of $800 per patient. Losses to insurancecompanies resulting from Siri's actions totaledapproximately $230,000. In addition to hisprison sentence, Siri was fined $135,000 incivil insurance fraud penalties.

State v. Crystie AnthonyOn September 2, 2002, Crystie Anthony wassentenced to two years probation on chargesof forgery for producing and selling fraudulentinsurance cards from her home in Paterson,New Jersey. After making several undercoverpurchases from Anthony, detectives executeda search warrant and seized several computersand computer components Anthony used to

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produce the counterfeit cards. Theinvestigation was conducted jointly with thePassaic County Sheriff's Department.

State v. Christopher Mazzo, D.C.On November 12, 2002, Paterson chiropractorChristopher Mazzo pled guilty to paying arunner to procure several patients in 2001,including an investigator who was workingundercover for the Passaic CountyProsecutor's Office. Mazzo was entered intoPTI and agreed to pay a $5,000 civil insurancefraud fine.

State v. Gilda SantosOn November 15, 2002, Gilda Santos pledguilty to theft by deception. Santos falselyreported her car stolen on September 25,2001, and subsequently filed a fraudulentinsurance claim with the Allstate InsuranceCompany for its alleged theft. Santos' fraudwas discovered after her vehicle was recoveredin a New York City parking lot in Decemberof 2001 and New York police determined thather car had been in the parking lot sinceSeptember 18, 2001, approximately a weekbefore Santos had claimed her vehicle wasstolen. Santos was admitted into PTI andordered to pay $1,584.78 in restitution to theinsurance company and $5,506.61 to UniversalFidelity Corporation.

Salem County

State v. Leslie MosleyOn August 5, 2002, Leslie Mosley wascharged with theft by deception and unlawfultaking. Mosley allegedly falsely reported thetheft of her leased 1998 BMW M3 in 1999, inorder to avoid her lease obligations, whileallegedly retaining the vehicle in a rentedstorage space in Carney's Point, New Jersey.Based upon the alleged report by Mosley, theState Farm Insurance Company paid the BMWLeasing Company $43,598.76.

State v. Rachel HarrisonOn August 29, 2002, Rachel Harrison wascharged with fraudulently obtaining over$100,000 in welfare and Medicaid benefitsover a period spanning from January toAugust of 2002. Harrison is alleged to haveobtained the benefits by misrepresenting herneeds, her living situation, and her financialand marital status when making application forbenefits.

State v. Russell Daniel, Andrea Richardson,Elnora Townsend, Martha Brown, MaryDaniel, Mischelle Raymond, AnothonyOliver, Jennifer Hooks, Douglas Slappey,Devon Dowe & Dawud Rakeem In July and August of 2002, a jointinvestigation between the Salem CountyProsecutor's Office and the Carneys PointPolice Department led to the arrest andcharging of 11 defendants in conjunction withschemes to produce, sell or possess fraudulentor fictitious motor vehicle insuranceidentification cards. The investigation also ledto the apprehension of Andrea Richardson, afugitive from the State of Delaware, and theseizure of a firearm allegedly possessed byRussell Daniel who was on parole at the timeof his arrest.

Somerset County

State v. Richard ChangOn November 26, 2002, Richard Chang, acollections coordinator in the financedepartment of the corporate owner of theArbor Glen Retirement Community, wasindicted and charged with theft by deception.Chang allegedly stole 40 checks totalling$206,000 paid by residents of the communityand their insurance companies for the benefitsof living in the retirement community. Thecase is pending trial.

State v. Daniel GardnerOn September 13, 2002, Daniel Gardner pledguilty to theft by deception. Gardner falselyreported the theft of his leased Ford Explorer

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in March of 2001 and subsequently filed afraudulent insurance claim which resulted inLiberty Mutual Insurance Company's paymentof $21,320 to satisfy the existing lien. Thevehicle was found burning in the woods alongInterstate 80 by the Pennsylvania State Policeafter its reported theft. Gardner is awaitingsentencing.

Sussex County

State v. Melissa ErmelOn October 18, 2002, Melissa Ermel wassentenced to two years probation, 30 daysSLAP and fines of $280 for exhibiting afictitious insurance card on two separateoccasions in February of 2002 in Newton,New Jersey.

Union County

State v. Diana StephanOn June 7, 2002, Diana Stephan, who hadbeen employed in her father's Rahway, NewJersey, insurance agency for over 20 years asa policy writer, was sentenced to three yearsprobation and payment of restitution in thesum of $6,322, for theft by deception.Stephan embezzled the insurance premiums often of the agency's customers and failed toobtain insurance on their behalf. Stephan wasalso barred from working in the insuranceindustry as a condition of her probation. Thematter was referred to the Department ofBanking and Insurance for furtheradministrative review.

Warren County

State v. Grace SwassOn July 17, 2002, Grace Swass was indictedand charged with false swearing. Swassallegedly falsely reported the theft of her 2000Ford Expedition in November of 2000 for thepurpose of filing a fraudulent insurance claimwith the Security Indemnity InsuranceCompany. Swass had financed the vehicle for

$38,718.38 in July of 2000, only four monthsbefore she allegedly falsely reported it stolen.She is currently a fugitive from justice.

1 The Collections function remains in the Department of Banking and Insurance. Thesefigures were reported by the Department of Banking and Insurance.

