In Over His Head
Johnny Brocktune Lew of Stockton, Calif., was sentenced to seven years and four months in state prison for plotting an insurance fraud scheme to sink his luxury yacht. The sentence was handed down by San Joaquin County Superior Court Judge Thomas Teaford after Lew agreed to plead guilty to charges of insurance fraud and solicitation to commit a felony.
The charges stem from an investigation and arrest in October 1999 by the California Department of Insurance (CDI). According to CDI investigators, in July 1999, Lew recruited individuals he believed to be co-conspirators to sink his 56-foot yacht, Norwel, valued at $1.2 million. He allegedly offered to pay $50,000 cash to have the yacht sunk in international waters, west of San Francisco's Golden Gate Bridge.
According to investigators, Lew allegedly claimed the yacht was owned by "Triad," an Asian organized crime group, and that "his people" authorized the sinking of the boat and the subsequent fraudulent claim for the loss. In addition, Lew threatened to kill anyone who leaked the scheme.
CDI investigators staged the theft of the yacht in August 1999, while Lew was traveling in China. The Norwel was secured and placed in dry dock storage. Upon his return from China, Lew paid the investigator $30,000 in cash and other valuables for the job. He contacted the Redwood City Police Department and reported the yacht stolen and then contacted his insurance company, American Yachts Ltd., and filed a fraudulent claim for the loss.
Truth Gets Flushed Down the Drain
A joint investigation by the CDI Criminal Investigations Branch, the Los Angeles District Attorney's Office, the Insurance Fraud Unit and HIH Insurance Company led to the conviction of Jesus Evaristo Gonzalez of Palmdale. The 39-year-old man pled guilty to workers' compensation insurance fraud on Dec. 26, 2000. A sentencing hearing in Los Angeles County Superior Court was scheduled for this month, and Gonzalez could face up to five years in state prison.
According to investigators, Gonzalez threatened his employer, Roto Rooter Plumbing Service, by telling them that should he be terminated, he would file a false workers' comp claim. Upon being terminated, Gonzalez did exactly as he said and filed a fraudulent claim. The investigation revealed that Gonzalez not only made false statements to his employer, his physician and the insurance examiner about the nature and extent of his alleged injuries, but he also made false statements about his injuries in a sworn deposition.
Not a Real Team Player
California Insurance Commissioner Harry Low revoked the license of former insurance agent Raymond Michael Graney, who did business as Team Concepts Insurance Services. An administrative hearing on Graney's licensing rights revealed various misrepresentations toward several clients, most of whom were senior citizens.
After three days of intense hearing proceedings, Graney surrendered his license and failed to cooperate by ending his participation in the hearing. Given the nature of Graney's wrongful acts, Commissioner Low decided to finish out the hearing in order to obtain a revocation on Graney's record. The Accusation and Order detailing Graney's misrepresentations revealed the agent defrauded several victims and earned significant commissions in the process.
For example, Graney sold a 73-year-old widow five annuity policies, and as a result of her relying on his misrepresentations, she suffered a loss of $166,080 in surrender penalty provisions. Meanwhile, Graney made $139,554 in commissions from the case. In a similar situation, Graney sold a 75-year-old housewife four different annuity policies which all contained surrender penalty provisions. In this case, the woman suffered a loss of roughly $36,680, while Graney earned about $26,765.
Hazardous Construction
Three construction company owners from Arizona and a California attorney have been accused of insurance fraud and employment tax evasion by California insurance officials. Jay Neal Wright, 48; his son, Jay Neal Wright II, 27, of Phoenix; Don Jay Wright, 80, of Mesa, Ariz.; and Timothy Miller, 43, of Riverside, Calif., are accused of defrauding insurers of at least $2 million and causing some $6 million in losses to the state.
The suit, filed in an Alameda County Court, accuses Wright and his son of telling state tax authorities and insurers they had divested themselves of their workforce while at the head of Highland Framers of Northern California, a residential framing company with a multi-million dollar payroll that did most of its business in Alameda and Contra Costa counties throughout the 1990s. The father/son duo allegedly told officials they were relying on outside subcontractors.
But an investigation of the subcontractors found at least two shell companies, operated and directly controlled by the Wrights and Highland Framers. State insurance officials believe the allegedly phony subcontracting companies were created with the assistance of Miller, the attorney, and were made to appear unrelated to Highland Framers to avoid paying workers' comp premiums and state employment taxes.
