Orange County Criminal Attorney Blog

Federal law enforcement has arrested eight people in the greater Los Angeles area, including two Orange County physicians, in a nationwide crackdown on alleged Medicare fraud. Both doctors are charged with various fraud offenses for allegedly filing $20 million in false claims. Investigators say that additional arrests and indictments are likely to follow, possibly including both federal and state fraud charges.

The nationwide investigation, reportedly the largest in the history of the Medicare system, targeted 108 medical professionals, including doctors, nurses, and others. Collectively, the subjects of the investigation are alleged to have billed around $455 million in fraudulent claims to the Medicare system. Federal officials say that Medicare fraud is one of the most rampant "white collar" crimes in the country, with an annual loss to taxpayers of over $60 billion. Investigators from the U.S. Department of Health and Human Services (HHS) led the effort with a "Medicare Fraud Strike Force" composed of attorneys from the Justice Department and the U.S. Attorney's Office, FBI agents, and both local- and state-level Medicaid fraud investigators. The Strike Force claims to have charged at least 1,330 defendants in connection with over $4 billion in fraudulent Medicare bills since 2007.

Continue reading "Two Orange County Doctors Charged in Nationwide Medicare Fraud Investigation" »

A grand jury in Orange County, New York indicted Jessica Vega on April 10, 2012 on six felony and one misdemeanor counts for fraud and larceny. Vega allegedly pretended to have terminal cancer prior to her wedding, receiving donations for the wedding and honeymoon after the media reported her story. Four months after the wedding, her husband, Michael O'Connell, told the media that she had faked her cancer diagnosis in order to "scam" him and others. The two have since divorced and reunited in Virginia. The New York Attorney General's Office accuses Vega of profiting from the community's generosity.

Vega allegedly claimed that she had terminal acute myeloid leukemia in early 2010, with less than a year to live. Friends, family, and others reportedly joined together to help raise money and plan her wedding to O'Connell. The Times Herald-Record reported her story on April 26, 2010, saying that the then-23-year-old Vega needed a wedding dress by May 2 for her dream wedding. The media coverage brought in even more donations. Vega reportedly accepted thousands of dollars worth of donated goods and services.

Vega and O'Connell were married on May 2, 2010, and took their honeymoon in Aruba. By Labor Day weekend that year, the couple had separated. The Times Herald-Record reported O'Connell's fraud allegations on September 6. Vega's health had not worsened, O'Connell said. He also said that he believed the letter Vega had that supposedly confirmed her leukemia diagnosis, from Dr. Dan Costin, was fake. Staff members at Dr. Costin's office confirmed that Vega had never been a patient there. Vega denied any and all allegations of fraud. She told a Times Herald-Record reporter that she had begun seeing a different doctor, although that was never confirmed.

Prosecutors charged Vega with six felonies, one count of first-degree scheming to defraud and five counts of fourth-degree grand larceny; and one misdemeanor, third-degree criminal possession of a forged instrument. Each felony charge carries a penalty of one-and-a-half to four years imprisonment. "Grand larceny in the fourth degree," under New York law, includes stealing property worth more than $1,000. "Stealing" is generally defined as wrongfully taking or obtaining property from its owner "with intent to deprive" the owner of the property. Prosecutors must prove that Vega intended to deprive people of their money and services, and that her intent was wrongful. Vega has pleaded not guilty. She is in the Orange County Jail on $10,000 cash bail or $30,000 bond.

Continue reading "Woman Who Faked Cancer to Get Donations for Her Wedding and Honeymoon Charged with Fraud" »

Five former New Orleans police officers received sentences ranging from six to sixty-five years in prison from a federal judge on April 4, 2012. The officers, Kenneth Bowen, Robert Gisevius, Robert Faulcon, Anthony Villavoso, and Arthur Kaufman, were charged with a variety of federal firearms and civil rights offenses related to shootings at a New Orleans bridge during Hurricane Katrina's aftermath in 2005. The case demonstrates two interesting aspects of criminal defense: it shows how federal prosecutors can step in when local law enforcement is compromised or implicated in a matter, and it shows that police misconduct can have a remedy.