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OIFP Civil Investigations and Litigation

StatisticsJanuary 1, 2002 - December 31, 2002

Civil Investigations Number Dollar Amount

New Cases Opened 9,530

Cases Forwarded for Investigation 4,639

No Investigation Warranted 4,891

PRE-LITIGATION DISPOSITIONS

Warning Letters Issued 1,713

Consent Orders Issued 877 $6,010,275

Consent Orders Executed 440 $1,373,000

Consent Order Judgments Filed 167 $ 333,783

LITIGATION (Division of Law)

Number of Referrals Received by Division of Law 490

Number of Cases Resolved 526 $5,073,211

Division of Law Enforcement Actions 161 $ 542,255

Division of Law Original Settlements 365 $4,530,956

COLLECTIONS (Department of Banking and Insurance)1

Number of OIFP Accounts Paid in Full 650

Total Amount Received $1,981,845

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Narrative

OIFP received 9,530 referrals of suspectedcases of insurance fraud in 2002, of which4,639 were forwarded for further investigationby OIFP-Civil. Investigations by OIFP's CivilInvestigators resulted in the issuance of 877consent orders totalling $6,010,275 in civilpenalties. By year's end, 440 consent orderswere executed by subjects charged withinsurance fraud violations. Those subjectsagreed to pay a total of $1,373,000 in civilfines in 2002. One hundred and sixty sevenconsent order judgments were also filed in2002 totalling $333,783. Deputy AttorneysGeneral in the Division of Law received 490insurance fraud referrals for enforcementactions in 2002, most of which came fromOIFP Civil Investigators.

The Division of Law resolved 526 matters in2002, including the successful conclusion of161 enforcement actions and the resolution of365 original settlements. Enforcement actionstotaled $542,255, while settlements negotiatedby civil Deputy Attorneys General accountedfor $4,530,956. Mirroring the success ofOIFP-Criminal, OIFP-Civil also experienced itsmost productive year to date registering a 59%increase in the total dollar amount of its consentorders, settlements and judgments, and a 32%increase in the number of successful resolutionsobtained. The case summaries which followhighlight a number of OIFP-Civil's successfulinvestigations and several of OIFP's moresignificant actions brought by Deputy AttorneysGeneral in the Division of Law.

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Civil Investigative Case HighlightsIn the Matter of ABP ChiropracticAs part of the ABP Chiropractic criminalinvestigation, handled by OIFP-Criminal,approximately 14 subjects were issuedConsent Orders for civil insurance fraud finesranging from $1,500 to $5,000 each, for atotal of $54,000. The ABP Chiropracticinvestigation involved the staging of autoaccidents by the owner/operator of severalchiropractic clinics and his co-defendants inorder that PIP claims could be submitted toinsurance companies.

In the Matter of Carl PrataIn late 2001 and during the course of 2002,37 subjects executed Consent Orders totalling$149,500 for participating in a scheme inwhich Carl Prata, a former employee of theAllmerica Insurance Company and the St. PaulInsurance Company, allegedly fabricatedphony accident claims by inputting fictitiousclaims information into the companies'computerized claims databases. Prataallegedly caused the issuance of settlementclaim checks in the names of the otherparticipants in the scheme, who cashed thechecks and split the proceeds with Prata.Many of those who entered into ConsentOrders requiring them to pay civil fines werealso prosecuted criminally by OIFP, asreported in the criminal case highlights sectionof this report. Prata, himself, has denied theallegations and was indicted on December 18,2002 for issuing approximately 57 fraudulentclaim checks totalling some $625,000.

In the Matter of Dr. Elliot Heller On October 4, 2002, Dr. Elliot Heller enteredinto a Consent Order to pay $100,000 forknowingly billing various insurance companiesfor services he did not render and forsubmitting falsified surgical records forr e i m b u r s e m e n t a t a h i g h e r"out-of-network"compensation rate than thatto which he was entitled. Dr. Heller was alsosentenced to three years in prison and ordered

to pay $321,000 in restitution in a companioncriminal matter prosecuted by OIFP.

In the Matter of Christopher Illenye On May 29, 2002, Christopher Illenye enteredinto a Consent Order to pay $5,000 for falselyreporting to Casualty Insurance Company thathis vehicle had been stolen. Evidence showedthat the vehicle had, in fact, been foundcrashed and abandoned prior to the reportingof the alleged theft.

In the Matter of Wanda Rios On November 8, 2002, Wanda Rios enteredinto a Consent Order to pay $5,000 forknowingly forging her husband’s signature onthe back of a PMA insurance benefit check andunlawfully depositing the funds into her ownpersonal account.

In the Matter of Duvan CardonaOn June 28, 2002, Duvan Cardona enteredinto a Consent Order to pay $5,000 for falselyreporting to Allstate Insurance Company thathis vehicle had been stolen. The vehicle hadactually been found burning prior to thereporting of the alleged theft.

In the Matter of Kenneth Lugo On August 2, 2002, Kenneth Lugo enteredinto a Consent Order to pay $3,000 for falselyreporting his vehicle stolen to AllstateInsurance Company. Evidence revealed thevehicle had been involved in an accident andabandoned prior to the reporting of the allegedtheft.

In the Matter of Cathy Pitbladdo On August 20, 2002, Cathy Pitbladdo enteredinto a Consent Order to pay $4,000 for falselyreporting her vehicle stolen to AllstateInsurance Company. The vehicle had beenrecovered prior to the reporting of the allegedtheft. Pitbladdo was also prosecuted criminallyby OIFP in conjunction with this matter.

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In the Matter of Scott Biroc & NicholasAlcuri On November 5, 2002, Scott Biroc enteredinto a Consent Order to pay $10,000 forreporting to Cumberland Insurance Companythat he had no involvement in the arson of hisrestaurant, Cucina d’Amore, when in fact heconspired with Nicholas Alcuri to purposelydestroy the property to collect the insuranceproceeds. Biroc and Alcuri were prosecuted bythe Bergen County Prosecutor’s Office. OnSeptember 30, 2002, Nicholas Alcuri enteredinto a Consent Order to pay $5,000 forconspiring to commit arson with Biroc in aneffort to collect the unlawfully obtainedinsurance proceeds.

