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OFFICE OF INSURANCE FRAUD PROSECUTOR | Car Insurance In nj
1. A
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OFFICE OF E
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INSURANCE FRAUD
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PROSECUTOR
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2000
Office of Insurance Fraud Prosecutor
Division of Criminal Justice
Department of Law and Public Safety
2. ANNUAL REPORT
OF THE
OFFICE OF INSURANCE FRAUD PROSECUTOR
FOR CALENDAR YEAR 2000
(Pursuant to N.J.S.A. 17:33A-24d)
Submitted
March 1, 2001
John J. Farmer, Jr.
Attorney General
Kathryn Flicker John J. Smith, Jr.
Director, Division of Criminal Justice Acting Insurance Fraud Prosecutor
Prepared by:
Office of Insurance Fraud Prosecutor
Division of Criminal Justice
Department of Law and Public Safety
P.O. Box 094
Trenton, NJ 08625-0094
(609) 896-8888
3.
4. ACKNOWLEDGMENTS
The Acting Prosecutor would like to thank the following people for their contributions to the
preparation of the 2000 Annual Report:
DAG Stephen D. Moore, Liaison to County Prosecutors
Judy Burton, Administrative Assistant
Paul Loriquet, OAG Public Information Officer
Paula A. Carter, Senior Analyst
Michelle M. Apgar, Acting Civil Supervisor
John Butchko, Liaison to Industry
Mitzi Gross, Senior Management Information Systems Technician
SDAG John R. Krayniak
ASDAG Scott Patterson
DAG Jennifer Fradel
Charles A. Janousek, Liaison to Professional Boards
Annie Meredith, Special Projects Coordinator
Sgt. Thomas A. Semon, New Jersey State Police
Patricia G. Miller, Administrative Assistant
Patricia Walinski, Managing Assistant
Shari Grace, DCJ Media Coordinator
SSI Craig Perrelli
SSI Martin Schwartz
SSI Joseph Buttich
SSI Walter L. Braxton, III
Lynn Wasserman, Secretarial Assistant
Helen D. Hager, Secretarial Assistant
Gloria D. Tennesen, Secretarial Assistant
AMDCI Quinton W. Collins, Sr.
DCI Jules Mateo
Nora Schaffener, Office Manager
The Acting Prosecutor would also like to thank all Deputy Attorneys General, State
Investigators and support staff assigned to the OIFP for their outstanding work, dedication and
professionalism during calendar year 2000. The number and significance of OIFP’s criminal
prosecutions continue to draw national recognition. The continued quality of OIFP’s civil
investigations and the amount of monies collected as insurance fraud fines pursuant to consent
orders have served to define the credibility and excellence of OIFP. The commitment and
professionalism of each person assigned to OIFP are hereby acknowledged with pride and gratitude.
Finally, the Acting Prosecutor wishes to thank former Insurance Fraud Prosecutor Edward
M. Neafsey, and acknowledge his leadership and guidance which served to provide a solid basis
upon which the Office of Insurance Fraud Prosecutor could achieve all that it has.
i
5. PREFACE
The Office of Insurance Fraud In accordance with the Reorganization
Prosecutor (OIFP) was created pursuant to Plan, the Division of Insurance Fraud
the provisions of the Automobile Insurance Prevention in the Department of Banking
Cost Reduction Act (AICRA) P.L. 1998, c.21, and Insurance was transferred to, and
on May 19, 1998. As observed by the officially became part of, the Office of
Legislature in the preamble to the Act, Insurance Fraud Prosecutor within the
fraud, whether in the form of inappropriate Division of Criminal Justice, Department of
medical treatments, inflated claims, staged Law and Public Safety, on August 24, 1998.
accidents, falsification of records, or any Assistant Attorney General Edward Neafsey
other form, must be uncovered and was sworn in as New Jersey’s first
vigorously prosecuted. According to the Insurance Fraud Prosecutor on October 28,
Legislative statement accompanying the 1998. Upon the departure of Insurance
Act, OIFP was established to “provide for a Fraud Prosecutor Neafsey on July 1, 2000
more effective investigation and prosecution to accept appointment as New Jersey’s first
of fraud than exists at the present time.” Inspector General, Assistant Attorney
General John J. Smith, a career prosecutor
As required by the Act, the OIFP was in the Division of Criminal Justice and the
established in the Division of Criminal Office of Insurance Fraud Prosecutor, was
Justice in the Department of Law and appointed as Acting Insurance Fraud
Public Safety under the direction of the Prosecutor.
Insurance Fraud Prosecutor, who is
appointed by the Governor, approved by the OIFP is charged under AICRA with the
Senate, and subject to the supervision of investigation of all types of insurance fraud,
the Attorney General. and serves as the focal point for criminal,
civil and administrative investigations and
In order to ensure the effective prosecutions of insurance and Medicaid
coordination of the anti-fraud efforts of fraud within New Jersey. OIFP is also
various state agencies charged with responsible for coordinating all insurance
combating insurance fraud, AICRA fraud programs and activities among state
required, among other things, that certain and local departments and agencies to
civil enforcement functions of the Division ensure a well integrated, cohesive and
of Insurance Fraud Prevention in the uniform statewide strategy for combating
Department of Banking and Insurance be insurance fraud. The following constitutes
transferred to the Office of Insurance Fraud the second Annual Report of OIFP to the
Prosecutor pursuant to a plan of Governor and Legislature pursuant to
reorganization (Reorganization Plan 0007- N.J.S.A. 17:33A-24d, which requires that
98), which Governor Christine Todd OIFP annually provide a report of activities
Whitman presented to the Legislature in conducted during the prior calendar year.
June of 1998.
ii
6. STATEMENT OF THE PROSECUTOR
The Office of Insurance Fraud Prosecutor insurance fraud enforcement policy.
(OIFP) has completed two full years of
operation. Like the Division of Criminal Criminal investigations and prosecutions
Justice of which OIFP is part, OIFP has serve to deter all those who might be inclined
continued to establish itself as a leading law to engage in insurance fraud conduct. I am
enforcement agency, accepting the most pleased to report that OIFP has once again
difficult and complex fraud matters for achieved some extraordinary criminal case
investigation and prosecution. In its first two results. Those results are highlighted in this
years of operation, OIFP resolved many of report.
those investigations with results extremely
favorable to the State of New Jersey. I am also extremely pleased to report that
the County Prosecutors’ Offices, which play
It is my firm belief that the wisdom and an integral role in OIFP’s statewide strategy,
foresight of the New Jersey Legislature in have in calendar year 2000, with the
crafting the Automobile Insurance Cost assistance of the Office of Insurance Fraud
Reduction Act (AICRA) and creating the OIFP Prosecutor, both in terms of resources and
has made New Jersey a leader in insurance training, also achieved extraordinary criminal
fraud detection, investigation and enforcement. case results. Some of those criminal case
New Jersey has the benefit of having three results are also highlighted in this report.
effective enforcement options available to
address insurance fraud: criminal The very nature of many insurance fraud
investigations and prosecutions; civil matters dictates that civil insurance fraud
investigations and a statutory mechanism to investigations and the imposition of statutory
impose civil insurance fraud fines; as well as insurance fraud fines are a vital component of
professional licensing and other administrative New Jersey’s insurance fraud enforcement
sanctions. These three enforcement options options. While criminal investigation and
provide the corner stones for successful prosecution is the preferred legal remedy for
insurance fraud enforcement. many insurance fraud matters, it is not always
the most appropriate legal remedy. Matters
As mandated by the Automobile Insurance involving small amounts of money stolen or
Cost Reduction Act (AICRA), the OIFP has attempted to be stolen, as well as facts and
successfully assisted in coordinating the evidence which may not support the extremely
conduct of other New Jersey state departments high burden of proof required for criminal
and agencies having responsibility for these convictions, are oftentimes best addressed
three enforcement options. Through thorough either through the imposition of a civil
OIFP case investigations to fully develop the insurance fraud penalty with the consent of
facts and the evidence, a well informed the subject of the civil fraud investigation, or
decision can be made as to whether or not to through civil litigation to impose a civil
proceed with one, two or all three of the above insurance fraud penalty. I am pleased to
enforcement options with respect to a given report that OIFP has achieved significant civil
insurance fraud matter. In this way, OIFP can insurance fraud case results and some of
successfully select the most appropriate legal those results are also highlighted in this
remedy and develop a comprehensive statewide report.