Hurricane Katrina was the costliest natural disaster in United States history, and also one of the deadliest with nearly 2,000 victims along the Gulf coast. The hurricane made landfall in southeast Louisiana on August 29, 2005. The worst damage and loss of life occurred in New Orleans, where the failure of the levees flooded most of the city and many surrounding areas. A period of chaos followed, in which people struggled to get out of the city and crime was reportedly rampant.

On September 4, 2005, less than a week after the levees broke, four of the defendants, Bowen, Gisevius, Faulcon, and Villavaso, went to the Danziger Bridge in response to a report of officers taking fire. According to the complaint filed in federal court, the officers encountered six unarmed civilians on the east side of the bridge. The officers allegedly opened fire on the group with assault rifles, pistols, and shotguns, killing one person, James Brissette, and wounding four others. The officers then drove to the west end of the bridge, where they opened fire on two men. One man, Ronald Madison, was shot and killed, and the officers arrested the other for attempted murder of a police officer. A judge ordered his release three weeks later, with no charges ever filed against him.

The fifth defendant, Kaufman, was assigned to investigate the shootings later that same day. He submitted a report, co-authored with another officer, in May 2006 describing the matter as "solved." The Orleans Parish District Attorney investigated the matter between 2006 and 2008, making no findings as to any officer's culpability. They referred the matter to the FBI.

The officers were charged with violations of the victims' civil rights "under color of law," conspiracy to commit an offense, firearms violations, fraudulent statements, witness tampering, and falsification of records. Five other officers, all charged with offenses related to the alleged cover-up of the incident, pleaded guilty before trial. In August 2011, a jury convicted four defendants of civil rights, firearms, and conspiracy offenses, and convicted Kaufman of offenses related to covering up the incident.

Continue reading "Former Police Officers Sentenced in Post-Katrina Shooting Cases" »

An Orange County man faces multiple criminal charges, including money laundering and grand theft, for an alleged gold investment scam. In early 2011, William Scott Spalding allegedly set up several businesses to solicit cash from gold investors. According to prosecutors, Spalding would pose as a gold investor and promise a high rate of return if people purchased gold from him. One Huntington Beach woman reportedly entered into a contract with Spalding in March 2011. The contract stated that she would pay him $280,000 and he would provide her with a certain amount of gold "in the immediate future." She gave Spalding the money, but he allegedly never purchased any gold. After what she described as multiple unsuccessful attempts to contact Spalding to get her money back, she notified law enforcement.

The U.S. Marshals Service and Huntington Beach police arrested Spalding in August 2011 for suspicion of using business fronts to "extort" money from prospective investors for promises of gold. Investigators reported that, prior to his arrest, they found that Spalding's phone was disconnected and the address associated with his businesses was fake. Spalding had also legally changed his name to Jonathan Scott Morgan in April. After his arrest, police described Spalding "living the high life" at his home in Irvine, with several new cars and large amounts of cash. Investigators claim he put the money obtained from the Huntington Beach woman into personal accounts and used it to pay for expenses like the cars and the house.

Spalding had served forty months in federal prison for a scheme involving a movie deal that reportedly defrauded several people in Redondo Beach out of $300,000. He had only recently been released from prison when the alleged gold investment scam would have taken place. The requirements of his release from prison included payment of restitution to his victims and avoidance of criminal activity. He reportedly did not pay restitution as required and was already considered a fugitive at the time of his arrest.

Spalding's recent prison release and fugitive status, in combination with his reportedly lavish lifestyle, led investigators to speculate that he had more than one victim in the gold investment scheme. Huntington Beach police requested assistance from the public in identifying additional victims after Spalding's arrest.

Continue reading "Alleged Gold Investment Fraud Results in Multiple Criminal Charges for Orange County Man" »

A federal court in Seattle has convicted an Orange County tax preparer, Ronald L. Brekke, of conspiracy and wire fraud for using a tax "myth" to claim millions of dollars in allegedly fraudulent refunds for his clients. Brekke reportedly filed nearly 1,000 tax forms for people in both the U.S. and Canada claiming more than $763 million in refunds, of which the government only paid about two percent.

Brekke's operation used what the IRS calls a "1099 OID fraud," which it says is a very common scheme. A theory, described as "false" and a "myth" by the Los Angeles Times, holds that the IRS' 1099 OID ("original issue discount") form can be used to access secret "straw man" accounts held by the government. The form is typically used to record interest amounts anticipated from financial instruments like securities. People sometimes, however, use the form to claim a refund from the IRS for the full amount of their debts.