In the Matter of Dimitrios Zacharias On December 10, 2002, Dimitrios Zachariasentered into a Consent Order to pay $20,000for participating in an auto "give-up" scheme.Zacharias caused the reporting of four falseauto thefts and a false homeowners claim, forcontents allegedly in one of the vehicles at thetime of the theft, to various insurancecompanies.

In the Matter of Marietta Lee Urban-FalkOn November 8, 2002, Marietta LeeUrban-Falk entered into a Consent Order topay $3,000 for failing to disclose to HanoverInsurance Company, a prior homeownersclaim for similar damage for which she hadpreviously recovered an insurance settlement.

In the Matter of David Moslowitz On October 22, 2002, David Moslowitzentered into a Consent Order to pay $5,000for falsely reporting his vehicle stolen to StateFarm Insurance Company. Moslowitz was alsoprosecuted by the Essex County Prosecutor’sOffice in conjunction with this matter.

In the Matter of Roben BrookhimOn June 4, 2002, Dr. Roben Brookhimentered into a Consent Order to pay $15,000

for billing the Delta Dental Plan of NewJersey for services which had already beensubmitted to and paid for by another dentalinsurance company.

In the Matter of Dr. Gina Garcen-CiallellaOn July 9, 2002, Dr. Gina Garcen-Ciallellaentered into a Consent Order to pay $15,000for conspiring with others to solicit individualsto obtain medical treatment at DowntownChiropractic Center and to submit claims tovarious insurance companies for PIP benefits.Five other individuals also entered intoConsent Orders in this case. Henry Robinson,a runner, entered into a Consent Order for$5,000 on July 8, 2002. Judy Hechavarria, thereceptionist, entered into a Consent Order for$2,500 on September 12, 2002. KonstantinZeva, the office manager, entered into aConsent Order for $5,000 on September 12,2002. Maria Mejias Wright, a formeremployee of the Jersey City PoliceDepartment, entered into a Consent Order for$5,000 on September 12, 2002. CharnetteHillireo, a former employee of the Jersey CityPolice Department, entered into a ConsentOrder for $5,000 on November 18, 2002. Thecase was also investigated by the HudsonCounty Prosecutor’s Office.

In the Matter of Phillip PigninelliOn June 4, 2002, Phillip Pigninelli enteredinto a Consent Order to pay $12,000 forconspiring with Robert Castellano to file afraudulent claim with the Great AmericanInsurance Company for damages allegedlyincurred to his boat. The criminal investigationin this case was handled by the Ocean CountyProsecutor’s Office.

In the Matter of Daniel MazurOn June 4, 2002, Daniel Mazur entered into aConsent Order to pay $5,000 for conspiringwith two other individuals to give-up hisvehicle and falsely report it stolen to LibertyMutual Insurance Company. On June 4, 2002,James Freeman entered into a Consent Orderrequiring him to pay $5,000 for conspiring

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with Mazur. On July 31, 2002, DouglasPowell also entered into a Consent Orderrequiring him to pay $5,000 for conspiringwith Mazur. The criminal investigation washandled by OIFP-Criminal.

In the Matter of Alfred M. SmithOn January 16, 2002, Alfred M. Smith enteredinto a Consent Order to pay $5,000 formisrepresenting the garage location of fivecommercial vehicles registered to his AtlanticCity cleaning business. Smith claimed thevehicles were garaged in Northfield, NewJersey, when, in fact, the investigation revealedthe proper garaging location to be AtlanticCity.

In the Matter of Harvey Snyder, MDOn February 15, 2002, Harvey Snyder enteredinto a Consent Order to pay $7,500 formisrepresenting his principal residence and thegarage location of his vehicle. Snyder hadregistered his vehicle to a New Jersey address,when it was actually principally garaged inPhiladelphia, Pennsylvania.

In the Matter of Luis RuizOn March 15, 2002, Luis Ruiz entered into aConsent Order to pay $20,000 for his part in astaged automobile accident conspiracy in theCamden County area, in which fraudulentclaims in excess of $90,000 were submitted toAllstate, State Farm, Liberty Mutual,Prudential and Material Damage AdjustmentCorporation insurance companies. Thetwenty-four co-defendants also executedConsent Orders for their roles in the scheme.The criminal case was handled by OIFP-Criminal.

In the Matter of Linda & Reginald HartOn April 5, 2002, Linda and Reginald Harteach entered into Consent Orders requiringthem to pay $2,500 for their participation inthe fraudulent automobile theft claimsubmitted to State Farm Insurance Company.The Harts claimed that their vehicle had beenstolen, when the investigation revealed that the

vehicle was inoperable and had been towed bythe Harts to a location in Philadelphia,Pennsylvania, where it was ultimatelyrecovered.

In the Matter of Tse CheungOn April 22, 2002, Tse Cheung entered into aConsent Order to pay $5,000 for providingfalse information to Clarendon InsuranceCompany regarding his residency and thegarage location of his vehicle. Theinvestigation revealed that Cheung wasresiding in Staten Island, New York, ratherthan Trenton, New Jersey, as he had stated onhis application for insurance and on his autotheft questionnaire.

In the Matter of Kumar SirjoosinghOn May 9, 2002, Kumar Sirjoosingh enteredinto a Consent Order to pay $5,000 forproviding false information to SelectiveInsurance Company regarding the policyaddress and garage location of his vehicle. Asa result of a PIP claim submitted bySirjoosingh, Selective discovered a Queens,New York address where he had been residingand garaging his vehicle since 1999.

