Ohio Director Unveils ‘Top 10 Fraud ‘ List

Ohio Insurance Director Ann Womer Benjamin has released the Department’s annual “Top 10 Insurance Fraud” list, noting that the agency had posted a dramatic increase in the number of completed cases, criminal indictments, and convictions.

“Insurance fraud is unethical and illegal, it destroys consumer confidence, and costs all of us hundreds of dollars a year in added insurance costs,” Womer Benjamin said. “The Department will continue to combat insurance fraud in Ohio, and we will be diligent in our efforts to root out and punish those who break the law.”

The Department recently reorganized its Investigative and Licensing Office to more aggressively combat insurance fraud and oversee the conduct of Ohio insurance agents and companies. These efforts include the creation of the agency’s Illegal Health Insurance Operations (IHIO) Task Force, which since it’s creation last September has taken action against three illegal health plans and is currently investigating another six organizations.

In 2002, the Fraud Unit received 1,146 fraud referrals with a total claim value of more than $13 million. The Department’s eight fraud investigators closed 234 cases last year, a 32 percent increase from the previous year. Individuals referred to county and federal prosecutors for criminal prosecution resulted in 47 indictments and 43 convictions for insurance fraud or related crimes – a 47 and 34 percent increase, respectively, from 2001.

In 2002, the Enforcement Unit opened 729 cases and referred 336 for administrative action, a 41 and 50 percent increase, respectively, from 2001. Sixty-five agent licenses were revoked and eight were suspended for violations of insurance law. In addition, 65 applications for licenses were denied for not meeting the minimum qualifications outlined in state law.

The Fraud and Enforcement Division’s top 10 cases from 2002 are listed below:

1. COMPANY DEFRAUDED INVESTORS OF MORE THAN $105 MILLION IN VIATICAL FRAUD

The largest insurance fraud investigation undertaken in the history of the Department, which included cooperation with the United States Attorney’s Office, the Federal Bureau of Investigation, the Internal Revenue Service, and the United States Postal Inspection Services, led to the January 2002 indictment of John Richard Jamieson, operator of Toledo-based viatical settlement company Liberte Capital Group, and the convictions of James A. Capwill, operator of Liberte’s escrow agency, and 19 other individuals. The group reportedly fraudulently obtained multiple life insurance policies in order to swindle insurance companies and nearly 3,000 investors of more than $105 million in a nationwide viatical settlements and investments scheme. Jamieson’s trial is currently set for May 22. Last week, Capwill pleaded guilty to one count of money laundering in exchange for 159 other charges against him being dropped. He faces up to 12 years in prison.

2. INVESTIGATION LEADS TO SENTENCING OF FAKE WORLD TRADE DEATH CLAIMANT

Cincinnati resident Ajay Chawla gained national notoriety for being one of the first people to try to reportedly cash in on the World Trade Center tragedy by allegedly filing a false insurance claim for $100,000 with CNA Insurance Company. He contended that his father was killed in the collapse of the twin towers, but the elder Chawla was actually found to be alive and living in India. Ajay Chawla was convicted Sept. 30 in Butler County Common Pleas Court of insurance fraud, theft, and telecommunications fraud, and was sentenced to 12 months in prison.

3. DAYTON-AREA BILLING SCAM UNCOVERED

Greg Knoderer, the former owner and operator of a multi-disciplinary medical practice in the Dayton-area that included three chiropractors and one medical doctor, was convicted Oct. 7 in federal court for over-billing and inflating the level of services provided to patients. The reported fraudulent billings totaled approximately $1.5 million over an 18-month period. Knoderer pleaded guilty to one count of aiding and abetting mail fraud and was placed on probation for three years and ordered to pay restitution.

4. OVER-BILLING SCHEME NETTED THOUSANDS FOR CHIROPRACTOR

An Ohio chiropractor who owned a number of clinics around the state – including two in Hamilton County that were the focus of a Department inquiry. Investigators learned that he trained his staff to allegedly over-bill insurers, billed patients for visits they did not make, and had “runners” obtain accident reports so that he could bill insurance companies for “free consultations” offered to automobile accident victims. The fraudulent efforts even reportedly included staging an accident involving his girlfriend as the supposed victim of a hit-and-run accident. He was convicted Dec. 13 of insurance and workers’ compensation fraud in excess of $300,000 and was placed on probation for two years in lieu of serving an 18-month prison sentence.

5. LICKING COUNTY ARSON-FOR-HIRE RING UNTANGLED

For years, the Godbolt family reportedly operated an arson-for-hire ring in Licking County. The family would allegedly purchase homes, over-insure them and then burn them down. They would also burn down other people’s houses on contract to enable those people to collect the insurance proceeds. Phillip, Summer, Allen, Delphine, and Ulyssess Godbolt were convicted between Feb. 4 and Sept. 18 of various crimes including aggravated arson, insurance fraud, engaging in a pattern of corrupt activity, and theft, and were sentenced to prison terms of between one and eight years. Prosecutors believe the ring netted nearly $860,000.

6. LICENSE REVOCATIONS OF INDICTED SECURITIES DEALER & ASSOCIATE PENDING

Insurance license revocations are pending for Powell securities dealer Vernon W. Shiflett and associate Paul L. Edwards, an insurance agent from Marion. Shiflett was indicted in December by a Licking County grand jury on 35 felony counts related to the allegedly fraudulent sale of promissory notes. He has been accused of running fraudulent promissory note and partnership schemes though 22 Columbus-based investment companies and bilking nearly 705 investors nationwide out of $29 million – actions in which Edwards allegedly also conspired. The Department has alleged both Shiflett and Edwards violated Ohio insurance law by soliciting investors, some of whom were previous insurance clients, to invest in non-insurance products such as limited-liability partnerships and promissory notes purportedly used to raise funds for several concert promotion companies. Allegedly, the money from at least 12 of Edwards’ customers totaling more than $186,000 was never invested and instead, individual investments ranging from $10,000 to $30,000 were diverted to Shiflett. Edwards was recently indicted on 28 felony counts including one count of engaging in a pattern of corrupt activity.

7. THEFT LEADS TO FELONY CONVICTION

The Department revoked Julie A. Borck’s license on Sept. 9 for reportedly misappropriating $20,000 – which was used to feed a gambling habit – from the title agency in which she was a part owner. Borck was convicted Aug. 21 of theft, a fourth-degree felony, in Stark County. Borck printed checks made out to herself from three agency accounts.

8. AGENT RIPS-OFF CONSUMERS IN ANNUITY SCAM

The license of Franklin County agent Dunyasha Yetts was revoked on May 24 in relation to the reported misappropriation of $35,000 from his annuity customers. The Department determined the former agent allegedly forged surrender requests and cashed in annuities without his clients’ knowledge. Yetts is currently the subject of an investigation by federal authorities.

9. DISHONEST AGENT SWINDLES 23 TRUSTING CLIENTS

The Department revoked the license of Hamilton County agent Scott J. Christmon on August 14 for reportedly misappropriating more than $11,000 in insurance premiums from 23 clients. Christmon later made full restitution to his victims.

10. FORGED CHECKS COST AGENT HIS LICENSE

Former Hamilton County agent Bryan Pifer allegedly forged surrender requests and cashed in annuities totaling $50,000 with his clients’ knowledge – even after his license was revoked on April 15 for the same illegal conduct. The Hamilton County prosecutor’s office is pursuing a criminal investigation.