Brekke's allegedly represented to his clients that the U.S. government must provide refunds to people to pay off their debts. He would prepare forms for his clients listing the total amount of their debts and claiming a refund for that amount. According to the Los Angeles Times, one form claimed a refund of $569,000. Debts included mortgages, car loans, and credit cards. The IRS reportedly flagged ninety-eight percent of the forms filed by Brekke as frivolous. With $763 million in total claimed refunds, however, this means that the IRS still issued about $15 million in refunds.

Police arrested Brekke at his apartment in Garden Grove in November 2010. Two clients from Canada had been arrested in Bellingham, Washington when they tried to cash two tax refunds checks totalling more than $350,000, and that implicated Brekke. A federal court in Seattle convicted the two clients of fraud as well.

Prosecutors charged Brekke with wire fraud and conspiracy. News reports do not indicate whether Brekke's clients believed the refunds to be legitimate or not. Intent to commit fraud, or to commit actions that constitute fraud, is typically a necessary element for prosecutors to prove.

Continue reading "Orange County Man Convicted of Defrauding IRS of $14 Million" »

A surrogacy and adoption operation run by a California lawyer has been described in the media as a "baby-selling ring," but the criminal cases that have come out of it have had little to do with the actual adoptions. Theresa Erickson, a San Diego attorney known as an expert on surrogacy law, pleaded guilty to conspiracy to commit wire fraud. While the overall scheme allegedly involved using surrogate mothers to produce babies that they offered for "sale" to adoptive parents, the actual criminal case focused on false or fraudulent documents submitted to courts in California. This seemingly mundane criminal charge took a back seat to the more sensational reporting on the broader aspects of the operation, for which there is actually very little regulation or oversight.

Surrogacy is the process by which a woman agrees to be implanted with a fertilized egg and carry it to term for another person or couple, in exchange for a fee and other compensation. It requires a very carefully-drawn contract explaining the rights and responsibilities of the parties and making arrangements for the surrogate to turn the child over to the parents after birth. A key legal requirement is that such a contract must be in place before a surrogate receives a fertilized egg, and that is how the operation involving Erickson reportedly came to violate the law.

Erickson and at least two other women would recruit women to act as surrogates. They would fly the surrogates to a clinic in Ukraine, where doctors would conduct implantation procedures. During the pregnancy, Erickson and the others would seek adoptive parents for the children. They essentially marketed the children as "designer babies," according to the media. People would reportedly pay upwards of $100,000 for an adoption. Neither the surrogates nor the prospective adoptive parents knew anything was amiss with the arrangements until the people in charge came under criminal investigation.

Prosecutors charged the women with conspiracy to commit wire fraud, based on the allegation that they submitted paperwork to court clerks regarding adoptions and similar matters that did not accurately state how the births were arranged. The papers were designed to show that the surrogacy and adoption contract complied with all legal requirements when they did not.

All three "conspirators," Erickson, Maryland lawyer Hilary Neiman, and Carla Chambers pleaded guilty in 2011. The court sentenced Neiman to five months in prison and seven months in home confinement in December. Erickson and Chamber received their sentences in February. Erickson was sentenced to five months in prison and nine months of home confinement, as well as a fine of $70,000. Chambers received the same sentence as Neiman, five months in prison and seven under house arrest.

Continue reading "Multiple People, Including a California Lawyer, Convicted of Wire Fraud in Surrogacy Scandal" »

A feature of the popular social media site Facebook that was intended to help users find their friends online has served a different purpose for a Seattle man. After Facebook's automated feature suggested that Alan L. O'Neill's wife become friends with a woman who turned out to also be married to O'Neill, prosecutors charged O'Neill with bigamy. Bigamy is a little-discussed feature of the Penal Code, as it is rarely ever prosecuted. It is still considered a criminal act, though, and every so often someone gets charged.

O'Neill married his first wife in 2001, when his name was Alan Fulk. In 2009, they separated, but never divorced. O'Neill petitioned to change his name in December 2011. Later that month, he married again. He has worked as a corrections officer for Pierce County, Washington, for about five years.