In the Matter of Robert McKeeOn May 9, 2002, Robert McKee entered intoa Consent Order to pay $3,500 for submittinga fraudulent claim for a loss to his property inSeptember 1998, which had been previouslysubmitted and paid as a result of a November1997 loss. McKee failed to make the repairfollowing the earlier loss and resubmitted it asa new loss nearly two years later.

In the Matter of Dr. Donna SegarraOn June 4, 2002, Donna Segarra entered intoa Consent Order to pay $7,000 for submittinga claim to Selective Insurance Company fordamage for which she had previously beenpaid.

In the Matter of Kerri LampropoulosOn September 12, 2002, Kerri Lampropoulos,entered into a Consent Order to pay $5,000

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for submitting an altered document toPrudential in support of her fraudulent claimfor disability insurance. At the time of thesubmission, Lampropoulos was activelyemployed as an agent with the PrudentialInsurance Company.

In the Matter of Assunta CuadraOn September 20, 2002, Assunta Cuadraentered into a Consent Order to pay $20,000for submitting a claim for water damageallegedly resulting from a broken pipe, whenthe investigation revealed that the damageexisted at the time she had purchased thehome.

In the Matter of Thomas BoselliOn October 28, 2002, Boselli entered into aConsent Order to pay $100,000 forsubmitting claims for allegedly providingchiropractic care. The investigation revealedthat Boselli was not actually licensed topractice chiropractic medicine at the time heclaimed to have provided the services.

In the Matter of Sobeida VelazquezOn May 6, 2002, Sobeida Velazquez enteredinto a Consent Order to pay $5,000 forsubmitting fraudulent bills to the Guardian LifeInsurance Company. In this same case, aConsent Order for Vivian Borges executed onJune 4, 2002, and a Consent Order forLashunda Smith executed on July 9, 2002,required both Borges and Smith to pay$5,000. These three individuals wereemployees of University Physicians Associates,a billing service for University Hospital(UMDNJ), when they submitted fraudulenthealth care claims for themselves. The criminalcase was handled by OIFP-Criminal.

In the Matter of Mark BiddleOn May 9, 2002, Mark Biddle entered into aConsent Order to pay $5,000 for submitting afraudulent Workers Compensation claim toCrum & Forster Insurance Company.

In the Matter of Ellis HaynesOn July 31, 2002, Ellis Haynes entered into aConsent Order to pay $5,000 for submitting afraudulent credit disability claim to JMICInsurance Company.

In the Matter of Franklin WebbOn May 6, 2002, Franklin Webb entered intoa Consent Order to pay $5,000 for submittinga fraudulent automobile theft claim to MetlifeAuto and Home.

In the Matter of Bindraban DeosaranOn June 18, 2002, Bindraban Deosaranentered into a Consent Order to pay $5,000for submitting a fraudulent automobile theftclaim to Liberty Mutual Insurance Company.The criminal case was handled by OIFP-Criminal. In the Matter of Ryan DelvecchioOn June 4, 2002, Ryan Delvecchio enteredinto a Consent Order to pay $5,000 forsubmitting a fraudulent automobile theft claimto State Farm Insurance Company.

In the Matter of Manuel Correia On September 19, 2002, Manuel Correiaentered into a Consent Order to pay $5,000for conspiring to submit a fraudulentautomobile theft claim to Liberty MutualInsurance Company.

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Division of Law Case Highlights

State v. Daniel FontanellaOn October 15, 2002, the State filed suit toimpose $2,390,000 in civil insurance fraudfines against jailed Passaic Countychiropractor Daniel Fontanella. The suitcharges Fontanella with violating the InsuranceFraud Prevention Act by submitting falsifiedpatient and billing records for 478 of hispatients to 36 insurance carriers over a periodof two years. An analysis performed by OIFPrevealed that Fontanella's billing to thedefrauded insurance carriers during that spanof time totaled $2,264,190. In the relatedcriminal case, handled by the Passaic CountyProsecutor's Office, Fontanella pled guilty andadmitted fabricating 45 percent of thosebillings by filing purported claims for treatmentfor dates on which his patients did not appearin his office or receive any treatment. On hiscriminal conviction, Fontanella was sentencedto serve three years in State prison and pay$500,000 in restitution. He had alsopreviously surrendered his chiropractic licensein 1998, but petitioned to obtain authorizationto continue practicing as a chiropractor inNew York while participating in a prison workrelease program. The complaint filed by theState seeks the imposition of a $5,000 penaltyfor each of the 478 patients for whomFontanella submitted fraudulent claims.

State v. Samuel Davit, M.D.On November 12, 2002, the State obtained aconsent judgment for an insurance fraud fine inthe sum of $50,000 against Samuel Davit,M.D. Davit, through his company, GlobalDiagnostics, committed multiple violations ofthe Insurance Fraud Prevention Act, includingthe preparation of false and misleading testresults and billing for services not rendered.Davit also entered into a settlement with theBoard of Medical Examiners pursuant towhich he agreed to a revocation of his licenseto practice medicine in New Jersey and to payadditional civil penalties in the sum of

$50,000, restitution in the amount of $175,000to First Trenton Indemnity Company, as wellas attorneys fees and costs of suit.

State v. John Thompson, III, ChristopherJarrett, Raymond Waters & Louis PageOn November 18, 2002, the State obtained adefault judgment against John Thompson, III,for fines and restitution in the amount of$481,179 for his part in a conspiracy todefraud his employer, Rutgers CasualtyInsurance Company, by issuing 32 fraudulentsettlement checks totalling $488,000 to hisfriends between 1995 and 1999. OnNovember 18, 2002, the State also obtained adefault judgment against one of Thompson'sco-conspirators, Christopher Jarrett, in thesum of $45,224. The other co-conspirators,Raymond Waters and Lewis Page, entered intoStipulations of Settlement and executedConsent Judgments, respectively, in theamounts of $60,000 and $55,000. All fourhad previously pled guilty to their thefts infederal court, where they were each sentencedto at least one year of prison and ordered topay restitution.