iii
7. It should be noted that OIFP has played a efforts have been featured in national
significant role in the coordination of publications, its Public Awareness Media
professional license sanctions, working closely Campaign has earned prestigious media
with other state agencies having responsibility industry awards, and its staff have been
for professional licensing matters. I am recognized for outstanding performance.
therefore pleased to report the results of
professional licensing penalties and sanctions Finally, while it is appropriate to point out
in this report. some of the successes and highlights of OIFP
operations from the past year, I must also
OIFP also continued to serve as a focal point out that insurance fraud is becoming no
point for continued communications and easier to detect, investigate and prosecute.
dialog with the insurance industry. Several The conduct of those who engage in fraud is
working groups were formed during calendar becoming increasingly more sophisticated.
year 2000 consisting of representatives from Additionally, it is no easier prosecuting these
the OIFP, other state agencies, and insurance often complex white collar criminal and civil
carriers to develop recommendations to cases in either criminal or civil courts where
improve the flow of information required to crimes of violence and other cases frequently
successfully investigate insurance fraud fill all too crowded court dockets, resulting in
allegations and to improve the remedies the fact that insurance fraud cases may, at
available to the State to address insurance times, be given less priority.
fraud. Several of those recommendations are
included at the conclusion of this report. Nevertheless, OIFP remains firmly
committed and dedicated to advocating that
In addition to civil and criminal case insurance fraud cases be addressed as
investigations and prosecutions, AICRA significant civil and criminal cases, and that
imposed a host of other obligations upon OIFP. these cases yield results that continue to deter
Among those obligations is the responsibility to any person who would defraud the insurance
educate the public about insurance fraud. industry and the citizens of the State of New
OIFP continued its Public Awareness Media Jersey through false insurance claims and
Campaign with radio and TV ads designed to similar schemes. As OIFP looks to the future,
broadcast a message of deterrence. These ads I believe the coming year promises continued
followed those public awareness messages significant criminal and civil case results
broadcast during OIFP’s first year of based on investigations that were opened and
operations, which sought assistance from the worked during calendar year 2000.
public to report suspected insurance fraud.
This report will begin with a brief
As noted in this report, OIFP’s summary of some of the insurance fraud case
accomplishments over the past two years have highlights achieved by the Office of Insurance
not gone unnoticed. In the year 2000 OIFP’s Fraud Prosecutor during 2000.
John J. Smith, AAG
Acting Insurance Fraud Prosecutor
iv
11. CRIMINAL CASE HIGHLIGHTS
O IFP o pe n e d 519 cri mi n al sentences obtained also required 110 years
investigations of 746 subjects allegedly of probation, $1,130,630 in restitution, and
involved in insurance or Medicaid fraud and $403,350 in criminal and civil penalties.
obtained 75 convictions in the year 2000. The following case summaries demonstrate
OIFP prosecutors also obtained sentences the continuing progress of OIFP’s efforts to
for 45 defendants. As the chart below investigate and prosecute insurance fraud
reflects, 19 defendants were sentenced to in its second full year of operation.
more than 34 years of incarceration. The
Name of Defendant Date of Jail Time Type of Insurance Fraud
Sentencing
Spencer, Kevin 1/7/00 3 years Theft (false health care claims)
Romero, Abigail 1/28/00 3 years Agent (bribery police accident reports)
Baker, Sheree 2/25/00 30 days Theft (false health care claims)
Anthony, Mark 5/9/00 5 years Medicaid fraud (false rx)
Butler, Elaugh 6/23/00 3 years Theft (false health care claims)
Lester, Lucy 6/30/00 4 years Theft (false health care claims)
Newman, Willie 6/30/00 90 days VOP, conspiracy, theft, false health care claims
Ivashenko, Alexander 7/7/00 180 days Theft (false health care claims)
Hernandez, Fabian 7/7/00 4 years Possession of stolen cars used in phony
insurance claims
McDaniel, Darlene 7/28/00 180 days Theft (health care claims money from provider)
Rampersad, Vernon 8/4/00 180 days Medicaid-inflating patient transportation
mileage charges
Alvarez, Samuel 10/6/00 94 days False PIP insurance claim
Usarzewicz, Steven 11/3/00 3 years Agent fraud
Milman, Boris 11/13/00 60 days Medicaid fraud (false transportation claims)
Soyfer, Alexander 11/13/00 60 days Medicaid fraud (false transportation claims)
Schultz, Anthony 12/1/00 364 days Added name to police report to make false
insurance claim
Carmona, Yolanda 12/1/00 162 days Medicaid, unlicensed practice of medicine,
endangering welfare of a child
7Murry, Tommie 1/5/01 3 years Medicaid fraud (false drug and counseling
claims)
7Fagan, John 1/12/01 3 years Writing a false police report for a stolen vehicle
TOTAL 34 YEARS - 10 months
7As reflected above, the Murry and Fagan sentences were not imposed until after January 1, 2001. It is
anticipated that these two sentences will also be reported in the 2001 Annual Report, however they are
included here in as much as both Murry and Fagan entered guilty pleas as part of significant OIFP
prosecutions during 2000.
1
12. INSURANCE FRAUD UNIT - CASE HIGHLIGHTS
HEALTH CARE CLAIMS FRAUD by deception and official misconduct. She
was sentenced to three years state prison
Fraud by Licensed Professionals and ordered to make restitution to the State
State v. Carl Lichtman, et al. As OIFP Health Benefits Program. Sheree Baker, a
previously reported, one of the largest lower level conspirator, was sentenced to 30
insurance fraud cases in the State’s history days in the Bergen County Jail, restitution
continued to advance significantly during of $2,950 and insurance fraud fines in the
the past year. Carl Lichtman, a former amount of $2,500. Willie Newman was
licensed psychologist, conspired with nearly sentenced to 90 days in the Bergen County
200 people to defraud the State Health Jail for violating probation based on his
Benefits Plan and approximately 35 other conspiracy with Dr. Lichtman. By the close
insurance carriers or health care plans out of 2000, approximately 190 individuals had
of more than $3.5 million for no show been prosecuted for involvement in the
treatments for “neurotic depression.” Lichtman conspiracy. Cases against the
Lichtman pocketed the money he received remaining co-defendants are pending in
for the bogus treatments and then kicked court.
back 25 percent to those persons who had
provided their insurance information to him State v. Alexander Ivashenko On July 7,
to submit the fictitious claims. Lichtman 2000, Alexander Ivashenko, a formerly
was able to steal millions from the carriers licensed physical therapist and Chief
because he started a referral system in Operating Officer for a string of physical
order to recruit new “patients” so he could therapy offices in New York and northeast
fraudulently bill their carriers. Lichtman New Jersey, was sentenced for theft in his
would typically pay $750 to a “recruiter” for "pocketing" of excess medical claims
each person brought into the scheme. payments which resulted in the
Some of the conspirators recruited as many victimization of over 100 patients and
as a dozen people into the scheme. insurance organizations. Ivashenko was
sentenced to five years probation
On February 18, 2000, Kevin Spencer, conditioned on serving 180 days in county
an active recruiter of “patients,” was jail, 200 hours of community service and
sentenced to a three year state prison the payment of $75,000 in restitution. The
sentence, required to pay an insurance restitution payment, which Ivashenko made
fraud fine of $10,000 and restitution of immediately following his sentencing, will
$11,094. Lucy Lester was convicted be divided among as many as 48 patients,
following trial of conspiracy, theft by and 58 insurance carriers and self-insured
deception and official misconduct. She was organizations.