At some point after the second wedding, O'Neill's first wife received a notification on Facebook recommending the second wife as someone she might know, reportedly based on their mutual connection to O'Neill. According to news reports, the two women had met before. The first wife was reportedly arrested in 2010 in connection with an altercation with the future second wife. When the first wife clicked on the second wife's profile, she apparently found pictures of the two of them with a wedding cake.

At this point, wife number one contacted O'Neill's mother, who reportedly told O'Neill. According to the first wife, O'Neill told her that they were in fact still married, but that he would "fix it." He asked the first wife not to tell anyone. Instead, she notified authorities, using copies of various official documents to demonstrate their marriage.

Prosecutors charged O'Neill with bigamy. The information filed against him states that, on or about December 19, 2011, he married someone while he still had a living spouse. His employer put him on administrative leave while the criminal case is pending. He could spend up to a year in jail if convicted.

Washington's bigamy statute defines the offense as intentionally marrying or purporting to marry someone when either person still has a living spouse. The statute therefore does not distinguish between a married person marrying someone else and an unmarried person marrying a married person. It does allow a defense if the defendant had a reasonable belief that they could legally enter into a new marriage, either because they believed their prior spouse to be deceased or the prior marriage to be dissolved.

Continue reading "Corrections Officer Convicted of Bigamy After One Wife Finds the Other on Facebook" »

A Florida woman who formerly worked as a legal assistant faces charges of credit card fraud stemming from alleged use of several law firm credit cards. Prosecutors allege that Kristina Petrik, age 38, defrauded her former employer, a Melbourne, Florida-based law firm, out of around $12,000. She reportedly used credit and debit cards belonging to the law firm at least eighty-eight times over the course of a year, Petrik has been charged with three counts of fraudulent use of a credit card and one count of scheming to commit fraud.

According to police, Petrik had run into some "family trouble" when she began using the law firm's credit cards for her own purchases. She had access to the firm's credit accounts because of her position of employment. The firm represents clients in claims for Social Security disability benefits. Petrik allegedly purchased clothing and other goods, software, and paid the cost of a family portrait with law firm credit cards.

Petrik reportedly requested two weeks' leave to spend time with family. During her leave, others in the office discovered the alleged purchases. Police arrested her the morning of Wednesday, February 1, 2012. According to Florida Today, police arrested Petrik at her "new place of employment." It is not clear when she ceased employment with the law firm.

Florida law defines "fraudulent use of credit cards" as any use of a credit card to obtain something of value with the intent to defraud, without the consent of the cardholder, and by purporting to be an authorized user of the card. Penalties vary depending on the length of time the card was used and the total amount of value obtained. Use of a card more than twice, and for amounts exceeding $100 is treated as a third-degree felony in Florida. Petrik potentially faces penalties of up to five years in prison and fines up to $5,000. She would also most likely have to make restitution of the amount of the alleged fraud.

Continue reading "Former Law Firm Employee Charged with Credit Card Fraud" »

A judge sentenced a Queens family to a collective 418 year prison sentence for a con job that took about $2 million from fellow immigrants. The Ramsundar family, consisting of Shane, age 50, his wife Gomatee, 46, and their daughter Shantal, 23, were convicted in November 2011 of multiple criminal offenses including grand larceny and money laundering. They are immigrants from Trinidad, located in the Caribbean. Their alleged con had two parts. One involved obtaining money from other members of the immigrant community purportedly to purchase properties that had been seized by federal law enforcement. The other involved convincing immigrants that they could assist them in obtaining green cards and in removing immigrants' names from various law enforcement lists. Shane Ramsundar would impersonate an Immigration and Customs Enforcement (ICE) agent. He kept false identification, a fake badge, and an air pistol as part of the ruse. He approached many of his victims at Hindu temples in and around his Queens neighborhood and built trust through shared religion and nationality.

He would reportedly tell victims that federal agents could bid preferentially on properties seized by the IRS and DEA before they were auctioned to the public. He received as much as $1.5 million from ten victims, who were told the money was to buy properties in Florida and Queens. He would also tell victims that he could help them, for a price, to obtain green cards, and that he could have their names removed from certain government watch lists. He received up to $250,000 from twelve people for this. In all, the family reportedly defrauded nineteen people, with some of them giving money to both scams.

Gomatee Rasmundar was accused of facilitating the immigration scam by convincing victims that they could get them green cards. Shantal Gomatee was accused of laundering the money obtained from the victims. The family reportedly used eleven different bank accounts for the money, eight of which were in Shantal's name.