State v. Muhammad A. NasirOn November 15, 2002, a unanimous panel ofthe New Jersey Appellate Division upheld asummary judgment against Muhammad Nasir.The judgment had held him civilly liable forinsurance fraud for purposely omittinginformation regarding a disabling medicalcondition affecting him at the time he appliedfor disability insurance coverage. Nasir hadvisited his family physician several timesbecause of escalating symptoms of pain in hisback and numbness in his hands and fingersand underwent an MRI prior to filing anapplication for disability insurance on April 27,1996. Nasir learned of the MRI results onApril 29, 1996, which revealed a herniated discin his cervical spine that required spinal fusionsurgery. When he filed a disability claim

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following surgery on July 3, 1997, Nasirclaimed that he first suffered symptoms onMay 7, 1996. In upholding the ruling of thetrial court, the Appellate Division also upheldan assessment of penalties, attorneys fees andcosts under the Insurance Fraud PreventionAct because they were rationally related to theState's expenses in prosecuting him.

In the Matter of Michael Lio, D.C.On March 25, 2002, Michael Lio, a licensedchiropractor, entered into a settlementagreement in which he admitted causing aDecember 3, 1999, fire in his vacation home inorder to file a fraudulent insurance claim. Liopaid a $10,000 civil penalty and is facingdisciplinary action by the New Jersey Board ofChiropractic.

State v. Jettie D. SailorOn December 28, 2002, the New JerseyAppellate Division, in what became the firstpublished decision addressing the issue, agreedwith the State that defendants in actionsbrought under the Insurance Fraud PreventionAct are not entitled to a trial by jury.

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PART III LEGISLATIVE AND REGULATORY RECOMMENDATIONS

The Office of the Insurance Fraud Prosecutorsubmits the following recommendations underauthority of N.J.S.A. 17:33A-24, whichrequires OIFP to formulate and evaluateproposals for legislative, administrative andjudicial initiatives to strengthen insurance fraudenforcement and to provide an annual reportto the Governor and Legislature:

A. Uninsured Motorists

1. Statement of the Problem: Drivers whoare cited for driving without insurancepursuant to N.J.S.A. 39:6B-2 are often able toavoid conviction by promptly obtaininginsurance on the day they are cited. Sincemany automobile insurance policies areroutinely issued retroactive to 12:00 AM onthe date of issuance, drivers are then able topresent court officials with documentation thatpurports to provide coverage prior to the timeof the issuance of the summons charging thedriver with driving without insurance.

Proposed Solution: In order to preventdrivers from escaping punishment for drivingwithout insurance by obtaining documentationwhich purports to provide insurance coverageprior to the time the driver is cited, aregulation should be adopted requiring thatautomobile insurance coverage may only beprovided prospectively, and that anydocumentation issued by insurance companiessubstantiating coverage provide informationconforming to this requirement.

2. Statement of the Problem: The statutewhich makes it a crime to exhibit a fictitious orcounterfeit insurance card does not criminalizethe knowing display of an insurance card

which was valid when initially issued, butwhich has been lawfully canceled fornonpayment of premium or other policyholderbreach. Consequently, drivers may circumventthe mandatory automobile insurance laws ofNew Jersey and avoid being charged underN.J.S.A. 2C:21-2.3 for exhibiting a fictitiousinsurance card by obtaining a valid insurancecard, making an initial installment payment andallowing the underlying policy to lapse fornonpayment of premium.

Proposed Solution: N.J.S.A. 2C:21-2.3, whichmakes the exhibiting of a fictitious orcounterfeit insurance card a crime, should beamended to include the display or exhibiting ofa validly issued insurance card which hassubsequently been canceled for nonpayment ofpremium or other legal cause, and which theperson displaying the insurance card knows isno longer valid.

3. Statement of the Problem: Uninsureddrivers who display fictitious insurance cardsare not subject to the same civil penaltiesunder the Insurance Fraud Prevention Act asare other types of insurance fraud cheats.While a person who lies on an application forinsurance may be heavily fined under theprovisions of the Insurance Fraud PreventionAct, a person who displays a fictitiousinsurance card to a law enforcement officer isnot subject to any civil penalties whatsoever.

Proposed Solution: The Insurance FraudPrevention Act should be amended to include,among the violations enumerated therein, thepossession, display, distribution ormanufacture of a fictitious insurance card.

4. Statement of the Problem: The statute

Recommendations Pursuant to N.J.S.A. 17:33A-24

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which makes it a crime to exhibit or display afictitious insurance card applies, by its terms,only to the display or exhibition of thefictitious card to a law enforcement officer ora person authorized to conduct a motorvehicle inspection. Drivers seeking to avoidcompliance with the mandatory automobileinsurance laws of New Jersey who resort tothe use of fictitious insurance cards sometimesdisplay or exhibit their fictitious or counterfeitinsurance cards for inappropriate purposes todeceive other governmental officials orindividuals in the private sector. The use offictitious insurance cards in this fashion doesnot constitute a violation of N.J.S.A. 2C:21-2.3.

Proposed Solution: N.J.S.A. 2C:21-2.3 shouldbe amended to expand the class of persons towhom the fictitious card is exhibited from lawenforcement officers to any person acting in anofficial capacity.

