Fraud Roundup

Crescent City, Calif., agency shut down
Two Pelican Bay State Prison correctional officers have been arrested for stealing insurance premium payments and issuing bogus documents to customers of their insurance agency, some of whom were fellow prison employees, according to the California Department of Insurance.

Margaret (Maggie) Young was arrested at Pelican Bay State Prison in Crescent City, Calif., when she reported for work. Jerrold (Jerry) Young did not report to work as scheduled, and CDI officers arrested him in Crescent City a short time later. Both were booked into the Del Norte County Jail. Additionally, CDI moved to shut down their Crescent City insurance agency.

CDI said the Youngs were arrested for felony violations of grand theft, forgery, forgery with the intent to defraud, preparing or making a false or misleading statement, and criminal conspiracy.

According to investigators, the Youngs owned and operated the Fraser, Yamor, Jacob and Young Insurance Agency. The agency had a history of diversion of insurance premium payments collected from consumers and in 2000, CDI issued a warning about diverting trust fund money for their own use and other statute violations. The Youngs obtained financing and replaced the missing trust fund money.

The Youngs then began diverting insurance premium payments. Several of their employees allegedly followed suit and also stole money from agency customers.

When the thefts were discovered, the Youngs and their employees attempted to hide the thefts by issuing additional fraudulent certificates of insurance, CDIsaid. Some loss claims were paid, while others went unpaid. The Youngs attempted to cover the thefts and their failure to place insurance coverage by issuing the bogus insurance documents. When the thefts came to light, the Youngs reported to local police that their office was burglarized and that the only items stolen were records related to the stolen premium payments and a computer terminal used to produce those documents, CDI said.

During the execution of a search warrant, CDI recovered documents produced by Jerry Young in an attempt to cover up the thefts, including a fraudulent certificate of insurance. Officers also found and recovered insurance files and documents related to the victims from Maggie Young’s office.

Former employees outlined the pattern of spending, theft and conspiracies put into place by Jerry and Maggie Young and their former employee Page Castro, who was also arrested. Additional suspects will be arrested at a later date, CDI said.

Jerry and Maggie Young recently changed their agency’s name to Young and Company Insurance Brokers.

The arrests were a result of a joint investigation between the CDI Investigation Division, the Crescent City Police Department and the Del Norte County District Attorney’s Office.

Two indicted on workers’ comp fraud
An Albuquerque couple has been accused of defrauding the New Mexico Workers’ Compensation Administration.

Rafael and Elvia M. Herrera, owners of Rafa’s Roofing Inc., were indicted on charges of forgery; fraud; and false applications, claims, proof of loss.

The state agency has accused them of altering a certificate of liability insurance for their business for the years 2005 and 2006. The state alleges the altered certificate was then presented to contractors as proof of liability and workers’ compensation insurance coverage.

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Idaho sentences man for fraud
Former Bend, Ore., resident Robert Pratt was sentenced for conspiracy to commit insurance fraud, Idaho Attorney General Lawrence Wasden said. Fourth District Judge Ronald Wilpur sentenced Pratt to seven years in prison and ordered him to pay $13,252.76 in restitution. The court retained jurisdiction for 180 days.

In May 2005, Pratt was taken by his girlfriend, Jeri Willets, to the emergency room at St. Alphonsus Regional Medical Center in Boise, Idaho. Willets provided the hospital with her Blue Cross of Idaho insurance card and claimed Pratt was her estranged husband who was covered under her medical policy. Blue Cross of Idaho was billed more than $13,252 for the emergency surgery and the related hospital expenses for Pratt’s surgery.

When Blue Cross discovered Pratt had impersonated Willets’ soon-to-be ex-husband, it denied the claims.

Pratt was arrested in Oregon on Nov. 12, 2006, and pleaded guilty to one count of conspiracy to commit insurance fraud on Jan. 1, 2007. Jeri Willets was sentenced on Feb. 6, 2007 for her part in the crime.

An investigation by Donald Roberson, Charles Hudson and Kevin Blue of the Idaho Department of Insurance and Karen Wright of the Special Investigations Unit for Blue Cross of Idaho led to the charges. The case was prosecuted by the Attorney General’s Special Prosecutions Unit.

Contractor Ordered to Pay $129,000 to Calif. State Fund
San Diego County Superior Court Judge David Danielsen has ordered the owner of a San Diego area tree service company to pay $129,000 in restitution to California’s State Compensation Insurance Fund as a result of a workers’ compensation insurance fraud case.

Kenneth Bojok, who owns Lakeside-based Ken Bojok Tree Service, also was sentenced to three years informal probation and ordered to do 250 hours of community service as part of his conviction on one count of workers’ comp insurance premium fraud and one count of tax evasion.

State Fund aided the San Diego County District Attorney’s Office in its investigation of Bojok, who paid some of his employees via payroll check and the balance in cash and some employees all in cash. Under this arrangement, Bojok avoided paying proper workers’ comp premiums to SCIF, which insured his company since 1997.

SCIF uncovered the fraud while processing a claim from one of Bojok’s employees, who revealed that he was paid partially in cash and partially by a check.

According to San Diego County Prosecutor Dave Bagheri, Bojok defrauded SCIF of approximately $129,000. He was charged with three counts of insurance fraud, four counts of tax evasion and four counts of tax fraud.

“The San Diego County District Attorney’s Office continues to do outstanding work in battling workers’ compensation fraud,” said Darlyn Regan, who manages State Fund’s Fraud Investigation Program. “By working in cooperation with the DA’s Office, several million dollars have been recovered.”