sentenced on June 30, 2000 to four years
state prison and ordered to make State v. Anthony B. Spain, D.M.D. On
restitution of $7,965 to the State Health December 11, 2000, Anthony Spain pled
Benefits Program. Elaugh Butler was also guilty to an Accusation charging him with
convicted following trial of conspiracy, theft falsifying records relating to orthodontic
2
13. treatment he had provided to two minor Phony Medical Bills
children. He had received Medicaid and State v. Sharon DaCosta-Barrett, et al.
direct payments from the children’s mother On February 25, 2000, Sharmaine Wilson
over a three year period, but in a sum less was sentenced, following her guilty plea to
than he normally would have been paid. a charge of theft from Blue Cross/Blue
He sought to make up the shortfall through Shield, to five years probation. Her
a claim to a dental insurance plan (Delta husband, Edwin Wilson entered a plea and
Dental) in which the mother had recently was admitted to the Pre-Trial Intervention
enrolled, misrepresenting the period of Program. Previously, co-defendant Sharon
treatment and billing prospectively for work DaCosta-Barrett, a former Blue Cross/Blue
already completed and paid for. Spain Shield health insurance claims processor,
voluntarily made restitution to the carrier was sentenced to four years in state prison
while the investigation was pending. This for causing the issuance of fraudulent
case was scheduled for sentencing on claims checks in excess of $97,000 to her
February 16, 2001. It will also be referred husband, Clive Barrett; her sister,
to the dental Professional Licensing Board Sharmaine Wilson; and her brother-in-law,
for appropriate professional licensing Edwin Wilson. As a condition of Ms.
action. Wilson’s probation and Mr. Wilson’s
admission into the Pre-Trial Intervention
“Slip and Fall” Program, they agreed to be jointly
State v. Bruce Robert Tarlowe On April responsible for the payment of $32,562 in
13, 2000, Bruce Robert Tarlowe, a licensed restitution, which represented one third of
insurance agent in the State of New Jersey, the total dollar amount stolen. Clive
was charged by a State Grand Jury with Barrett pled guilty to theft on March 17,
health care claims fraud and attempted 2000. On June 2, 2000, he was also
theft by deception. It is alleged that sentenced to five years probation
Tarlowe staged a phony "slip and fall" conditioned upon the payment of $32,562
accident, and claimed that he fell as the in restitution.
result of lettuce lying on the floor of the
produce aisle in an A&P Supermarket. The State v. The Healing Clinic, Hudson
indictment further alleges that Tarlowe Neurological, Inc. Florida Medical
submitted more than 20 health insurance Supply and Mario Macias T h r e e n o w
claims, totaling more than $5,700 to United defunct corporations, The Healing Clinic
States Life Insurance Company for injuries Incorporated, Hudson Neurological, Inc.
purportedly resulting from the accident. and Florida Medical Supply, and their
During the court proceedings, Tarlowe former manager and corporate officer, Mario
challenged the appropriateness of charging Macias, were previously indicted for
health care claims fraud based on this defrauding numerous insurance carriers of
conduct, but the court denied his motion. more than $86,000. According to the
This case remains pending in court. indictment, the medical providers billed the
health insurers for medical services that
were never rendered and for medical
equipment that was never provided. On
March 17, 2000, the corporate defendants
3
14. entered guilty pleas. The Healing Clinic sentenced to 180 days in the Union County
pled guilty to one count of attempted theft Jail as a condition of probation, ordered to
by deception, and was later sentenced to make restitution of $33,500 and ordered to
pay an insurance fraud penalty of $10,000, perform 200 hours of community service.
as well as other fines, and restitution in the
amount of $48,041. Also on that date, State v. Joanne Panico O n M a y 2 6 ,
Hudson Neurological pled guilty to one 2000, a former insurance adjuster, pled
count of attempted theft by deception, and guilty to an Accusation charging health
was later sentenced to pay a civil care claims fraud. Joanne Panico, formerly
administrative penalty in the amount of employed by Blue Cross/Blue Shield as a
$10,000, as well as other fines and Team Service Representative, was charged
restitution in the amount of $33,572. with defrauding her employer of
Florida Medical Supply also pled guilty to approximately $3,500 by electronically
one count of attempted theft by deception, manipulating claims in order to issue
and was later sentenced to pay an checks in her husband’s name for services
insurance fraud penalty of $10,000, as well never rendered. Panico was sentenced to
as other fines, and restitution in the four years probation and was ordered to
amount of $5,283. The case against the pay restitution to Blue Cross, as well as a
individual defendant, Mario Macias, is still $5,000 civil insurance fraud fine.
pending in court.
State v. Barbara Moran On November
State v. Carrell Martin and Darlene 28, 2000, Barbara Moran pled guilty to
McDaniel On March 8, 2000, Carrell health care claims fraud and forgery arising
Martin and Darlene McDaniel were indicted out of her submission of several fraudulent
on second degree charges of conspiracy and health care claims to Prudential Insurance
theft by deception. The indictment charged Company. Moran filed the fraudulent
Darlene McDaniel, an employee of Family claims for reimbursement of medical
Health Center (FHC), a subsidiary of Union services, which she claimed she received
Hospital, with diverting approximately and paid for, but were never actually
$77,000 in checks issued by US Healthcare provided. Moran submitted receipts from
to FHC by portraying Martin as an various doctors, which she altered, to
osteopathic physician entitled to the support her fraudulent claims. Under the
money. After being diverted by McDaniel, plea agreement, Moran is required to pay a
the checks were ultimately deposited into $5,000 civil insurance fraud fine. Her
Carrell Martin’s bank account and the sentencing was scheduled for January 19,
proceeds split by McDaniel and Martin. 2001.
The stolen money represented payments to
FHC for medical services provided to State v. Charlene Vaughan a.k.a.
various patients. On May 15, 2000, Carrell Charlene Jordan On June 16, 2000,
Martin pled guilty to conspiracy charges Charlene Jordan was sentenced to three
and was sentenced to three years probation years probation and ordered to make
and restitution of $33,500. Defendant $9,015 in restitution after pleading guilty to
McDaniel pled guilty to conspiracy and theft by deception. Jordan, who then used
theft by deception charges and was her married name of Charlene Vaughan,
4
15. worked as a claims adjuster for GRE State v. Lorna Kitson On April 14, 2000,
Insurance in Princeton. At GRE, she Lorna Kitson was indicted for attempted
defrauded her employer by issuing theft by deception stemming from her
fraudulent payments to an outside alleged submission of health care bills in
consultant for fictitious services. Vaughan the name of herself and others to two
forged the consultant’s signature and insurance carriers. Between 1995 and
cashed the checks. 1997, Kitson, who had worked for
Hackensack University Medical Center,
State v. Xun-Cheng Huang On February allegedly submitted bogus health insurance
25, 2000, a State Grand Jury returned a claims to Connecticut General Life
ten count indictment against Xun-Cheng Insurance Company (CIGNA) and Provident
Huang, a former professor of mathematics Life and Accident Insurance Company
at New Jersey Institute of Technology totaling more than $220,000 and received
(NJIT). The Hudson County resident was approximately $146,000 from those
charged with one count of health care carriers. CIGNA’s fraud unit referred the
claims fraud, three counts of theft by investigation to OIFP in March 1999.
deception, falsification of records relating to
medical care, and three counts of forgery. AUTO INSURANCE FRAUD
The indictment alleges that from False Auto Theft Claims
January, 1995 through September, 1996, State v. Tok Hwan Bae On September 6,
while employed at NJIT, Huang submitted 2000, Tok Hwan Bae pled guilty to a one
over 100 false claims for medical services in count Accusation charging attempted theft
excess of $40,000 for reimbursement by deception for his role in the submission
through the State Health Benefits Program. of phony invoices to Allstate Insurance
Upon leaving his employment at NJIT, he is Company. In October 1998 Bae filed a
alleged to have submitted an additional 20 stolen vehicle claim with Allstate for his
fraudulent claims in excess of $2,500 under 1990 Mercedes 300 SL, allegedly stolen
insurance coverage obtained by his from a restaurant in New York. He
daughter while a student at the University submitted two invoices, later proven to be
of Pennsylvania. For most claims, the bogus, in support of his $4,000 claim for
named medical provider did not exist and custom wheels. Bae received a six month
was allegedly a fictitious provider created by PTI term and paid a $3,000 civil fine.