5. Statement of the Problem: Drivers whoare subjected to auto insurance verificationchecks sometimes attempt to prove they areinsured and avoid prosecution by exhibitingfictitious or fraudulent documentationpurporting to substantiate insurance coverageother than fictitious insurance cards, such asdocuments which purport to be a binder,declarations page or face page of an insurancepolicy. The statute which makes the exhibitingor display of a fictitious insurance card a crimedoes not, by its own terms, extend to theexhibiting or display of other fictitiousdocuments purporting to substantiateinsurance coverage.

Proposed Solution: To ensure that anuninsured driver who falsely claims to beinsured is not able to evade prosecution byvirtue of the nature of the fictitious documentspurporting to provide coverage, the statutemaking it a crime to exhibit or display afictitious insurance card, N.J.S.A. 2C:21-2.3,should be expanded to include the exhibitingor display of any document purporting to

substantiate insurance coverage.

B. Criminal Statutory Provisions

1. Statement of the Problem: The highestgrading for any theft offense, whethercommitted against an individual, a business,the State or an insurance company, is that of asecond degree crime. A second degree crimeprovides for a maximum penalty of ten yearsof incarceration and a criminal fine of$150,000. These penalties often do not reflectthe significant harm caused by thefts ofsubstantial sums, and may be insufficient todeter those who are willing to risk thepenalties of a second degree crime toaccomplish such thefts.

Proposed Solution: The Health Care ClaimsFraud Act and other criminal theft statutesshould be amended to provide that thefts of$500,000 or more constitute crimes of the firstdegree with a maximum penalty of 20 yearsimprisonment.

2. Statement of the Problem: The "RunnersStatute," N.J.S.A. 2C:21-22.1, which makes ita crime for a provider to pay another person toprocure a client, patient or customer, has beeninterpreted by at least one court as notapplying to payments from one provider toanother. The court reasoned that suchreferrals are an exception to the statute asbeing "otherwise authorized by law."Accordingly, under this interpretation of thestatute, an attorney may not be held criminallyliable for paying a provider such as achiropractor for the referral of bodily injuryclients, and vice versa, because such referralsmight be interpreted as "otherwise authorizedby law."

Proposed Solution: The "Runners Statute"should be amended to provide that, "forpurposes of this provision, the referral of aclient, patient or customer from a provider toanother provider, not of the same profession asthe referring provider, shall not be considered

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as otherwise authorized by law."

C. Civil Fraud Act Provisions

1. Statement of the Problem: Significantnumbers of New Jersey residents fraudulentlyuse out of state addresses to register andinsure vehicles which they garage at their full-time residences in New Jersey. In some casesthis is done to obtain less expensive insurancepolicies than would otherwise be available inNew Jersey. In other cases, migrant workersavail themselves of "one-stop shopping" inneighboring urban centers, such asPhiladelphia, where they are able to obtaintheir vehicle's title, registration and insurancefrom a single dealer, who speaks their nativetongue, for a low flat fee. This growingpractice constitutes a form of "reverse rateevasion" which is subject to neither the civilpenalties of the Insurance Fraud PreventionAct nor prosecution under the criminal laws ofNew Jersey because the act of obtaining thequestionable insurance has taken place inanother state and often involves an insurancecarrier which does not underwrite automobileinsurance in New Jersey. The practice maynegatively impact insurance carriers in NewJersey by depriving them of the higherinsurance premiums they might have chargedhad the insurance been properly obtained inNew Jersey. New Jersey residents who sufferbodily injury or property damage resultingfrom an accident with such "reverse rateevaders" are put at risk because these out ofstate policies may provide lesser coverage thanwould otherwise be mandated under a policyissued in New Jersey, or may be voidedaltogether in the event of a claim on the basisof misrepresentations made by the policyholderhaving falsely claimed to reside, or garage theinsured vehicle, in the neighboring state.

Proposed Solution: The Insurance FraudPrevention Act should be amended to makethe practice of "reverse rate evasion" aviolation thereof subject to the prescribed civil

penalties for other violations of the Act.

2. Statement of the Problem: The InsuranceFraud Prevention Act does not include fraudagainst an HMO as one of the offenses forwhich a civil fine may be imposed.Consequently, those who commit fraud againstan HMO are not subject to the civil penaltiesprovided by the Fraud Act.

Proposed Solution: The Insurance FraudPrevention Act should be amended to includefraud against an HMO as one of the actsconstituting a violation of the Fraud Act, byadding an HMO as one of the enumerated"insurance company" entities in N.J.S.A.17:33A-3.

3. Statement of the Problem: In order toreduce their premium payments, somebusinesses defraud their WorkersCompensation insurance carriers byunderstating or failing to disclose the fullextent of the risks for which they haveobtained Workers Compensation coverage,such as by understating the business’ numberor nature of employees or by failing to disclosesignificant additions to a business vehicle fleet.This type of insurance fraud does not currentlyconstitute a violation of the Insurance FraudPrevention Act, thereby depriving the State ofthe ability to impose appropriate civil penaltieswhen such fraud is detected. Oftentimes theState is left without a viable remedy to addresssuch fraud unless it is able to prove its case incriminal court with its enhanced burden ofproof.

Proposed Solution: The Insurance FraudPrevention Act should be amended to providethat Workers Compensation premium fraudconstitutes a violation of the Act, subjectingthe offender to the civil penalties providedtherein.

4. Statement of the Problem: The acts offraud which constitute violations of the

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Insurance Fraud Prevention Act do notgenerally include acts of fraud against publicentities and programs providing various typesof insurance coverage, such as the varioustypes of insurance indemnification provided byjoint insurance funds and various socialinsurance programs such as those providingfor unemployment and temporary disabilitybenefits. Whether an insurance cheat issubjected to civil penalties provided by theInsurance Fraud Prevention Act should notdepend upon whether the victim is a privatebusiness or public entity.

