Former Calif. life insurance agent convicted for faulty notes

Fraud Roundup

California Insurance Commissioner John Garamendi announced the conviction of former life insurance agent Bassem Btadini, 51, also known as Bob Btadini. Btadini entered a no contest plea and was convicted of five misdemeanor counts of Sale of Securities without Qualification, Corporations Code Section 25540(a). Btadini was ordered to repay $397,287 in restitution and $150,000 immediately to four victims, and was placed on a one-year probation.

Btadini was arrested in 2003 after a three-year investigation conducted by the California Department of Insurance’s (CDI) Investigation Division. Btadini had been involved in plea discussions with the Los Angeles County District Attorneys office since the conclusion of his preliminary hearing in 2004.

CDI received several complaints from individuals who were solicited to purchase a living trust by Btadini. He sold some of the individuals annuity products and later persuaded them to invest in nine-month promissory notes. The notes were not qualified for sale in California as required by law. The notes were issued by several out of state “start up companies” seeking capital to maintain and expand their businesses. All of the companies defaulted on the notes, and none of the investors received their promissory note investments back. All of the victims were senior citizens.

Former San Diego broker sentenced in premium theft scam

Former San Diego insurance broker Roberto Molina Jr., 55, was sentenced to 180 days in jail and three years of probation stemming from an investigation by the California Department of Insurance.

Molina was sentenced Feb. 24 for selling insurance policies to several consumers but failing to obtain the insurance. He was the owner and broker of R. Molina Insurance Services, formerly known as Car Insurance Agency. A restitution hearing was scheduled for March 8.

The CDI’s Investigation Division received four complaints during 2002 through 2004, alleging insurance fraud involving premium theft by Molina. Evidence seized from Molina’s office in 2004 reportedly disclosed names of clients and policies that had not been placed after premiums were paid to Molina, according to the commissioner’s office.

Seven individuals who purchased auto insurance policies from Molina were involved in auto accidents. Those victims thought they were insured when in reality they were without insurance coverage because of Molina’s failure to forward the premium funds to the insurance companies.

Since the execution of the search warrants, another victim – a 62-year old woman who suffered personal injuries – reported having an accident in March 2005 after paying Molina for her insurance policy. Unbeknownst to her, she had no insurance coverage at the time of her accident.

The documented total loss from the eight victims is $79,427. On Sept. 20, 2005, during his arraignment hearing, San Diego Superior Court Judge David Szumowski ordered Molina to stop selling insurance.

On Nov. 30, 2005, Molina pled guilty to two felony counts: one count of insurance fraud and one count of grand theft. Prior to sentencing, Molina had already paid $52,000 for the loss caused by accidents of four individual victims.

The amount sought for additional restitution, $70,000, is being evaluated due to personal injuries suffered by two victims and potential additional medical expenses.

Four Riverside, Calif., residents arrested for alleged fradulent auto theft claim

Three Riverside, Calif., residents have been arrested on charges that they allegedly filed a fraudulent auto theft claim on a car that was later found in an orange grove – with a bird’s nest under the hood.

The March 1 arrests of Edward James Richardson Jr., 23, Lourdes Richardson, 45, and Carissa Lambert, 23, came after an investigation by the California Department of Insurance (CDI). An additional suspect in the case, Edward James Richardson Sr., was arrested on March 2. All four are accused of filing a fraudulent claim with Clarendon National Insurance Co.

Richardson Jr. is charged with six felonies: abandoning insured property; presenting a fraudulent insurance claim; filing a fraudulent motor vehicle claim; providing false statements in support of an insurance claim; false police report; and perjury. Richardson, Lambert, and Richardson Jr., are each charged with providing false statements in support of the claim.

The investigation disclosed that Richardson Jr. told Clarendon National Insurance Co. (under oath) that an insured 2003 Ford Expedition had been stolen from his parents’ home on Jan. 22, 2005. However, the Ford was discovered abandoned in an orange grove days prior to the alleged date of theft. It was in poor condition – in fact, a completed bird’s nest was found under the hood in the engine compartment, CDI said.

If this had been accepted as a legitimate claim, Clarendon National Insurance Co. would have paid out between $18,000 and $19,000, CDI said.

The Riverside County District Attorney’s office is prosecuting the case. The suspects were booked at the Riverside County Jail. Bail was set at $50,000 for Richardson Jr. and $25,000 for the other two suspects. This case was investigated by the CDI Rancho Cucamonga regional fraud office’s Organized Automobile Fraud Activity Interdiction Program, a joint task force consisting of CDI, the California Highway Patrol and the Riverside County District Attorney’s office. Further arrests are pending.

Employer arrested for wrongful
accusation of workers’ comp fraud

A San Bernardino, Calif., employer has been arrested for wrongly accusing an employee of workers’ compensation fraud, according to the California Department of Insurance. Matthew Day, 26, was arrested after surrendering himself to the County of San Bernardino Superior Court on March 28. He has posted bail, and a preliminary hearing has been scheduled for April 10, 2006. If convicted, Day could serve five years in state prison and pay a fine of $150,000 or double the value of the fraud, the Insurance Commissioner’s office said.

According to investigators, on July 1, 2005, Day, the owner of Western Tree Service, reported to investigators at the Department of Insurance regional office in Rancho Cucamonga, Calif. that employee Carlos Jaramillo, 36, was making a false workers’ compensation claim against his company. Day told investigators he accepted a job application from Jaramillo but never hired him. Jaramillo’s injury on Feb. 22, 2005, occurred at the San Bernardino County International Airport, where Day was working as a subcontractor. The investigation revealed that Day did in fact hire Jaramillo prior to Jaramillo’s injury date, according to CDI.