Huang. For those claims where the
medical provider did exist, the claimed State v. John B. Fagan On October 12,
services were never provided. Huang failed 2000, West Orange police officer John B.
to appear for his arraignment and a warrant Fagan pled guilty to an Accusation charging
for his arrest has been issued. one count of official misconduct based on
his writing of a false West Orange Police
automobile theft report stating that a Land
Rover Discovery SUV had been stolen.
Fagan also admitted that he had written a
second false police report representing that
his own vehicle, a Jeep Cherokee had been
5
16. stolen. Automobile theft and related claims Protection (PIP) claim seeking more than
totaling approximately $40,000 were $2,500 from CNA Insurance Company for
submitted to three separate insurance medical visits which he purportedly
companies. On January 12, 2001 Fagan underwent as the result of the accident.
was sentenced to three years in state Schultz had entered a guilty plea to an
prison, a civil insurance fraud fine of Accusation charging health care claims
$8,000 and restitution in the amount of fraud on September 9, 2000.
$9,056.
“Give-Up” Schemes
Fake Property Damage Claims State v. Pablo Cordero, et al. In
State v. Fabian Hernandez On June 19, February 1999, New Jersey State Police
2000, Fabian Hernandez pled guilty to a Auto Unit and OIFP investigators arrested
one count Accusation charging receiving Pablo Cordero and twelve other New Jersey
stolen property. On July 7, 2000, Bergen residents for their roles in “giving up” their
County Superior Court Judge Meehan vehicles to a New York Police Department
sentenced Hernandez to a four year state police officer posing as a “chop shop”
prison sentence for his role in possessing operator. On January 28, 2000, Cordero
several stolen vehicles utilized in a property was sentenced to three years probation for
damage insurance fraud scheme. Among his role in bringing vehicles to the
the stolen vehicles investigators found on undercover New York garage. Additionally,
Hernandez’s North Bergen lot were a 1990 Cordero agreed to cooperate with NJSP
BMW 535, a 1992 BMW 325i, a 1996 Auto Unit detectives and OIFP investigators
Nissan Maxima, a 1992 Lexus GS 400, and to pose as a tow truck driver who could
a 1995 Ford Thunderbird. Hernandez dispose of “give up” vehicles to develop
received the vehicles, valued at other cases. From February 1999 through
approximately $82,000, between June 1995 Octo be r 2000, Cordero bro u ght
and November 1997 and then changed their investigators eleven vehicles with an
vehicle identification numbers to file bogus approximate value of $105,000.
property damage claims with the carriers.
On February 10, 2000, NJSP Auto Unit
Jump In Claims detectives, in conjunction with OIFP
State v. Anthony Schultz On December investigators, arrested 20 defendants as
1, 2000, Anthony Schultz, was sentenced to part of this “sting” operation. The arrested
five years probation conditioned on his defendants included eight middlemen and
serving 364 days in the Camden County twelve owners, including two municipal
Jail for causing his name to be added to a police officers.
Pennsauken Police automobile accident
report. After being identified in the Each of the defendants was charged
Pennsauken Police accident report as with conspiracy to commit theft by
having been involved in the accident when deception. The owners allegedly filed false
in fact he was not, a fraudulent practice police reports and fraudulent affidavits of
known as a “jump in,” Schultz then filed an vehicle theft to support their claims to the
automobile insurance Personal Injury carriers that their vehicles had been stolen.
6
17. Six different insurance carriers were locations in the first large-scale, organized
defrauded into paying stolen vehicle claims. auto insurance fraud ring prosecuted under
the new Health Care Claims Fraud Act.
State v. Mark Francekevich On February Arrest warrants were also obtained for two
4, 2000, the Office of Insurance Fraud additional defendants who remain fugitives.
Prosecutor filed an Accusation and The complaints charge Anhuar Bandy with
accepted a guilty plea from Mark being a leader of organized crime, and with
Francekevich to charges of attempted theft conspiracy to commit racketeering and
by deception and false swearing. The health care claims fraud. Bandy is charged
charges were based on Francekevich’s with paying people to stage automobile
fraudulent insurance claim to Rutgers collisions in order to obtain patients for
Insurance Company that his Mitsubishi numerous chiropractic clinics he allegedly
Eclipse had been stolen when it was owned and operated, thereby generating
actually “given up,” and on the false billings under the Personal Injury
affidavit of vehicle theft he submitted in Protection (PIP) portion of automobile
support of that claim. On March 10, 2000, insurance policies. As a result, OIFP has
Francekevich was sentenced to two years identified numerous allegedly fraudulent
probation and a civil insurance fraud fine of claims submitted to insurance carriers
$4,000. throughout the state. Another target of this
investigation, Alejandro Ventura, was
State v. Bruce Michael Garry On October charged with conspiracy to commit
13, 2000, Bruce Michael Garry was racketeering and health care claims fraud
sentenced to two years probation and for arranging the automobile collisions and
payment of a civil insurance fraud fine in recruiting the participants.
the amount of $1,000. Garry was
sentenced for his conduct in “giving up” a During the past year, six individuals
Nissan Pathfinder, and falsely reporting to involved in staged accidents, some staged
the West New York Police Department that accidents also involving undercover State
the Pathfinder had been stolen. After the Investigators, have entered guilty pleas.
false report to the police, Garry submitted Five of the six individuals entered guilty
a fraudulent insurance claim in the pleas to conspiracy to commit theft by
approximate sum of $27,725 to State Farm deception. Another entered a guilty plea to
Insurance Company, falsely claiming that a charge of attempted theft by deception for
the Nissan Pathfinder had been stolen. causing claims in excess of $10,000 to be
submitted to Selective Insurance Company
Staged Accidents for treatment purportedly rendered to him
State v. Anhuar Bandy, et al. The at a Bandy operated clinic, when in fact, he
prosecution of this alleged large scale had not even been a passenger in the
staged accident ring advanced significantly vehicle involved in the staged accident.
in 2000. Previously, ten people were Total insurance claims for the four staged
arrested and search warrants were accidents in which the arrested defendants
executed at eight chiropractic clinics and allegedly participated was in excess of
medical offices in several New Jersey $108,000. The cases against several of
7
18. those arrested, as well as against others indictment charging Campbell with
identified as the result of extensive conspiracy and bribery in official matters.
investigation, is pending further The indictment was based on Campbell’s
prosecution. payment of approximately $1,200 to an
undercover Newark police officer to obtain
Fake Accidents Newark Police automobile accident reports
State v. Phillip Major, et al. This case in order for Campbell to solicit the persons
also significantly advanced as 18 identified in those reports for filing
defendants pled guilty to charges of theft or insurance claims. Campbell is due to
attempted theft by deception during year return to court for sentencing later this
2000 as part of the continuing investigation year.
and prosecution of former East Orange
police officer Phillip Major and others. State v. Abigail Romero On January 28,
Major previously pled guilty to official 2000, Abigail Romero, a "runner" who paid
misconduct and related charges for approximately $1,800 in bribes to an
fabricating police accident reports. The undercover Newark police officer to
pleas from these 18 defendants accounted purchase police reports for use in the
for some $167,000 of the $900,000 in solicitation of persons to make automobile
fraudulent insurance claims which have insurance claims, was sentenced to three
been tied to Major’s malfeasance. It is years in state prison. She had previously
anticipated that, with the cooperation of been indicted by a State Grand Jury and
these defendants, as required under the charged with conspiracy, bribery in official
terms of their guilty pleas, additional matters, and official misconduct for paying
subjects will be charged in 2001. the undercover officer bribe money to
obtain police automobile accident reports.