Proposed Solution: The Insurance FraudPrevention Act should be amended to includethat the acts identified therein as fraud againstprivate insurance companies also constituteviolations of the act when committed againstpublic insurance programs and public entitiesproviding various types of insurance coverage.

D. Civil Fraud Act Omissions

1. Statement of the Problem: Because theInsurance Fraud Prevention Act is silent as tothe burden of proof to be borne by the State incivil enforcement actions filed thereunder,legal resources are sometimes unnecessarilywasted in the litigation of this issue .

Proposed Solution The Insurance FraudPrevention Act should be amended to set forththat the appropriate burden of proof to beborne by the State in bringing an actionthereunder is that of a "preponderance of theevidence".

2. Statement of the Problem: Although theAutomobile Insurance Cost Reduction Act of1998 transferred authority for most insurancefraud enforcement functions from theDepartment of Banking and Insurance to theOffice of the Insurance Fraud Prosecutor,numerous references to the Commissioner ofthe Department of Banking and Insuranceremain in the Insurance Fraud Prevention Act,which inaccurately depict the Commissioner as

having retained such previously transferredauthority.

Proposed Solution: The Insurance FraudPrevention Act should be amended to replace,where appropriate, all references to theCommissioner of the Department of Bankingand Insurance with references to the InsuranceFraud Prosecutor.

3. Statement of the Problem: Civilenforcement actions brought on behalf of theOffice of the Insurance Fraud Prosecutor aresometimes challenged on the basis that theactions were not filed within the appropriatestatute of limitations. Because the InsuranceFraud Prevention Act is silent as to theapplicable statute of limitations with respect tothe filing of an action thereunder, this matter isoften subject to needless litigation and thewaste of legal resources by the State.

Proposed Solution: The Insurance FraudPrevention Act should be amended toincorporate the applicable 10 year statute oflimitations as set forth in N.J.S.A. 2A:14-1.2.

E. Health Care Claims Forms

1. Statement of the Problem: The claimforms which medical service providers submitto insurance carriers to obtain reimbursementfor services which are covered under theirpatients’ insurance policies are conducive tothe commission of health care and PIP claimsfraud because they fail to adequately affix legalresponsibility for the truth of the assertionswhich they contain, and because, all too often,they allow for the reporting of vague orimprecise information. Since claim forms areoften prepared by employees within a medicalservice provider’s office, or by an independentcontractor which specializes in billing onbehalf of service providers, it is often difficult,if not impossible, to hold the actual licensedmedical service provider legally responsiblewhen claim forms contain false or misleadinginformation. Further, in order to determine

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whether services by a medical provider areproperly compensable by insurance, insurersmust be able, among other things, to ascertainthe overall context of treatment within whichthe service was rendered, whether the claimedservice was properly coded, and whether itwas rendered in whole or in part by a licensedmedical service provider.

Proposed Solution: Insurance claim forms,whether filed electronically or in “hardcopy”paper forms, should require the inclusionof information specifically identifying the typeof procedures, medical services and medicalsupplies provided, amounts actually paid bythe patient, the identification of any persons inthe provider’s office providing the servicesbilled for, whether such persons are licensed,the professional license number, and alltaxpayer identification numbers (TIN)associated with the licensed medical serviceprovider and with any person or entityidentified in the claim form as having providedany of the services set forth therein. Claimforms should also incorporate a certificationwhich affixes personal legal responsibility forthe claim’s accuracy with the appropriatelicensed medical service provider. An exampleof such a certification follows: “I (name ofmedical service provider) certify that I havereviewed this claim form and that all of theinformation contained herein is accurate andtruthful. I further certify that my signature onthis claim form, whether that be an originalsignature or a stamp facsimile signature, orwhether the signature block is simply noted‘signature on file’, attests to the fact that Ihave reviewed this claim form and that theinformation contained herein is truthful andaccurate. I further certify that I personallyrendered the services described on this claimform, or that I directed, managed andsupervised the person who provided theservices described on this claim form. I furthercertify that this claim form accurately containsmy professional license number and that of anyother person whom I directed, managed andsupervised in performing the services

described herein. I further certify that Iunderstand that no payment can be made forthe services claimed herein without my reviewand completion of this certification.”

F. Insurance Company Access to AccidentInformation

1. Statement of the Problem: Wheninvestigating claims arising out of anautomobile accident in which the sobriety of adriver is in question, insurance carriers have alegitimate need to obtain and evaluate reportsprepared by law enforcement officials settingforth the results of various sobriety tests,including the results of tests pertaining to theBAC (blood alcohol content) of a driverinvolved in the accident. Under current law,N.J.S.A.17:33A-29, investigators employed byinsurers are entitled to obtain accident reportsfrom police departments within 24 hours of theoccurrence of the accident which is the subjectof the report. There is no comparableauthority, however, enabling insurancecompany investigators to obtain the referencedinformation as it pertains to sobriety unless itis set forth in the accident report, itself.Accordingly, despite an equally compellingneed by insurance carriers to obtain recordsrelevant to the sobriety of an insured, or aparty making a claim against the insured,results of sobriety tests are, as a practicalmatter, unavailable to insurance companyinvestigators.

Proposed Solution: N.J.S.A.17:33A-29 shouldbe amended to include a requirement that lawenforcement officials release the results ofsobriety testing to insurance companyinvestigators in the same manner as they areobliged to release accident report information.