The Rasmundars were indicted in March 2010 on thirty-four counts. In addition to money laundering and grand larceny, they faced conspiracy charges, criminal impersonation, and a charge related to unlawful possession of an air pistol. They all pleaded not guilty, and the case went to trial in late 2011. A jury convicted all of them on November 22, 2011. Shane Rasmundar received the maximum allowable sentence of 235 years. Gomatee Rasmundar was sentenced to 153 years in prison, and Shantal Rasmundar received a 30-year sentence.

Continue reading "Family Convicted of Fraud and Money Laundering Scheme Gets Over 400 Years in Prison" »

After an attempt to modify her home mortgage went wrong, a Mission Viejo homeowner took it upon herself to investigate the company, eventually taking them to small claims court to recover around $7,000. Her efforts brought the company to the attention of law enforcement, and the company's owners now face multiple charges for theft and conspiracy.

Danielle Holmberg, as reported in the Orange County Register, met with a representative of a company, Green Credit Solutions, that claimed it could cut her mortgage payments in half. A friend had referred the company to her, so she took a meeting in mid-2009. She and her husband agreed to an up-front payment of $3,495 to modify their loan. They also paid the same fee to modify the mortgage on a house they own in Florida.

Weeks passed, and she reportedly tried to contact the company every other week. They told her repeatedly that the modification was in progress but would take time. Holmberg had researched the company online and found a large number of complaints, but she trusted her friend's endorsement and had proceeded with Green Credit anyway. After multiple conversation with the company, she decided to look deeper.

Holmberg learned that the California Department of Real Estate had ordered the company to stop collecting what it called "illegal upfront fees" several weeks before she and her husband met with them to pay the fee. The state also contended that Green Credit did not have a valid real estate license that would allow it to engage in the business of loan modification. Holmberg researched the company, its owners, and others affiliated with the business. She began to send letters, with the help of a legal aid organization, demanding the return of her $6,990.

Eventually, Holmberg filed suit in a small claims court to recover her almost $7,000 from Green Credit. She learned that her letters had drawn the attention of the California State Bar. An investigator with the Bar told her that the Bar has raided Green Credit's offices and found her demand letters. She also learned that the Department of Justice had gotten involved in the Bar's investigation. She subpoenaed the investigator, the Department of Real Estate, and the Department of Justice to testify at her small claims trial. She prevailed against Green Credit at the trial, and the court pierced the corporate veil and held the two owners personally liable.

Continue reading "Prosecution of Mortgage Loan Company for Fraud Results from Investigation by Orange County Homeowner" »

The owner of a flight school in La Verne faces charges of visa fraud for an alleged scheme to falsify immigration documents and offer flight classes to foreign nationals without proper authorization from the government. Karena Chuang, the owner of Blue Diamond Aviation, which is now closed, allegedly enrolled students in her school using fraudulently-obtained visas. She also allegedly failed to obtain authorization for her school to train foreigners. Officials quoted by the media have played up the possibility of ties to terrorism among immigrants in general, while noting that no evidence connects any of Chuang's students to terrorism in any way. This just demonstrates how inflammatory topics, in this case terrorism, can inflate or enhance a criminal charge outside of the legal system itself.

According to authorities from Immigration and Customs Enforcement (ICE), the federal agency that investigates and prosecutes alleged violations of immigration laws, Chuang helped prospective students from Sri Lanka, Taiwan, and Egypt obtain permission to attend flight schools in the U.S. by posing as their cousin. She would help them get an authorization document from authorized flight schools, which had passed a government screening program. The students could use that document to obtain a visa based on their intent to attend an authorized flight school, and would then enroll in Chuang's school instead.

Under federal law, visa fraud is formally known as "fraud and misuse of visas, permits, and other documents." It includes making false statements to immigration officials and posing as any other person in order to obtain immigration benefits. An offense can carry a prison term of ten to fifteen years, and the statute allows enhancements if the purpose of the fraud was to facilitate terrorism or drug trafficking.

The terrorism angle complicates Chuang's case. Flight schools must obtain government approval and follow various screening procedures for students in order to offer training to foreigners. By failing to follow these procedures, the government alleges, Chuang endangered national security. The ICE special agent in charge in Los Angeles stated that by not screening student through the official procedure, she lacked "the ability to know whether or not they have terrorist ties, which is why the whole procedure exists."

