53 Charged In Automobile Insurance Fraud
ISSUED: 11/16/2000
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In New York-Defendants Purposely Caused Automobile Accidents With Innocent Victims Superintendent Neil D. Levin, Loretta E. Lynch, United States Attorney for the Eastern District of New York, Barry W.Mawn, Assistant Director in Charge, Federal Bureau of Investigation in New York, and Jay Skidmore, Inspector in Charge, U.S.Postal Inspector Service (New York), today announced the filing of criminal charges against 53 defendants for their participation in a large-scaled insurance fraud ring that purposely caused at least 27 automobile accidents since 1996 in Brooklyn, Queens, Manhattan, Hempstead, long Island in order to file bogus bodily injury and medical treatment under no-fault insurance policies. More than 200 agents of the FBI, U.S. postal Inspection Service and the New York State Insurance Fraud Bureau were dispatched this morning at 6:00 a.m. to execute the arrests.
The charges are the result of a 10-month multi-agency investigation into no-fault insurance fraud in the New York City area. The Department’s Frauds Bureau estimates that fraudulent no-fault insurance claims resulting from staged accidents amounts to tens of millions of dollars a year in New York State, and hundreds of millions of dollars nationwide. Based on the evidence reviewed to date, the loss in this case exceeds $1 million.
The scheme described in the criminal complaint unsealed today operated as follows.1 Owner and managers of medical clinics paid "runners," or recruiters, to arrange automobile accidents and send individuals supposedly injured in the accident to the clinics for treatment. The runners recruited drivers to cause the accident and passengers to ride in the cars. Usually, two to four passengers were recruited to maximize the profit per accident. After the drivers picked up the passengers, they went in search of their victims. According to the complaint, the drivers often targeted vulnerable drivers such as women riding alone, women with small children, and elderly people. These innocent victims were chosen in order to minimize the risk of confrontation at the scene of the accident. Of the 27 accidents described in the complaint, 21 involved accidents in which cars occupied by innocent victims were hit by defendants participating in the scheme. The other six accidents involved cars owned or insured by members of the ring hitting each other. In fact, one of the ring members who acted as a passenger in an accident, JEAN MAXON LUCIEN, actually sued himself under an alias as the owner of the vehicle used to cause the accident.
Although the accidents were intended to cause no real injury to the defendant drivers or passenger, the accident were reported to the police so that a record could be created to support the fraudulent insurance claims. The runners then directed the defendant passenger to clinics for bogus medical treatment, often driving the passenger there themselves. The clinics then submitted claims under the insurance policy of the runner so another ring member who had insured the car. The medical bills, which often reached $10,000-$20,000 per passenger, could go as high as $50,000 per passenger under New York law. The medical service for which the ring members sought payment from insurers were not necessary, and many such service were not actual provided at all. In addition, the claims for insurance were routinely inflated. Typically, the defendant passenger falsely claimed multiple injuries to various parts of their bodies in order to maximize their fraudulent claims. In addition, according to the complaint, the defendant passenger filed fraudulent lawsuit against insurance companies alleging bodily injury. Settlement of these lawsuits ranged from $3,500 to $22,000 per passenger.
Today’s arrest s included defendants at all levels of the scheme, specifically, 4 runners/ recruiters who staged the accidents (3 of whom also acted as drivers who caused the accidents), 6 additional drivers who caused the accidents, 7 owners of vehicles used in the accidents (including the 4 runners/recruiters), and 38 passengers who collected thousands of dollars on bogus bodily injury claims. The runners/recruiters are: FRANTZ MEVS,ROODY MOISE, BINSONN GUILLAUME and WALDON DESIR; MEVS, MOISE and GUILLAUME also acted as drivers in eight of the accidents. The other drivers charged in the scheme are: MASON ALEXANDRE, WILFRANTZ, ALIX ALTENOR, FRANTZ LAFLEUR, PIERRE SALTEMA, and VINCENT VIRGILE. The seven vehicles owners are: FRANTZ HILAIRE, MARTINE ROMAN and DANIEL RICHARD, as well as runner/ recruiters JEAN MAXON LUCIEN, GUILLAUME, DESIR and MOISE. JEAN MAXON LUCIEN, a runner/recruiter and leader of the scheme who participated in 11 staged accidents, was arrested previously on similar fraud charges.
Those arrested today also included RUSLAN ERLIKH and ALEXANDER LAKHTER, owner/managers of a medical clinic, formerly known as Medical Arts Rehabilitation and located at 26 Court Street in downtown Brooklyn, where several of the defendant passengers were treated, and SOFIYA NAZAROVA, a billing clerk at that clinic. During a search of the clinic on August 23, 2000, agents discovered evidence of kickback payments to runner/recruiters as well as fraudulent bills to insurance companies in which the unauthorized signature of doctors has been cut out from other documents and pasted onto the fake bills.
The defendants arrested today are scheduled to have preliminary appearances this afternoon before United States magistrate Judge A. Simon Chrein at the United States Courthouse in Brooklyn. If convicted, the defendants each face up to ten years in prison and a $250,000 fine on the health care fraud charge, and up to 5 years imprisonment and a $250,000 fine on the mail fraud charge. In addition, the defendants, RUSLAN ERLIKH, ALEXANDER LAKHTER and SOFIYA NAZAROVA each face up to 5 years imprisonment and a $250,000 fine on the false statements charge. The government’s investigation into this scheme is continuing.
In announcing the arrests, United States Attorney LORRETTA E. LYNCH state: "The economic harm of this fraud is substantial, and it impacts all of us who pay for automobile insurance by raising our insurance rates. But there is another concern here which cannot be measured in dollars, and that is public safety. These defendants were willing to risk serious if not fatal injury to innocent victims for their illicit personal gain by causing automobile accidents on city streets. The arrests today should send the message that this conduct will not be tolerated." Ms. Lynch commended the FBI, Postal Inspection Service and New York State Insurance Fraud Bureau for their outstanding efforts in this joint investigation. She also thanked the National Insurance Crime Bureau ("NICB") for its invaluable assistance in the investigation.
Assistant Director in Charge (FBI) BARRY W. MAWN stated: "These defendants used the streets of New York as their own amusement park – playing a game of "bumper cars" – not for fun, but for profit. They formed a profitable business enterprise based entirely upon deceit. The accidents were no accident- the injuries were faked – the medical tests were phony – and the insurance claims were fraudulent. What is real is the effect these staged car accidents have had on everyone’s insurance rates."
Postal Inspector in Charge JAY SKIDMORE, stated: "This particular scheme is especially outrageous, as it literally placed the lives of innocent citizens at risk to line the pockets of the unscrupulous promoters. In this case, the combined resources of law enforcement were marshaled to quickly identify and arrest the perpetrators, thus directly safeguarding the public from this heinous scheme to defraud."
Superintendent NEIL D. LEVIN stated: "The message is clear – New York State will stop at nothing to dismantle these crime rings and protect consumers from insurance fraud which increases auto insurance costs for New York’s honest premium paying consumers. I would like to applaud the hard work done by the US Attorney’s Office, the Federal Bureau of Investigation, the Postal Inspection Service, and our investigators. These arrests are the latest example of the Insurance Department’s tough anti-fraud effort. Under Governor Pataki’s leadership we have devoted new resources to weed out insurance fraud and our efforts to protect New York State consumers from insurance fraud and higher rates are working – arrests are up 178% and convictions are up 145% since 1995."