2. Statement of the Problem: Insurancecompany claims adjusters and third partybusinesses contracted by insurance carriers toobtain police accident reports on their behalfare sometimes denied access to accidentreports by police departments under

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N.J.S.A.17:33A-29 on the ground that they donot qualify as "investigators employed byinsurers." Those individuals, are, in fact, dulyauthorized by carriers to perform the functionof insurance company investigators.

Proposed Solution: N.J.S.A.17:33A-29 shouldbe amended to read "investigators, claimsadjusters, and businesses authorized to act onbehalf of, or employed by, insurers..."

G. Law Enforcement Access to Records

1. Statement of the Problem: Records ofvehicles transiting toll booths in New Jerseymaintained by the EZ Pass system are animportant investigative resource for lawenforcement agencies investigating a variety ofdifferent types of suspected crimes, includinga type of insurance fraud known as theautomobile "give-ups," where an owner falselyreports a vehicle stolen in order to file afraudulent claim for its alleged theft. Fraud byan owner in these cases can sometimes beproven by establishing that the vehicle wasactually in use at a particular location, such asan EZ Pass toll booth, at a time inconsistentwith the owner's version of events. Lawenforcement investigators are often thwartedin their attempts to obtain and use as evidence,EZ Pass records, by a law which requires acourt order before such records can bereleased but which, nonetheless prevents suchrecords from being used as evidence.

Proposed Solution: The legislation requiringa court order to release EZ Pass records tolaw enforcement investigators should beamended to allow for the release andevidentiary use of those records pursuant to alaw enforcement subpoena.

H. Insureds’ Rights

1. Statement of the Problem: Corporationssometimes obtain life insurance on low levelemployees without their knowledge or consentin order to provide tax free funding for

employee benefits, such as post-retirementhealth benefits. This type of corporate ownedlife insurance differs from "key man" insurancebecause the deaths of the insured employeeswould ordinarily not be expected to negativelyimpact the economic viability of thecorporation. Sometimes referred to as"janitors insurance" or "peasants insurance," itis attractive to corporations because the deathbenefits are tax free, and typically provide littleor no benefit to the families of those whoselives are insured.

Proposed Solution: Legislation should beenacted to either require notice to or theconsent of the insured employee when suchinsurance is contemplated, or to prohibit thepractice altogether unless it can bedemonstrated that the insured employee wouldqualify as a person eligible for "key man"insurance.

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PART IV: APPENDIX

EXHIBIT A

OIFP CRIMINAL/CIVIL INSURANCE FRAUD PENALTIES IMPOSEDCOMPARISON 2001 - 2002JANUARY - DECEMBER

ACTION TAKENTOTAL SANCTIONS

IMPOSED2002

TOTAL SANCTIONSIMPOSED

2001

PERCENTAGEINCREASE

OIFP CRIMINAL CASES FILED

OIFP Accusations Filed 88 57 54%

OIFP Defendants Charged by Accusation 87 58 50%

OIFP Indictments Filed 85 35 143%

OIFP Defendants Charged by Indictment 138 60 130%

OIFP Convictions (Guilty Pleas & Trials) 154 86 79%

OIFP Sentences 159 74 115%

GRAND TOTAL OIFP DEFENDANTS CHARGED 225 118 91%

OIFP FINES IMPOSED

Criminal $ 177,680.00 $ 16,750.00

Civil $ 909,832.00 $ 951,437.00

Restitution $6,787,645.00 $6,839,862.00

GRAND TOTAL OIFP CRIMINAL FINES IMPOSED $7,875,157.00 $7,808,049.00

1%

CIVIL SANCTIONS IMPOSED

OIFP WARNINGS/ CONSENT ORDERS/JUDGMENTSFOR CIVIL INSURANCE FRAUD FINES

Warning LettersIssued

1,713 0 __

Consent OrdersIssued

1,044 1,211 __

TOTAL Dollar Amount $6,344,058.33 $5,119,150 00 24%

OIFP & DIVISION OF LAW CONSENT ORDERS /SETTLEMENTS / JUDGMENTS

Current Resolutions 966 734 32%

TOTAL Dollar Amount $6,446,211.02 $4,043,131 38 59%

GRAND TOTAL CIVIL INSURANCE FRAUDSANCTIONS IMPOSED

3,723 1,945 91%

$12,790,269.35

$9,162,281.38 40%

GRAND TOTAL OIFP CRIMINAL AND CIVILPENALTIES IMPOSED

3,948 2,063 91%

GRAND TOTAL OIFP CRIMINAL AND CIVILMONETARY SANCTIONS IMPOSED

$20,665,426.35 $16,970,330.38 22%

Individuals Charged Criminally By Indictment or Accusation

134

86118

225

0

50

100

150

200

250

1999 2000 2001 2002Year

Indi

vidu

als

Cha

rged

EXHIBIT B

Civil Insurance Fraud Actions

788

1646

1945

3723

0

500

1000

1500

2000

2500

3000

3500

4000

1999 2000 2001 2002Year

# of

Act

ions

EXHIBIT C

OIFP Civil Insurance Fraud Sanctions Imposed

$6,750,628.00

$9,162,281.00

$12,790,269.00

$5,269,910.00

0.00

2,000,000.00

4,000,000.00

6,000,000.00

8,000,000.00

10,000,000.00

12,000,000.00

14,000,000.00

1999 2000 2001 2002

Year

Dol

lar A

mou

nt o

f San

ctio

nsEXHIBIT D

OIFP Civil and Criminal Monetary Sanctions Imposed

$11,665,107.00

$16,970,330.00

$20,665,426.00

$8,279,956.00

0

5000000

10000000

15000000

20000000

25000000

1999 2000 2001 2002Year

Dol

lar A

mou

nt o

f San

ctio

ns

EXHIBIT E