In a related case, Mark Bendet (a Romero would then refer the persons
disbarred attorney), Imelda Toquero (a identified in those police accident reports to
nurse and Bendet’s estranged wife) and receive chiropractic treatment and file
Eddie Boyd (a suspected runner) were automobile insurance claims.
indicted in 2000 on charges of second
degree bribery and second degree State v. Jerome F. Bollettieri and
conspiracy to commit bribery and official Thomas DiPatri On October 20, 2000,
misconduct stemming from their alleged the Office of Insurance Fraud Prosecutor
involvement with a medical practice known obtained and executed arrest warrants for
as Metro Medical Services. On June 9, Lt. Jerome F. Bollettieri, the officer in
2000, OIFP caused the arrests of Bendet charge of the Camden County Police
and Toquero in Texas and their return to Department Records Section, and retired
New Jersey to face those charges. Camden Police Department Sergeant
Thomas DiPatri. Bollettieri and DiPatri
Using “Runners” were arrested and charged with conspiracy
State v. James Lee Campbell On to commit official misconduct and official
December 2, 2000, James Lee Campbell, a bribery. It is alleged that they accepted
runner, pled guilty to a State Grand Jury money in return for providing Camden
8
19. Police Department automobile accident made a claim worth $15,935 on her
reports to other individuals in order for homeowners’ policy for vandalism and
those individuals to solicit the persons property allegedly damaged or stolen during
identified in those police accident reports to a burglary. To support her claim, Tomasso
become patients and submit automobile allegedly provided false information to the
insurance claims. The OIFP’s investigation insurance carrier about the items that were
in this matter is continuing and additional stolen or damaged. The false information
charges are anticipated. included receipts for property that was
returned to the seller before the burglary,
Phony Auto Insurance Documents and forged receipts for nonexistent
State v. Joann Sullivan On December 15, purchases. The carrier stopped payment on
2000, Joann Sullivan waived indictment the claim after discovering the bogus
and pled guilty to a one count Accusation receipts. The case is pending in Superior
charging theft by deception in the third Court.
degree. The indictment charged Sullivan
with obtaining $8,855 from First Trenton State v. Paul LoPapa On October 25,
Indemnity by creating or reinforcing the 2000, Paul LoPapa was indicted by a State
false impression that she was entitled to Grand Jury on 15 counts charging him with
compensation for lost wages and essential theft and attempted theft by deception,
services under the Personal Injury misconduct by a corporate official, failure
Protection (PIP) component of her to file a New Jersey Income Tax-Resident
automobile policy as a result of an accident Return, failure to pay New Jersey Gross
she was involved in on July 23, 1997. The Income Tax with intent to evade, falsifying
investigation revealed that Sullivan falsified records and forgery. The investigation
three letters purportedly from her medical leading to the indictment was conducted
providers in order to collect lost wages and jointly by the New Jersey State Police and
essential services from her automobile OIFP. In addition to a fraudulent real
carrier. Essential services include payment estate financing scheme, the indictment
by an insurance carrier for assistance with charges LoPapa with attempting to file a
household work, child care and other fraudulent insurance claim under his
miscellaneous chores which would have homeowners’ policy in the sum of $33,400
normally been performed by the insured. for purported water damage. The case is
These payments were made directly to pending trial.
Sullivan. Sullivan was scheduled to be
sentenced on February 16, 2000. LIFE INSURANCE FRAUD
PROPERTY INSURANCE FRAUD State v. Lucille Dennis On October 16,
2000, the State Grand Jury returned a 14
State v. Athena J. Tomasso On count indictment against Lucille Dennis for
September 15, 2000, Athena J. Tomasso allegedly attempting to collect accidental
was indicted on attempted theft and forgery death benefits for her late husband and
charges in connection with a false brother, both of whom died natural deaths.
homeowners’ claim. Tomasso allegedly Typically, these attempts were allegedly
9
20. made by altering police reports and/or money. On January 12, 2001 Greenfield
death certificates to reflect accidents which was sentenced to three years probation,
never occurred. These attempts are alleged and restitution in the amount of $65,232.
to have taken place between 1995 and 1998 Because he was a licensed insurance agent,
against five different insurance companies. the OIFP referred Greenfield’s criminal
The most recent attempt involves an alleged conviction to the Department of Banking
effort to collect on a $1 million accidental and Insurance for appropriate action with
death policy. In that case, it is charged that respect to Greenfield’s insurance agent’s
Dennis enrolled her husband for the license.
accidental death benefits three months
after he had already passed away. Dennis State v. Richard Leavitt On August 25,
is currently a fugitive and a bench warrant 2000, a former licensed insurance producer
has been issued for her arrest. who operated an insurance agency in
Somerville, NJ, pled guilty to theft by
INSURANCE AGENT FRAUD deception and falsifying records for failing
to remit $16,924 in premium funds to an
State v. Steven M. Usarzewicz On insurance company on behalf of an insured
November 3, 2000, Steven M. Usarzewicz, a for an automobile policy. Leavitt
formerly licensed insurance producer and fraudulently collected the premium funds
securities dealer, was sentenced to three from the insured, Atlantic Sports
years in state prison after pleading guilty to Management, for coverage for seven
the looting of over $100,000 from the trust vehicles which were purportedly insured by
funds and insurance policies of a client’s New Hampshire Insurance Company, even
two minor children. On December 8, 2000, though the policy had not been renewed
the sentencing court also ordered that and was no longer in effect. Leavitt kept
Usarzewicz make payment of restitution in the premium money and used it for
the sum of $106,810. personal expenses. Leavitt also admitted to
producing a fraudulent auto insurance
State v. Joseph Greenfield On November identification card for one of the vehicles
9, 2000, Joseph Greenfield, a licensed purportedly insured under the policy. On
insurance agent in New Jersey, pled guilty October 20, 2000, he was sentenced to
to an Accusation charging theft by three years probation and was ordered to
deception. The Accusation charged pay full restitution and a $5,000 insurance
Greenfield with theft of approximately fraud fine.
$65,232 representing insurance premiums
for a variety of insurance policies including CONTRACTOR FRAUD
commercial auto and multi-peril insurance,
accident/sickness coverage and workers’ State v. Jeffrey Nemes On December 18,
compensation, along with a “floater” for 2000, Jeffrey Nemes, a Hamilton Twp.
equipment damaged or lost, which he sold police officer was charged with theft by
to the Marlboro Township Board of Fire failure to make required disposition of
Commissioners, Fire District #2. Greenfield money in excess of $75,000. The
purposely overcharged the fire district for indictment alleges that Nemes, who
the insurance coverage and kept the excess operated a construction business in
10
21. addition to being a Hamilton Twp. police Unemployment Insurance Fraud
officer, stole in excess of $75,000 in State v. Renee Brown; State v. Zina
insurance claim money from several Shivers On August 29, 2000, two persons
persons who suffered property damage to were separately indicted by a State Grand
homes or commercial businesses that they Jury for allegedly falsifying official
owned. This case remains pending in documents in order to obtain thousands of
court. dollars in unemployment insurance to
which they were not entitled. Allegedly
PUBLIC ADJUSTER FRAUD Brown received more than $15,000 and
Shivers over $8,000.
State v. Michael Winberg On September
22, 2000, Michael Winberg, a licensed State v. Anthony Pagan; State v. Mark
public adjuster, was indicted for allegedly DiNacola; State v. Vanegas Wilborne;
stealing over $15,000 which represented State v. Darnell Toliver; State v.
the insurance proceeds settlement checks Bernard Wilson On September 29, 2000,
from two clients. The indictment alleges five persons were separately indicted by a
that Winberg, in his capacity as a licensed State Grand Jury for allegedly falsifying
public adjuster working for American official documents in order to obtain
Adjustment Agency of Bordentown, New thousands of dollars in unemployment
Jersey, was retained by two homeowners to insurance to which they were not entitled.
negotiate settlements with Prudential Allegedly, Toliver received over $8,000,
Insurance Company following damage to DiNacola received almost $12,000 and
their homes from a storm. Prudential Pagan received over $8,500.
issued five checks, each made payable to
one of the homeowners and American State v. Walter Harris; State v.
