New York Authorities Put Auto Fraud Ring in Park; Five Corporations Indicted

August 25, 2004

New York Attorney General Eliot Spitzer and State Insurance Superintendent Gregory Serio announced the indictment of six people and five corporations for their reported roles in a criminal enterprise that submitted phony personal injury claims to insurance carriers. Two personal injury attorneys and their law firms, an insurance broker, and a licensed acupuncturist are among those charged.

The case represents the first time that the Attorney General has filed an indictment charging Enterprise Corruption in an auto insurance fraud case. The charge, which has been traditionally used in organized crime cases, and more recently used by prosecutors in securities fraud cases, is a class "B" felony and carries a maximum sentence of 8 1/3 to 25 years in prison.

Other charges brought in the case include scheme to defraud, money laundering, grand larceny, insurance fraud, falsifying business records, and offering false instruments for filing.

"Ambulance chasing has evolved from an opportunistic and unseemly act to a sophisticated multi-faceted criminal enterprise," said Spitzer. "In many cases, accident victims become pawns for lucrative insurance fraud schemes, in which medical mills are used to fabricate no-fault and personal injury claims. Together, with the State Insurance Department and the cooperation of the insurance industry, we will continue to aggressively prosecute cases of auto insurance fraud."

Gregory Serio, superintendent of Insurance added, "Working with the Attorney General, our investigation discovered that these individuals and corporations orchestrated a scheme solely meant to profit themselves at the expense of honest insurance policyholders. It's clear that insurance fraud drives up the costs of auto insurance, and today's indictments will help raise the public's awareness that insurance fraud is a serious crime."

According to the indictment, brothers Robert and John Fernandez were the principal "steerers" for the criminal enterprise. It was the role of the "steerer" to solicit those involved in accidents and refer them to corrupt medical facilities and lawyers.

It is alleged that the Fernandez brothers paid off people such as: tow-truck drivers, auto repair shop managers, and insurance brokers, including broker-defendant Robert Betman, for the names and contact numbers of persons who had recently been in motor vehicle accidents.

It is alleged that the Fernandez brothers then illegally solicited motor vehicle accident victims on behalf of the defendant-attorneys, Paul Ajlouny and Daivery Taylor, whose law practices are located in Nassau County. State law prohibits attorneys from employing a person for the purpose of soliciting business. In soliciting the accident victims, the Fernandez brothers allegedly directed the victims to fabricate injuries or to exaggerate injuries sustained in the accidents and lured them into submitting no-fault claims and retaining the defendant-attorneys by promising them large cash settlements from the filing of personal injury claims.

The no-fault law provides payment to people injured in motor vehicle accidents.

The indictment alleges that Ajlouny and Taylor also submitted false retainer statements to the New York State Office of Court Administration concealing the fact that the clients were illegally referred to them by the "steerers."

It is also alleged that the Fernandez brothers and Ajlouny and Taylor directed motor vehicle accident victims to health providers affiliated with the Fernandez Brothers' criminal enterprise, including defendant Andrea Gurciullo, a licensed acupuncturist and owner-of- record of defendant Andrea Gurciullo Acupuncture P.C., located in Nassau County.

The patients received months of unnecessary treatment for their alleged injuries, including acupuncture, physical therapy, massage therapy, chiropractic treatment, psychological counseling, and extensive diagnostic testing. In order to justify the months of unnecessary treatment, defendant Gurciullo and other health providers affiliated with the criminal enterprise reportedly generated false treatment reports containing fabricated symptoms and diagnoses. The providers, including Gurciullo, then submitted claims to no-fault carriers for months of unnecessary treatment, and for services never provided.

This illegal practice is alleged to have generated millions of dollars in illicit revenues paid out by insurance carriers and also fraudulently strengthened the personal injury claims brought by the defendant-attorneys. If a patient received treatment for five months instead of four, for example, the attorney could argue that his client had suffered a "serious injury" warranting compensation for pain and suffering, and the settlement of the bodily injury claim would increase in value by several thousand dollars.

In addition to soliciting accident victims to fabricate and exaggerate injuries, the Fernandez brothers are alleged to have secretly owned Gurciullo's acupuncture practice. State law requires a professional health practice to be owned by a licenced practitioner. Although listed in corporate filings as the President and Chief Executive Officer of Gurciullo Acupuncture, P.C., Gurciullo did not control it. Robert and John Fernandez allegedly dictated the flow of revenues and expenditures of the company by setting up "shell"corporations, including corporate defendants RJF Services Inc. and New York Professional Management Inc. In total, the Fernandez brothers are alleged to have illegally diverted more than $1 million from Andrea Gurciullo Acupuncture, P.C. and other businesses of Gurciullo into the accounts of their "dummy" corporations.

The 41 counts of the indictment charge Enterprise Corruption, a "B" Felony; Money Laundering in the Second Degree, a "C" Felony; Grand Larceny in the Third Degree, a "D" Felony; Insurance Fraud in the Third Degree, a "D" Felony; Scheme to Defraud in the First Degree, an "E" Felony; Falsifying Business Records in the First Degree, an "E" Felony; Offering a False Instrument for Filing in the First Degree, an "E" Felony; and Money Laundering in the Fourth Degree, an "E" Felony.

The defendants named in the indictment are:

* Robert Fernandez (a/k/a Robert Campbell) 36, of Lido Beach; secret owner of Andrea Gurciullo Acupuncture P.C.;
* John Fernandez , 40, of Lido Beach; secret owner of Andrea Gurciullo Acupuncture P.C.;
* Andrea Gurciullo, 36; of Lido Beach; acupuncturist and president of * Andrea Gurciullo Acupuncture, P.C.;
* Paul Ajlouny, 45, of Hempstead; attorney;
* Daivery Taylor, 36, of Freeport; attorney;
* Robert Betman, 42, of Lido Beach; insurance broker;
* Andrea Gurciullo Acupuncture P.C., located in Garden City; owned on paper by Andrea Gurciullo;
* RJF Services Inc., Bayshore; owned by John Fernandez;
* New York Professional Management Inc., located in Nassau; owned by Robert Fernandez;
* Paul Ajlouny & Associates P.C., located in Garden City; owned by Paul Ajlouny; and
* Law Offices of Silverman & Taylor, located in Freeport; partnership including Daivery Taylor.

The case is an outgrowth of a June 2003 multi-agency investigation, which involved the use of court-authorized wiretaps. Four of the individuals named in this indictment had been arrested in 2003 and charged with the crime of conspiracy to commit insurance fraud.

Providing assistance in this case were the office of the New York City Health and Hospitals Corporation Inspector General and the New York City Department of Investigation. Attorney General Spitzer thanked them, as well as the National Insurance Crime Bureau, Allstate Insurance Company, Clarendon Insurance Company, Eagle Insurance Company, Merchants Insurance Company, New York Central Mutual Fire Insurance Company, and State Farm Insurance Company for their assistance.

The defendants face a maximum sentence of eight and 1/3 years to 25 years incarceration.