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IBC and insurers team up with law enforcement in fight against insurance fraud on behalf of consumers
A woman is facing charges after a joint Toronto police-Travel Industry Council of Ontario investigation into a plane ticket fraud that allegedly scammed victims out of an estimated $150,000.
According to Toronto police, people booked airline tickets through a woman they believed was authorized to sell them. The woman, who promised low-fare plane tickets to the Philippines, accepted cash and credit card payments, but victims never received the tickets they paid for and had unauthorized charges on their credit card statements.
Toronto police arrested Lorna Natalie Arcega, 38, from the Philippines on Thursday and charged her with four counts of fraud over $5,000, two counts of fraud under $5,000, two counts of uttering a forged document, two counts of false pretence under $5,000, four counts of false pretence over $5,000, three counts of unauthorized use of credit card data and one count of possessing proceeds of a crime under $5,000.
She is scheduled to appear in court on Sept. 23.
The Travel Industry Council of Ontario also laid charges against Arcega under the Travel Industry Act of Ontario, police said.
Police believe there may be more victims and are asking anyone with information to call police at (416) 808-2433 or Crime Stoppers anonymously at 416-222-TIPS (8477)
By Amanda Lee Myers
THE ASSOCIATED PRESS
LOS ANGELES _ Eight people across the U.S. who registered to use Ashley Madison are suing the website for cheaters after hackers released personal and detailed information of millions of users, including financial data and sexual proclivities.
The lawsuits were filed between last month and Monday by Ashley Madison users in California, Texas, Missouri, Georgia, Tennessee and Minnesota. They all seek class-action status to represent the estimated 37 million registered users of Ashley Madison.
The lawsuits, which seek unspecified damages, claim negligence, breach of contract and privacy violations. They say Ashley Madison failed to take reasonable steps to protect the security of its users, including those who paid a special fee to have their information deleted.
Last month, hackers infiltrated Ashley Madison’s website and downloaded private information. The details _ including names, emails, home addresses, financial data and message history _ were posted publicly online last week.
“Needless to say, this dumping of sensitive personal and financial information is bound to have catastrophic effects on the lives of the website’s users,” according to a lawsuit filed Friday on behalf of an anonymous Los Angeles man who created an account with Ashley Madison in March 2012.
“As a result of (Ashley Madison’s) unfair, unreasonable and inadequate data security, its users’ extremely personal and embarrassing information is now accessible to the public,” according to the lawsuit, filed by the Baltimore-based firm of Hammond Law.
Attorney Julian Hammond, who says his firm has litigated class-action lawsuits against companies like Google, Apple and Hulu, said the Ashley Madison breach is unprecedented in his experience.
The website’s users are worried not only about identity theft but about the embarrassment of the release of intimate sexual preferences. Even registering for the site without having an actual affair could put marriages in jeopardy.
“I haven’t seen anything like it,” Hammond said Tuesday.
A spokesman for Avid Life Media, the Toronto-based company that owns Ashley Madison, referred to previously released statements by the company calling the hack malicious and an “act of criminality.”
Avid Life on Monday began offering a $500,000 Canadian (US $378,000) reward for information leading to the arrest of members of a group that hacked the site.
“We will not sit idly by and allow these thieves to force their personal ideology on citizens around the world,” the company said in a statement last week.
The U.S. litigation follows a $578 million lawsuit filed in Canada last week, also seeking class-action status.
The hackers who took responsibility for Ashley Madison’s data breach have said they attacked the website in an effort to close it down as punishment for collecting a $19 fee without actually deleting users’ data.
On Monday, Canadian police said the hack has triggered extortion crimes and led to two unconfirmed reports of suicides.
The credit-card information of U.S. government workers _ some with sensitive jobs in the White House, Congress and the Justice Department _ was revealed in the breach. Hundreds of email addresses in the data release appear to be connected to federal, provincial and municipal workers across Canada.
Compiled by Patricia L. Harman, PropertyCasualty360
Medical Insurance Fraud
Vi Nguyen, Theresa Fisher and Lindsey Hardgraves were indicted on multiple counts of mail fraud by a federal grand jury in Orange County, California, for a scheme that involved billing insurers more than $50 million worth of cosmetic surgery claims. According to a report in the Orange County Register, patients were told they could have “free or discounted cosmetic surgeries” such as “tummy tucks,” “nose jobs,” or liposuction if they agreed to undergo other unnecessary procedures such as endoscopies and colonoscopies, which were then billed back to the insurers.