Adjustment Agency as co-payees. Winberg, Constance Odoemena-Henderson; State
allegedly had each homeowner endorse the v. Pamela Mundy; State v. Andegdo
checks, then cashed them and kept the Naccillo On December 4, 2000, four
money for his own personal use. The case persons were separately indicted by a State
is pending in court. Grand Jury for allegedly falsifying official
documents in order to obtain thousands of
LABOR FRAUD1 dollars in unemployment insurance to
As a result of a cooperative effort among which they were not entitled. Allegedly
OIFP, the Labor Prosecutions Unit of the Harris received more than $9,000 and
Division of Criminal Justice, and the New Odoemena-Henderson received over
Jersey Department of Labor, the following $7,000.
unemployment insurance fraud cases and
workers’ compensation cases were filed:
1
All cases reported in the Labor Fraud section
of OIFP’s Annual Report may also be reported elsewhere
by the Division of Criminal Justice.
11
22. State v. Johhny Medrano; State v. operated by the Division of Workers’
Gregory K. Jones; State v. Denise Compensation within the New Jersey
Dinielli; State v. Charles Gosha; State v. Department of Labor. Huggins admitted
Camille Buffa; State v. Frank Tarantino; that she forged the name of a deceased
State v. Deborah Brown On December associate, who had legitimately received the
18, 2000, seven persons were separately benefit payments until his death in
indicted by a State Grand Jury for allegedly September 1989. She also admitted to
falsifying official documents in order to fraudulently obtaining $63,784 in disability
obtain thousands of dollars in benefits from New Jersey Manufacturers
unemployment insurance to which they Insurance Company for the same time
were not entitled. Allegedly, Medrano period and same deceased associate.
received more than $12,000, Tarantino
received over $12,000, Buffa received over State v. Leonard Lipman On September
$9,000 and Jones received almost $9,000. 25, 2000, Leonard Lipman pled guilty to an
These cases are pending in Court in various Accusation charging failure to provide
stages of prosecution. workers’ compensation coverage. Lipman
admitted that an employee was injured
Workers’ Compensation Insurance Fraud while working for him at Serene Restaurant
State v. Lawrence Ford, Sr. On Equipment Corporation and agreed to pay
September 18, 2000, Lawrence Ford, Sr. $73,248 to the Uninsured Employer Fund
was sentenced pursuant to an indictment of the New Jersey Department of Labor.
charging him with theft by deception and
forgery for cashing more than $150,000 MEDICAID FRAUD UNIT - CASE
worth of workers’ compensation checks HIGHLIGHTS
issued to his deceased father. Ford was
sentenced to five years probation and given Medical Treatment Fraud
five days jail credit. The case had been State v. Tommie Murry and The Excel
referred by the Division of Workers’ Center, Inc. On August 1, 2000,
Compensation after new computer defendants Tommie Murry and The Excel
technology designed to uncover workers’ Center, Inc., a subsidiary of Facilities
compensation fraud revealed potential Management Associates, Inc., entered guilty
fraud. pleas in Superior Court, Mercer County, to
the crime of theft by deception pursuant to
State v. Maude E. Huggins On November the terms of a plea agreement negotiated
8, 2000, Maude E. Huggins pled guilty to with OIFP. Murry, formerly the Executive
an Accusation charging second degree theft Director of the Excel Center, together with
by deception, third degree theft by that corporation, admitted to defrauding the
deception and two counts of fourth degree Medicaid Program of approximately
forgery. The charges stem from her falsely $600,000 through the submission of false
endorsing $200,430 worth of benefit checks claims for group and individual therapy
from New Jersey Manufacturers Insurance sessions which never occurred. The Excel
Company and the State of New Jersey. By Center had operated as a substance abuse
pleading guilty, she admitted that she treatment center in Vineland, New Jersey.
fraudulently obtained disability benefits
from the Second Injury Fund, a program As a result of these guilty pleas, on
12
23. January 5, 2001, defendant Murry was State v. Alice Yolanda Carmona On
sentenced to three years in state prison and October 23, 2000, defendant Carmona pled
the corporation was sentenced to and paid guilty to a one count Accusation charging
a fine of $10,000. Both defendants Medicaid fraud. Carmona was an employee
consented to an order debarring them from of a mental health clinic and after the
participation in the Medicaid Program and doctor left the clinic, Carmona, who was not
waived any claims to approximately $1.7 licensed as a medical care practitioner,
million that had previously been forfeited in continued to provide mental health
connection with the case. counseling to Medicaid patients.
State v. Yogendra Sharma Yogendra On December 1, 2000, Carmona was
Sharma, the sole owner and operator of sentenced to three years probation and 162
Advanced Optical, previously pled guilty to days timed served in the Cumberland
a one count Accusation of health care County Jail. She was also debarred from
claims fraud, for recklessly committing the Medicaid program for a minimum
health care claims fraud in the course of period of five years. As indicated elsewhere
providing professional services. Sharma, an in this report, Carmona also pled guilty to
optometrist, billed Medicaid for services Cumberland County charges relating to the
which were never prescribed by a physician unlicensed practice of medicine.
and which were never provided by Sharma
to Medicaid recipients. The majority of his Medicaid Laboratory Fraud
patients were elderly. On February 8, State v. Venditti Clinical Laboratory, et
2000, Yogendra Sharma was sentenced in al. On August 1, 2000, Venditti Clinical
Mercer County to four years probation, Laboratory of South Plainfield, Mohammed
ordered to pay restitution in the amount of Saleem, Iftikhar Hussain and Abdul Hafeez
$2,951, and a criminal fine of $12,000, and Raja, owners and operators of Venditti
to serve 100 hours of community service. Clinical Laboratory were indicted for
Additionally, he was debarred from conspiracy, Medicaid fraud and misconduct
Medicaid and any similar health insurance by a corporate official. The defendants
programs for a minimum of five years. The allegedly paid almost $347,000 in
judge ordered Sharma’s optometrist license kickbacks to encourage clinic owners to
to be suspended for one year during which submit blood samples to the laboratory to
time he is barred from the practice of the undergo an expensive panel of diagnostic
profession. tests. All the samples submitted were from
Medicaid recipients and paid for by the
Medicaid Program. The defendants
allegedly attempted to hide the kickback
payments by writing checks from the
Venditti business account to fictitious
business entities controlled by the various
clinic owners. This case is pending trial in
Middlesex County.
13
24. State v. Janet Scarpitta On October 23, practitioner with one count of health care
2000, Janet Scarpitta, the former manager claims fraud. Aly was also indicted for one
of Roseville Medical Center in Newark, and count of health care claims fraud as a non-
Amad, Inc., also in Newark, was indicted for practitioner. The defendants owned and
conspiracy, Medicaid fraud, and theft by operated Paterson Community Pharmacy in
deception. Scarpitta was charged with Paterson. It is alleged that the defendants
fabricating blood requisition forms in purchased prescriptions for Serostim, an
connection with fraudulent blood tests expensive anti-AIDS medication. It is also
purportedly performed by United Diagnostic alleged that the defendants did not
Laboratory and causing Medicaid to be dispense the medication but submitted a
billed approximately $129,991 for expenses claim for reimbursement to the Medicaid
related to the purported blood testing. In Program, and received approximately
addition, while working as office manager of $170,000 in Medicaid payments. It is
Amad, Inc., Scarpitta is alleged to have further alleged that in an attempt to cover
deposited into her bank account 17 checks up their crime, the defendants submitted
totaling $5,877 made payable to three false invoices to establish that their
doctors, without the authorization of those inventory contained the amount of drugs
doctors. The case is pending trial in provided. This matter is pending in Passaic
Monmouth County. County.