The agent acknowledged that they have no evidence of any ties to known terrorists among her students, but they also noted that at least two of her Egyptian students signaled an intent to go on to train on larger airplanes. Experts on anti-terrorism have cast doubt on the ability of a small airplane to do any major damage in an attack, and have noted that training on a small plane does not translate well to a large commercial jetliner.

Continue reading "California Flight School Owner Arrested for Alleged Fraud with a "War on Terror" Twist" »

A Fullerton woman, Lydia Delrio Montelongo, pleaded guilty to one count of medical insurance fraud on December 8, 2011. She was accused of fraudulently collecting more than $118,000 in public assistance. The court imposed a sentencing enhancement, since the offense involved white collar crime in an amount greater than $100,000. She must serve nine months in prison and pay back the $118,000 as restitution. She will also serve five years' probation, during which time the court will stay an additional six-year prison sentence. She will not have to serve that additional sentence if she successfully completes probation.

According to the Orange County district attorney's office, Montelongo collected public assistance by claiming that she was divorced from her husband, and that she did not receive any financial assistance from him. She further claimed that she did not know her husband's whereabouts. In reality, she was still married and living with her husband. She was not employed while receiving public benefits, but she was receiving support from her husband and had coverage under his health insurance. Her husband, an officer with the Los Angeles Airport Police Department, apparently did not have any knowledge of the scheme.

The district attorney presented evidence that Montelongo fraudulently collected three separate forms of public assistance. She first applied for and received social security benefits in December 2004 with a fraudulent application. In June 2005, she began illegally receiving Medi-Cal benefits. In June 2008, she began receiving benefits from In-Home Support Services, part of the Orange County Social Services Agency. The district attorney alleged that she did not qualify for any of these benefits. An anonymous tip to law enforcement led to the discovery of her scheme.

California's Insurance Code, Penal Code, and Welfare and Institutions Code contain provisions for the investigation and prosecution of alleged insurance or welfare fraud. Any false statement made for the purpose of obtaining benefits may be prosecuted if the statement was material to the application for benefits. This case further involves fraud on the public, since all of the benefits obtained came from public sources funded by the taxpayers. The law generally defines "welfare fraud" in part as deliberate misstatement or omission of relevant information in order to obtain benefits for which one would otherwise be ineligible. Statewide hotlines set up to allow reporting of suspected welfare fraud trigger investigations by police and district attorneys' offices, many of which have full-time welfare fraud investigators.

Continue reading "Orange County Woman Pleads Guilty to Public Assistance Fraud" »

In a scene reminiscent of the Bernard Madoff scandal in New York, two Orange County men who held themselves out as investment and financial experts have pleaded guilty to multiple felony counts of theft, fraud, and more. Both were accused of taking money from investors and, instead of managing and investing it as promised, keeping it or using it to pay previous investors. In all, the two stole upwards of $10 million, according to the charges brought against them. Cases such as these, often known as "white collar" crimes, present many difficulties for criminal defense lawyers. The burden of proof for the prosecution is very high, but the risks to a defendant are also quite high, not to mention the risk of negative publicity.

Hitomi Tsuyuki initially faced 200 felony charges for stealing more than $2.8 million from his clients. This occurred over a 10-year period from 1997 to 2007. In September 2011 he pleaded guilty to 29 of the charges, including 17 counts of false statements regarding the sale of securities, 10 counts of theft from the elderly, and one count each of grand theft and using a scheme to defraud. Among the 33 clients he defrauded were family members, people he met through his father's church, and numerous elderly people. He had known some of his victims since childhood. Tsuyuki's legal problems began earlier than the criminal case. The same day the Orange County District Attorney announced the indictment of Tsuyuki in June 2008, a lawyer filed a judgment for almost $400,000 against him based on a securities arbitration claim filed in 2006. The claim related to a family of investors who accused Tsuyuki of fraud and theft. A judge sentenced Tsuyuki to the maximum of 18 years in state prison in early November.