The investigation also showed that Day reported the injury to the contractor-San Bernardino County International Airport- but Day did not have workers’ compensation insurance at the time of Jaramillo’s injury. As a result, the Uninsured Employers Fund of the Department of Industrial Relations’ Division of Workers’ Compensation was used to pay for benefits resulting from the workers’ compensation claim; they also attempted to get the money paid out on the claim from the uninsured employer.

“This employer put his unsuspecting employee in an immensely risky situation,” said Insurance Commissioner John Garamendi. “Day was just attempting to conceal the fact that his company did not have workers’ comp coverage. This attempted cover up made his client and employee vulnerable to huge potential losses.”

In making a false statement that Jaramillo was not an employee at the time of injury, Day was preventing Jaramillo from obtaining medical treatment, potential temporary disability and permanent disability benefits, as well as any other benefits entitled to injured workers’ in California, CDI said.

Four surrender on insurance fraud,
grand theft and tax fraud

California Insurance Commissioner John Garamendi announced the surrender of Wanda Cleveland, 49, Willie Cleveland, 50 (husband and wife) from Whittier; Farrell Cobbs, 42, of Victorville and his brother Wade Cobbs III, 44, of Los Angeles for charges of falsifying dismemberment claims.

The surrender occurred at the Los Angles County Superior Court in response to a complaint filed by the California Attorney General’s Office. The defendants were charged with 58 felony counts including insurance fraud, grand theft and tax fraud.

According to Department of Insurance investigators, the case began in July 2003 when a claims examiner at UNUM Insurance Co. received a dismemberment claim from Willie Cleveland, indicating Cleveland accidentally amputated a thumb and forefinger while using a band saw. The examiner had recently approved payment for an eye loss claim Cleveland made as a result of a radiator cap exploding in his face. UNUM investigations discovered that the medical reports for the finger and eye loss claims were forgeries. In October 2003, UNUM referred the case to the CDI’s Fraud Division.

The fraud division’s investigation revealed that the Cleveland couple and Cobbs brothers purchased dismemberment policies from various insurance companies to make erroneous claims. The victim insurance companies include: UNUM Life Insurance Co., American Reliable Insurance Co., the Hartford (formerly CNA Insurance Co.) and First Fortis Life Insurance Co. The complaint alleges that the total losses to the insurance companies were more than $1.8 million.

On March 14, 2006, the state Attorney General’s Office filed charges including 58 felony counts and is prosecuting this case. The charges include insurance fraud, grand theft and tax fraud against Willie Cleveland, Wanda Cleveland and Farrell Cobbs. Charges of insurance fraud and grand theft were filed against Wade Cobbs III.

On March 29, 2006, Wade Cobbs and Wanda Cleveland were released without having to post bail. Farrell Cobbs and Willie Cleveland also were released without posting bail, but the court ordered both to wear electronic monitoring devices to prevent escape. If convicted on all counts, Willie Cleveland faces 27 years imprisonment, Wanda Cleveland faces 21 years, Farrell Cobbs faces 19 years and Wade Cobbs III faces 5 years imprisonment. A preliminary hearing for the defendants is scheduled for May 25, 2006.

Special Agents from the State of California Franchise Tax Board and the Los Angeles Police Department’s Questioned Documents Unit also were involved with the investigation. Special Investigation Units from the victim insurance companies provided assistance during the CDI’s Fraud Unit investigation.

Los Angeles clerk charged in fraudulent disability claim scam

Linda Carleen Moore, 42, of Palmdale, Calif., was arrested on felony charges of falsifying an accident disability claim, the California Department of Insurance reported.

Moore, an employee of the Los Angeles County Department of Public Social Services, was arrested by the California Department of Insurance Fraud Division on March 1 and booked into the Lancaster County Sheriff’s Station on $20,000 bail.

The charges stem from an investigation by the CDI Fraud Division in Valencia. The Los Angeles County District Attorney’s Office charged her with three felonies: insurance fraud for making a false claim; falsifying documents in support of an insurance claim; and presenting false and misleading information in a claim for payment.

The case began when Workmen’s Auto Insurance Co. (WAIC) reported to the CDI Fraud Division that Moore submitted fraudulent documents in support of her claim. She had been involved in an auto accident on Feb. 29, 2004, in which she claimed injuries. In June 2004, WAIC opened a bodily injury case for Moore’s claim of alleged injuries to her neck and back.

In March 2005, Moore allegedly submitted an altered doctor’s notice of disability form to WAIC, claiming her alleged injuries caused her to be disabled and unable to work from April 29, 2004, through Nov. 1, 2004.

In the course of investigating the WAIC claim, it was discovered that Moore also filed an accident disability claim with AFLAC Insurance Co. on April 29, 2004, claiming she was disabled from April 29, 2004 through April 28, 2005, due to injuries suffered from an auto accident occurring on April 29, 2004.

Moore allegedly submitted falsified documentation to AFLAC indicating she was off work from Nov. 2, 2004 through April 28, 2005. The investigation revealed she returned to work on Nov. 1, 2004 and collected disability benefits from AFLAC, while working for five months at the LADPSS from Nov. 2, 2004 through April 28, 2005. Moore received approximately $5,415 from AFLAC in disability benefits due to her claim.

The CDI’s Fraud Division arrested Moore with assistance from the Los Angeles County Police and the LADPSS. Also assisting in the investigation were the Special Investigative Units of Workmen’s Insurance Co. and AFLAC Insurance Co.

Topics California Auto Fraud Agencies Workers' Compensation