Medicaid Drug Fraud Medicaid Transportation Fraud
State v. Mark Anthony On May 9, 2000, State v. I&I Invalid Coach, Imad
Anthony was sentenced to five years in Elbashir and Imadelin Khair On
prison after he pled guilty to one count of November 29, 2000, Imad Elbashir,
health care claims fraud. Anthony engaged Imadelin Khair and I&I Invalid Coach were
in a scheme to defraud the Medicaid indicted for conspiracy, health care claims
Program by forging prescriptions for high- fraud, theft by deception, Medicaid fraud,
priced drugs. Using stolen or purchased and corporate misconduct. I&I was an
Medicaid cards, he had these prescriptions invalid coach provider in Clifton, New
filled at pharmacies which in turn billed the Jersey, owned by defendants Imad Elbashir
Medicaid Program. Anthony then sold the and Imadelin Khair, that provided non-
drugs on the street for a fraction of their emergency medical transportation to
value. OIFP investigators from the Medicaid recipients. It is alleged that,
Medicaid Fraud Section, were able to between November 15, 1995 and July 27,
determine that Anthony was responsible for 1999, I&I inflated mileage on claims
over $250,000 in Medicaid billings before submitted to the Medicaid Program and
he was apprehended. received $90,000 more than it was entitled
to for services rendered. In addition, the
State v. Hanan Selim, Wail Aly and defendants are alleged to have paid cash
Paterson Community Pharmacy On kickbacks to several Medicaid recipients in
March 3, 2000, a State Grand Jury indicted exchange for their continued patronage.
the defendants for conspiracy and Medicaid The matter is pending in Passaic County.
fraud. Additionally, Hanan Selim, a
licensed pharmacist, was charged as a
14
25. State v. Lakshminarine Rampersad On with the furnishing of Medicaid services.
August 4, 2000, Rampersad, the owner of Sentencing for Bilenkin was scheduled for
First Invalid Coach Company in Landing, February 5, 2001.
Morris County, was sentenced to 180 days
in the Morris County Jail and placed on State v. Alaa Baker and Ali Baker On
probation for three years. Rampersad also April 28, 2000, Alaa and Ali Baker, owners
was disqualified from participation as a of Royal International Trade and Services,
transportation provider in the New Jersey Inc., were indicted by a State Grand Jury
Medicaid Program for a minimum period of for conspiracy, theft by deception,
eight years and relinquished all rights to misconduct by a corporate official and
$172,400 in claims submitted by him that Medicaid fraud. The defendants, through
had been held in abeyance until the their company, provided transportation
conclusion of this case. This case was services to Medicaid recipients in the
referred to the Medicaid Fraud Section in Monmouth County area. They allegedly
the OIFP by the Division of Medical submitted approximately 1,902 fraudulent
Assistance and Health Services. An audit claims for services not rendered and
had revealed unusually high mileage inflated mileage charges on other claims
charges which was confirmed by OIFP resulting in losses of approximately
investigation. $138,380 to the Medicaid Program. Both
defendants were arrested in Virginia and,
State v. Genady Chulak; State v. Elana after an extradition hearing, ordered to
Bilenkin On December 14, 2000, a jury appear in Monmouth County Superior
found Genady Chulak, owner of GGE Court. Both defendants failed to appear
Impact Corp. t/a Medicall, guilty of theft by and arrest warrants were issued for them.
deception, Medicaid fraud, and misconduct
by a corporate official. Chulak defrauded State v. Rafik Raziq On November 30,
the Medicaid Program by submitting 2000, a State Grand Jury returned an
approximately $400,000 in false claims. He indictment charging Rafik Raziq with theft
falsely certified to the Medicaid agency the by deception, misconduct by a corporate
mileage driven to transport Medicaid official and Medicaid fraud. Raziq was the
recipients, which was greatly in excess of owner and manager of Absolute Transport
the mileage actually driven. Additionally, and Limousine Service in Monmouth
Chulak had provided illegal kickbacks to County. He is alleged to have unlawfully
Medicaid recipients in the form of cash, obtained more than $140,000 from the
checks and other valuable items. State Medicaid Program by submitting
Sentencing for Chulak was scheduled for claims for services that were not rendered
February 20, 2001. On December 5, 2000 and inflating mileage charges on other
Elana Bilenkin, wife of Genady Chulak and claims. A warrant has been issued for
co-owner of GGE Impact Corp. t/a Medicall Raziq’s arrest.
pled guilty to one count of Medicaid fraud,
for knowingly and willfully making false
statements of material fact on Medicaid
claim forms, and one count of Medicaid
fraud for offering kickbacks in connection
15
26. State v. Alexander Soyfer, Boris Milman, alleged to have submitted false expenses on
Vadim Boguslavskiy and A&B Invalid cost reports to the Medicaid agency. The
Coach Company On March 29, 2000, the allegedly fraudulent expenses are related to
defendants were indicted by a State Grand a bus that Stone Arch purportedly used for
Jury for conspiracy, theft, Medicaid fraud patient care but which was actually
and misconduct by a corporate official. The inoperable. It is also alleged that Stone
defendants operated A&B Invalid Coach in Arch reported to Medicaid the salary and
Woodbridge, New Jersey. They were health benefits of an alleged "no-show"
charged with defrauding the Medicaid employee who was the daughter of the
Program by submitting approximately nursing home owner. The case is pending
$141,000 in false claims, falsely certifying in Mercer County.
to the Medicaid agency that recipients were
in need of invalid coach services when they State v. M&G Livery and Transportation,
were not. They also inflated mileage Inc., Gregory Sverdlov, Raisa Zeltser On
charges on claims they submitted. June 21, 2000, the three defendants were
indicted in connection with the operation of
On October 2, 2000, defendants Milman a livery transportation company called M&G
and Soyfer pled guilty to Medicaid fraud. Livery and Transportation, Inc. The
On November 13, 2000, the defendants indictment variously charged Gregory
were each sentenced to four years Sverdlov, Raisa Zeltser and the corporation
probation, ordered to spend 60 days in the with conspiracy, Medicaid fraud, theft by
Middlesex County Jail, and to pay $42,153 deception, and misconduct by a corporate
restitution, as well as to debarment from official.
the Medicaid Program. On December 18,
2000, defendant Boguslavskiy pled guilty to Sverdlov and Zeltser, who were married,
one count of Medicaid fraud. His are alleged to have fraudulently operated
sentencing was scheduled for February 20, M&G Livery and Transportation, Inc. by
2001. paying kickbacks to induce Medicaid
recipients to use their company, by billing
State v. Stone Arch Health Care Center, for people ineligible to receive Medicaid, by
Inc., Nancy Tofani and David Hofstetter transporting Medicaid recipients to
On February 14, 2000, a State Grand destinations not allowable under Medicaid
Jury indicted David Hofstetter, Nancy regulations and by submitting false
Tofani and Stone Arch Health Care Center information on Medicaid forms to avoid
Inc., for conspiracy, theft by deception, and Medicaid scrutiny. This matter is currently
Medicaid fraud. David Hofstetter and pending trial in Union County.
Nancy Tofani were also indicted for
misconduct by a corporate official. Stone
Arch is a nursing home owned by defendant
Hofstetter. Nancy Tofani is the
administrator of Stone Arch. This case
involves approximately $104,566 in alleged
Medicaid fraud. The defendants are
16
27. OIFP-CRIMINAL
OIFP’s criminal cases are investigated by health care providers, such as doctors,
State Investigators within the Division of dentists, chiropractors, etc. or by individual
Criminal Justice, Department of Law and patients, or by others providing health care
Public Safety, who are assigned to the OIFP. related services, such as medical billing and
Deputy Attorneys General within the invalid transportation businesses. Health
Division of Criminal Justice, also assigned care claims fraud occurs when a person or
to OIFP, prosecute OIFP’s criminal cases. business makes a misrepresentation in a
These Deputy Attorneys General and health claim for benefits under a policy of
investigators are assigned to squads in the health insurance. See N.J.S.A. 2C:21-4.2.