Mark Alan Helsing pleaded guilty in October to 68 felony counts for defrauding twelve investors out of $6.9 million during a period from 2004 to 2007. The charges included 55 counts of grand theft, seven counts of false recorded documents, and six counts of financial exploitation of elders. He had previously pleaded guilty to six theft and check fraud charges in June 2009. Many of Helsing's clients were apparently his longtime friends. He operated as a "hard money lender," loaning money using private investor funds instead of banks. Authorities alleged that he would take investor money and, instead of lending the fund, use some money to falsify interest payments and embezzle the rest.

Continue reading "Two Orange County Investment Advisers Plead Guilty to Multiple Theft, Fraud Charges" »

Children in foster care across the country suffer from identity theft in alarming numbers. Children in general have a higher risk of identity theft than adults, according to a recent Forbes article, but foster children face an even greater risk because of their often vulnerable position. As many as 30% of foster children may become identity theft victims. Since children tend not to have credit cards or mortgages in their names, their Social Security numbers offer a blank slate for opportunistic thieves. Even worse, children usually do not learn about how their information has been compromised until they become adults and try to obtain credit. This can prevent foster children, who have often endured substantial hardship already, from enjoying many of the privileges of adulthood.

Identity theft among foster children presents a problem from the standpoint of criminal law. Foster children often come from troubled family situations with few resources. They may find themselves saddled not only with huge amounts of debt they cannot pay, but with other contractual obligations and little understanding of what happened and what they must do. Without careful handling of a victim's personal information, a foster child could face unforeseen penalties for acts committed by the identity thief.

Foster children aging out of the system and discovering the theft for the first time often discover massive unpaid bills, credit cards, and utilities in their names. The perpetrators are often known to the victim, including family members needing access to credit. Researchers looking into this problem also found wrongdoing by some foster parents and child welfare workers, as well as simple errors in credit reporting. Los Angeles child welfare workers reviewed credit reports for over 2,000 foster children in their system and found significant problems in the reports for 5% of the children. The average account balance was $1,811, and one child had a $217,000 mortgage.

A new federal law, signed by President Obama in September, requires state officials to run credit checks on foster children who are nearing age 18, at which point they leave the care of the state's child welfare agency. The law also requires child welfare officials to help foster children repair credit problems that turn up on the credit search. This may include negotiating or resolving debts incurred by the identity thief and removing false information from the credit file.

Continue reading "Preventing Identity Theft Among Foster Children" »

A federal judge in Boston sentenced a Dorchester, Massachusetts man to six years imprisonment, followed by three years' supervised release, for a series of false claims for physical therapy treatments submitted to automobile insurance companies. The man was convicted for submitting false claims to 19 different insurance companies. The court further ordered him to pay restitution totalling $461,624 and to forfeit an additional $303,195. A licensed physical therapist in his employ, charged as a co-conspirator, received a five-year prison sentence for the fraudulent claims.

The man owned a physical therapy clinic in Brockton, Massachusetts. According to evidence presented in court, he directed the physical therapist to falsify patient records to show nonexistent treatments. Some patients' charts had false entries added to them, while other charts were completely fabricated for patients who had never even received physical therapy treatment at the clinic. The man received hundreds of thousands of dollars from auto insurance companies for the false claims.

Health care fraud has become a serious problem all over the country. Health care practitioners can commit fraud in a number of different ways, and all of them have the potential to pass costs on to patients and consumers. In addition to false claims like those in the above case, fraud cases can include duplicate claims for the same service, altering dates or descriptions of services, deliberate incorrect reporting of treatments or diagnoses to increase payment amounts, and even prescribing unnecessary medications or treatments. The federal government estimates that the cost of fraudulent health care claims accounts for 10 cents of every dollar spent on health care.

Federal law requires insurers to pay legitimate claims within 30 days of the date a patient or health care provider presents the claim. While this protects patients and legitimate providers who may need quick access to treatment and funds, it makes the job of investigating and stopping payment on fraudulent claims difficult. The investigation of health care fraud is often handled internally by insurance companies. Jurisdiction for these investigations legally falls on the United States Postal Service, the Federal Bureau of Investigation, and the Office of the Inspector General. The Health Insurance Portability and Accountability Act (HIPAA), which became law in 1996, created a Health Care Fraud and Abuse Program to support investigation and prosecution of fraudulent claims in both public and private health care plans.

Continue reading "False Health Care Claims Lead to Six-Year Prison Sentence" »