Insurers Cheated Out of Millions in False Claims for Lost or Damaged Cell Phones

A Newark, New Jersey man has admitted that he conspired with others to defraud telephone providers and insurance companies out of millions of dollars by using stolen or fake identities to submit fraudulent claims for replacement cellular devices. He and his co-conspirators then resold the replacement devices outside the U.S., according to U.S. Attorney Philip R. Sellinger of the New Jersey district attorney’s office.

Parag Bhavsar, and Indian national, pleaded guilty before U.S. District Judge Madeline Cox Arleo to one count of conspiracy to commit mail fraud and one count of conspiracy to commit interstate transfer of stolen property, Sellinger reported.

According to court documents, from June 2013 through June 2019, Bhavsar and his conspirators maintained a network of mailboxes and storage units across the U.S., including in New Jersey, where the replacement devices would be shipped and then held before being sold to third parties outside the country.

According to prosecutors, the conspirators unlawfully obtained personal identifiable information (PII) and account information of insurance policyholders and customers of the wireless providers. In addition to these compromised accounts, the conspirators used stolen PII to open new cellular telephone and insurance accounts. They used the accounts to file fraudulent insurance and warranty claims for replacement cellular telephones. After they submitted the fraudulent claims, they directed that the replacement devices be shipped to addresses associated with ]mail receiving or virtual office locations that they maintained.

The defrauded insurance companies sold insurance and related protection programs on behalf of cellular telephone service providers. They included insurers located in Smyrna, Tennessee; Fort Worth, Texas; Louisville, Kentucky; York, Pennsylvania, and Lewisville, Texas. Generally, the insurance programs were sold to customers through their wireless providers.

In the event an insurance holder’s cellular telephone was lost, stolen, or damaged, the user could submit a claim for a replacement device. After the insurance claim was processed, either the wireless providers or the insurance companies would ship a replacement device to the user. Because users could be traveling at the time an insurance claim was made, a replacement device could be shipped to an address different than the address on the insurance holder’s account. In addition to insurance coverage, the wireless providers also provided warranties to cover replacement of cellular telephones under certain circumstances.

As part of the plea agreement, Bhavsar will consent to a money judgement of $10.67 million. Sentencing is scheduled for Jan. 3, 2024.

The charge of conspiracy to commit mail fraud carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense, whichever is greatest. The charge of conspiracy to commit interstate transfer of stolen goods carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense, whichever is greatest.

Source: U.S. Attorney’s Office, District of New Jersey

Topics Carriers Claims New Jersey