Three Suspects Arrested for Alleged Auto, Work Comp Insurance Fraud
Investigators arrested three people Aug. 3 on numerous felony charges after a 3-year California Department of Insurance (CDI) investigation into a chiropractic office, which uncovered numerous alleged auto insurance and workers' compensation insurance violations, including the fraudulent treatment of a Jack Russell terrier.
Todd Daniel Baldini, of El Dorado Hills; his office manager Kathy Diane Thomas, of Rocklin; and Jeffrey Scott Bartlett, of Las Vegas, were arrested on various felony charges. Baldini's partner, Reginald Martin "Marty" DePaoli, of Carlsbad, is still at large, but charges have been filed against him as well.
Baldini was arrested and booked into the El Dorado county jail on one felony count of conspiracy to commit illegal referrals, five felony counts of illegal referrals, one felony count of conspiracy to commit grand theft, one felony count of conspiracy to prepare false claims and four felony counts of preparing false claims.
DePaoli is being sought on one felony count of conspiracy to commit illegal referrals, four felony counts of illegal referrals, one felony count of conspiracy to commit grand theft, one felony count of conspiracy to prepare false claims and four felony counts of preparing false claims.
Thomas was arrested and booked into the Sacramento county jail on one felony count of conspiracy to commit illegal referrals and nine felony counts of illegal referrals.
Bartlett was arrested in Las Vegas and booked into Clark County jail on one felony count of conspiracy to commit illegal referrals and nine felony counts of illegal referrals.
If convicted, each could face up to five years in prison and/or a fine of $50,000. Bail was set at $10,000 each for Baldini and Bartlett; bail was set at $5,000 for Thomas. The Sacramento District Attorney's Office is prosecuting the case.
The arrests follow an investigation of reports of suspected fraudulent claims from numerous insurance companies and private citizens. The California Department of Insurance's Organized Auto Fraud Interdiction Task Force was the lead enforcement agency on the case. Other task force members included the California Highway Patrol and the Sacramento County District Attorney's Office. The National Insurance Crime Bureau, the California State Automobile Association and Allied Insurance all provided pretext insurance policies, which were used by undercover investigators for billing by the suspects.
Based on observations from undercover officers posing as patients, as well as obtaining employment inside the clinic, Baldini and DePaoli Chiropractic allegedly engaged in insurance fraud. During the investigation, one undercover officer even brought in a dog for chiropractic treatment. The dog was indeed treated and the undercover officer's pretext insurance policy was billed as if the officer received the treatment.
In January 2003, search warrants were served at Baldini and DePaoli Chiropractic offices and the arrestees' residences in Sacramento, Folsom, Roseville and Rocklin. At that time, computers and file cabinets as well as approximately 2,700 patient files and x-rays were seized.
Evidence seized at that time indicated that a law firm associated with 1-800-A-LAWYER referred patients to Baldini and DePaoli Chiropractic. Evidence also indicated that 37.5 percent of the referred-patient's total chiropractic billings would be paid to Dormie Management.
In June 2003, search warrants were served at 1-800-A-LAWYER in Los Angeles. With the assistance of the Nevada Attorney General's Office, search warrants were also served at Dormie Management, which doubled as Bartlett's residence in Las Vegas. Bank search warrants were subsequently served on the accounts of Baldini and DePaoli Chiropractic, Jeff Bartlett and Dormie Management.
Evidence seized indicated that Baldini and DePaoli Chiropractic allegedly billed insurance companies for treatments of patients referred by 1-800-A- LAWYER. Once payments were received from those insurance companies, Baldini and DePaoli Chiropractic reportedly paid 37.5 percent to Dormie Management. Bartlett is part owner of both Dormie Management and 1-800-A-LAWYER.
From March 2002 to February 2003, Baldini and DePaoli Chiropractic received in excess of $85,000 in income and paid approximately $32,000 pursuant to this illegal referral arrangement. Baldini and DePaoli Chiropractic's billings in 2002 totaled approximately $700,000.
California Brothers and Employee Arrested in Alleged Felony Fraud Case
Brothers Sam Saeid Afghani, of Agoura Hills, Calif., and Siamac A. Afghani, of Calabasas, Calif., as well as employee Renee Laws, of Encino, Calif., were to be arraigned August 24 for their suspected roles in a fraud case at several government construction projects in Ventura and Los Angeles Counties totaling $1.7 million. All three suspects were arrested July 7, 2004.
The three were charged with multiple, felony counts of workers' compensation insurance fraud and unemployment insurance fraud in addition to other labor code violations, including failure to pay overtime and submitting false payroll records.
All three suspects were booked at the Ventura County jail. Bail was set at $10,000 each. Each suspect faces a maximum penalty of five years in state prison. The case is being prosecuted by the Major Fraud Unit of the Ventura County District Attorney's Office.
Sam Afghani is the owner of AFCO Construction, and both the owner and president/CEO of AFCO Builders Inc. Siamac Afghani is the secretary of AFCO Builders, and Renee Laws is an employee of AFCO Construction.
"This sort of fraud is not a faceless crime; it steals cash from employees' pockets and money from taxpayers' checkbooks," Insurance Commissioner John Garamendi said. "My department remains vigilant against insurance fraud, and we will continue fighting it with the instrumental help of our public and private sector partners."
Although the California Department of Insurance, Fraud Division (CDI) is the lead agency, the case was investigated by the Ventura County Underground Economy/Employer Fraud Task Force, which consists of the California Employment Development Department (EDD), the California Department of Industrial Relations' Division of Labor Standards Enforcement (DLSE), the state Franchise Tax Board (FTB), the Contractors State License Board and the Ventura County District Attorney's Office.
The loss to State Compensation Insurance Fund, Credit General Insurance Company, Connecticut Indemnity Company and Westport Insurance Corporation is more than $700,000. Taxes and penalties from EDD are more than $540,000, and, according to DLSE, back wages owed to employees are nearly $584,000.
The task force received information from the Carpenters/Contractors Cooperation Committee regarding several government construction projects in Ventura and Los Angeles Counties where AFCO Construction was doing work. A number of employees had alleged that AFCO Construction paid neither prevailing wages nor overtime, and paid some employees in cash. The employees also alleged that the company submitted false certified payroll records on those projects and false payroll information to its workers' compensation carriers.
Subsequent investigations at five public works projects in Ventura and Los Angeles Counties revealed that prevailing wages and overtime were indeed not paid and that some employees were in fact paid in cash.
Furthermore, some workers reportedly were required to work more than eight hours each day for $50 to $70 per day, and occasionally six days per work week with no overtime paid.
AFCO Construction reported different payroll amounts to FTB, EDD and its insurance carriers. AFCO Construction also allegedly underreported more than $4.1 million in wages from 1998 to 2002 to its insurance carriers.