Workers’ Compensation and Identity Theft
In Naples, Florida, as many as 146 employees of Fruit Dynamics, LLC (also known as Incredible Fresh or Collier County Produce) may have committed workers’ compensation fraud, according to Florida Chief Financial Officer Jeff Atwater. Sixteen employees were arrested during a recent raid on the plant.
The investigation into the fraud began when a former employee sought medical attention using a fake identity and mentioned that some other workers had done the same thing. At least 27 employees were believed to have stolen the identities of individuals from as many as 25 different states. The owners of the identities said they had not given permission for them to be used by anyone. The investigation is ongoing.
No Charity Here
In Texas, according to the Texas Department of Insurance (TDI), more than $10.3 million in insurance fraud was referred for prosecution in 2013. Two of their top fraud cases involved frauds perpetrated against elderly residents.
Leon “Randy” Sinclair, III, was a former insurance agent who successfully convinced more than 30 of his elderly clients to liquidate their assets and place them into charitable gift annuity accounts. It turns out that the only beneficiary of the charity was Sinclair himself, to the tune of $16 million which was misappropriated from the accounts. He was convicted following a 16-month TDI Fraud Unit Investigation and sentenced to 20 years in prison.
In a multi-jurisdictional case that involved the TDI Fraud Unit, the Internal Revenue Service and the Federal Bureau of Investigation, Christopher Purser and Robert S. Mills sold Shoreline Cruises of Lake George, N.Y., fictitious marine insurance. When the Ethan Allen, a cruise ship, sank killing 20 elderly tourists, the company found out it actually had no valid insurance coverage. Both plead guilty to federal charges. Purser was sentenced to more than 15 years in prison. Mills was sentenced to 10 years in prison and ordered to pay $2.45 million in restitution.
Operation Running Man
A Bridgeport, Conn.-based personal injury attorney, Joseph P. Haddad, perpetrated a large-scale conspiracy involving Francisco R. Carbone, a physician whose license was eventually revoked, and Dr. Marc Kirshner, a chiropractor. Haddad used “runners” to find clients for his legal practice, paying them in cash since using runners for personal injury cases is illegal in Connecticut. He regularly sent clients to Carbone, who fabricated injuries and provided prescriptions, bills and medical reports for Haddad and the patients’ insurance companies, frequently without even doing an examination. Haddad also sent clients to Dr. Kirshner, influencing Kirshner to prescribe more diagnostic tests and treatment than the patients required. After six months of treatment, the patient would receive a false permanent partial disability rating. Others in Kirshner’s office were involved in the fraud, which eventually involved 10 carriers and a total loss of $2.5 million.
Carbone and his cohorts were caught in a 14-month undercover fraud investigation headed by the FBI called Operation Running Man. Other agencies involved in the operation included the National Insurance Crime Bureau, Metropolitan Property and Casualty Insurance’s Special Investigation Unit, and the Travelers Insurance Company. Haddad pleaded guilty to one count of conspiracy to commit mail fraud and one count of mail fraud, and faces a maximum term of 20 years in prison for each count and a fine of up to $3.5 million. He also agreed to pay restitution of $1,758,368. Carbone, Kirshner, three other chiropractors and a licensed doctor of osteopathic medicine have pleaded guilty and are still awaiting sentencing.
At Haddad’s sentencing, John Sargent, director of the special investigation unit for MetLife made a victim impact statement to the court, summarizing the extent of the damage done by Haddad and his associates to the insurers, the patients and consumers in general.
BP Oil Spill Restitution
In a highly unusual ruling, a federal judge in New Orleans has ordered the attorneys and accountants who represented a claimant in a shrimping claim following the BP Oil spill in Lake Pontchartrain in New Orleans, to repay nearly a quarter of the $357,000 payment he received.
In 2012, BP and a group of plaintiffs lawyers who represented thousands of residents impacted by the spill, reached a settlement and the company began paying the claims. BP maintained that there were a number of fraudulent payments made and began investigating. Now individuals who made fraudulent claims are getting tough sentences for those actions. Casey C. Thonn and his attorneys are repaying a portion of what they received because the payment was based on phony tax returns. The judge rescinded the $357,000 payment and said attorney Lionel “Tiger” Sutton, III is responsible for repaying $35,700 plus interest from the date of judgment until paid, attorneys Jonathan Andry and Glen Lerner are required to pay the same amount, and an accounting firm retained by the law firm is responsible for repaying $14,280 plus interest. The court has given all parties one month to return the full $357,000 payment.