Insurance Fraud Unit or the Medicaid For example, health care claims fraud is
Fraud Unit of OIFP, which are each headed committed when a physician knowingly
by a Supervising Deputy Attorney General. submits bills for unnecessary medical
Investigators within these units report to a procedures or for medical services that were
Supervising State Investigator, who, in not provided. Similarly, a patient commits
turn, reports to the Deputy Chief health care claims fraud when submitting a
Investigator in charge of OIFP -Criminal. claim for medical benefits for treatment of
The Deputy Chief Investigators in charge of feigned injuries, when submitting false
OIFP-Criminal and OIFP-Civil are medical receipts for reimbursement or,
supervised by OIFP’s top ranking when as an accomplice, a healthcare
investigator, the Managing Deputy Chief provider submits a false or inflated claim for
Investigator, who oversees all OIFP shared benefits.
investigators and investigations, both civil
and criminal. Currently, the OIFP According to the United States General
Managing Deputy Chief Investigator Accounting Office, health care fraud losses
position is vacant. The Deputy Chief may constitute as much as ten percent of
Investigator-Criminal has been serving as our nation’s annual health care
both the Deputy Chief Investigator-Criminal expenditures. In addition to increasing our
and as the Managing Deputy Chief health care insurance premiums, health
Investigator for OIFP, following the care claims fraud may also adversely affect
departure of the former Managing Deputy the quality of medical care rendered by
Chief Investigator to join the Inspector those committing health care fraud and
General’s Office on August 11, 2000. diminish available funding for medical
research.
The Insurance Fraud Unit of OIFP
investigates and prosecutes all types of Because false or inflated health care
insurance fraud, most of which involve claims frequently arise in the context of
either health, automobile, homeowners, or automobile accidents, these claims also
commercial insurance policies. Health impact the premiums charged for the
insurance fraud constitutes a significant Personal Injury Protection (PIP) components
portion of cases handled by OIFP. Health of car insurance in New Jersey. OIFP
care claims fraud may be committed by places a high priority on the prosecution of
17
28. individuals and practitioners engaging in screen” of law enforcement by the use of
health care claims fraud, as exemplified by aliases supported by phony credentials,
its prosecutions of phony clinics and such as false social security numbers and
medical mills, often times associated with counterfeit drivers’ licenses. Because of the
staged accident rings. potential for serious injury to innocent
victims, staged accidents pose a significant
Staged accidents are among the crimes of threat to the safety of the public.
most concern to OIFP because of the threat
to the safety of the motoring public and OIFP has also committed to the
innocent bystanders. In this type of prosecution of fraudulent automobile
insurance fraud, the subjects plan and insurance theft claims resulting from
intentionally cause a motor vehicle staged auto thefts, sometimes referred to as
collision, often purposely involving “give-ups.” In these cases, an automobile
unsuspecting motorists in the “accident.” owner or lessee purposely abandons or
Typical staged accident scenarios involve disposes of the insured automobile in order
passing an innocent motorist and abruptly to fraudulently collect the insurance
braking, causing the motorist to appear at proceeds, frequently turning the vehicle
fault by causing him to crash into the rear over (the “give-up”) to an intermediary.
of the subject’s vehicle; or waving an Often those who lease automobiles stage
unsuspecting motorist from a stop sign or these vehicle thefts to avoid the substantial
parking spot and then quickly proceeding to mileage or repair costs which might
crash into the unsuspecting motorist, again otherwise have to be paid by the lessee
in an attempt to make the unsuspecting upon the return of the vehicle to the leasing
motorist appear at fault. Other staged company at the conclusion of the lease. In
accident scenarios involve an intentional other cases, a theft is staged to enable an
sideswipe in which the driver in the inside owner to recover more than the owner
lane of a dual left turn lane intentionally would have received from the purchaser in
drifts into the outer lane causing a a legitimate sale. Vehicles which are given
collision, and the “hit and run” when the to a middle man may be exported for foreign
subject drives a damaged vehicle to a public resale, quickly disassembled at a “chop
location and falsely reports that the shop” which sells the parts on the black
subject’s vehicle had just been damaged by market or uses the parts in conjunction
a fleeing driver. with an auto body repair business, or may
be simply destroyed or otherwise disposed
Subjects who stage such events frequently of to prevent the insurance company from
plant coached “witnesses” at the scene of returning a recovered vehicle to the owner
the alleged accident or as passengers in the or lessee. The search of lakes, rivers and
purported accident, and may subsequently ponds frequently reveals automobiles which
work with unscrupulous doctors, lawyers, were the subject of “give-up” thefts. As
or auto repair facilities to fabricate or inflate explained elsewhere in this report, to
claims for injury or property damage. address the growing problem of fraudulent
Those engaged in staging multiple accidents auto theft claims, OIFP-Civil has instituted
sometimes attempt to “fly below the radar a program designated as the “Give-Up
18
29. Initiative,” to focus and coordinate law Medicaid fraud also will have committed
enforcement efforts in the detection, health care claims fraud.
investigation and prosecution of these
phony auto theft claims. The New Jersey Medicaid Program is
generous in its benefits in that it pays for
Medicaid fraud investigations and non-emergency transportation for Medicaid
prosecutions also comprise a significant recipients to and from their homes and the
portion of the criminal case load of the place where a service reimbursed by
OIFP. The Medicaid Program is a state and Medicaid is rendered. The program
federally-funded health insurance program provides different modes of transportation
that pays for the health care needs of the depending upon the Medicaid beneficiaries’
disabled and economically disadvantaged of ability to ambulate without assistance.
our state. In New Jersey, the state and Livery transportation is provided to those
federal government equally share the cost of who can ambulate and do not need
the Medicaid Program. In 2000, OIFP’s assistance going between home and
Medicaid Fraud Unit was responsible for medical services. Mobility assisted
policing the state’s Medicaid Program which vehicles, in the past referred to as invalid
expended over $5.5 billion in medical coach services, are available to those who
assistance payments. The state’s share of are wheelchair bound or not able to
the Medicaid expenditures represents ambulate freely due to a medical or mental
approximately fifteen percent of New condition. These transportation services,
Jersey’s annual budget. while intended to assist the medical needs
of patients, also present an inviting target
The Medicaid Fraud Unit investigates and for providers intent upon committing fraud.
prosecutes health care providers such as This fraud is also committed by inflating
doctors, pharmacists, dentists and ancillary the mileage for patient transportation
service providers, who defraud the Medicaid claims, billing for services that were not
Program. As a general rule, the Unit does provided, and falsifying prior authorization
not prosecute Medicaid patients who forms to qualify a recipient for mobility
defraud the program. Rather, these matters assisted services. This service is paid at a
are referred to the state’s Medicaid agency, higher rate than livery service.
the Division of Medical Assistance and
Health Services in the Department of INSURANCE FRAUD UNIT
Human Services. However, if a conspiracy
exists between a Medicaid patient and The Insurance Fraud Unit (IFU) is
provider to defraud the program, the currently overseen by an Acting Supervising
Medicaid Fraud Unit will investigate and Deputy Attorney General, who has been
prosecute all parties in the conspiracy. assigned to the headquarters office of the
Medicaid fraud occurs when a provider OIFP in Lawrenceville since the departure of
fraudulently receives medical assistance the former Supervising Deputy Attorney
payments to which he is not entitled or in a General on August 11, 2000. The Unit’s
greater amount than that to which he is staff of 22 Deputy Attorneys General and 57
entitled. Effective January 15, 1998, with Criminal Investigators is divided into five
the passage of the Health Care Claims squads. Squads one and two are housed in
Fraud Act, a provider who commits OIFP’s north office in Whippany; squads
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