Ohio Department of Insurance Director Ann Womer Benjamin reported the Department’s “Top 10″ insurance fraud cases for 2005, which involved a total of more than $5.5 million.
The Department reorganized its Office of Investigative and Licensing Services in 2005 to create a Fraud and Enforcement Office and a Market Regulation and Licensing Office. Both offices were allocated with additional resources, which reportedly made a positive impact.
In 2005, the Department opened 139 consumer insurance fraud cases. Fifty-six of those cases were referred for prosecution, an increase of 144% over those referred in 2004. A total of 240 insurance agent misconduct actions – compared to 108 in 2004 – were referred for administrative action, criminal action – or both.
The Department’s top fraud cases for 2005 were:
1. Former Agent Sentenced for $2.5 Million Premium Misappropriation
Philip A. Regano – Cleveland: Regano was indicted Aug. 4, 2005 on one count of mail fraud. He pleaded guilty on Oct. 5, 2005. On Dec. 22, 2005 he was sentenced to 63 months in prison, followed by three years of supervised release, and was ordered to make restitution in the amount of $2.5 million. Regano misappropriated over $600,000 from insurance clients by taking money to invest in policies that did not exist. He also misappropriated funds from clients by selling promissory notes in gold products and then using the money for his own purposes. The Department revoked Regano’s insurance license on July 26, 2005.
2. Former Agent Gets Four Years for $200,000 Theft
William Tad Cuckler – Athens: Cuckler pleaded guilty on Dec. 15, 2005 to three counts of theft and one count of aggravated theft for stealing more than $200,000 from his clients. Cuckler took their money to invest in annuities, but instead he used it for his own purposes. In some cases he used money from new clients to pay back money he had taken from previous clients. Cuckler was sentenced on Jan. 27, 2006 to four years in prison. The Department revoked Cuckler’s insurance license on Oct. 24, 2005.
3. Agent’s License Revoked for Stealing $215,000 from Seniors
David B. Paige – Marietta: Paige was found guilty of two counts of theft, and was sentenced to five years in prison on April 15, 2005. Paige withdrew $215,000 from his three clients’ retirement annuities for his own use. The insurance companies which held the annuities made the victims whole, and Paige was ordered to pay restitution to the insurance companies. The Department revoked Paige’s insurance license on Jan. 31, 2005.
4. Agent Steals $80,000 from Elderly Client
Randall L. Webb – Springboro: Webb was convicted on July 15, 2005 of theft by deception for stealing approximately $80,000 from the annuity of a retired elderly client. Webb was sentenced two years in prison. The Department is pursuing revocation of his license.
5. Agent Disciplined for $49,000 Annuity Theft
Michael L. Fair – Cincinnati: Fair was convicted on Nov. 9, 2005 of one count of theft for stealing $49,000 of annuity retirement money from an elderly client. Fair was sentenced to one year in jail, but the sentence was suspended when he made full restitution to the victim. Fair is serving one year under community control. The Department revoked his insurance license on Dec. 12, 2005.
6. Arson and $250,000 Insurance Fraud Nets Prison Time
Kevin Dalton – Athens: Dalton pleaded guilty on Jan. 21, 2005 to engaging in a pattern of corrupt activity, aggravated arson and insurance fraud. He was sentenced to eight years in prison and was ordered to forfeit his real estate valued at more than $300,000. Dalton was responsible for burning down two residences in Athens County, after being paid by the homeowners to carry out the act. This was part of a scheme to defraud two insurers of $250,000 of insurance proceeds. Both homeowners also pleaded guilty to insurance fraud and were each sentenced to three years in prison.
7. Fake Flood Claim of $122,000 Results in Indictment for Claimant
Martin McNamee – Columbus: In July of 2001 McNamee submitted a flood loss claim to his insurer for a broken water line, which was settled for $122,000. An investigation determined that he allegedly staged the loss and used the proceeds to finance his struggling business. He was indicted on Aug. 12, 2005 by a grand jury on charges of money laundering, mail fraud and for filing false tax returns.
8. Illegal $1.6 Misappropriation Ruins Business, Hurts Many
Gloria Long and Mike Wozniak, Midwest Title – Delaware: Gloria Long and her husband Mike Wozniak were indicted on Nov. 15, 2005 on six counts of theft, six counts of money laundering and one count of engaging in a pattern of corrupt activity. The charges arose out of allegations that Long, the owner of Midwest Title, had spent more than $1.6 million that had been improperly transferred from the escrow accounts of Midwest Title. These acts caused the collapse of Midwest Title and resulted in serious financial hardship for consumers whose escrowed funds disappeared. The Department revoked Gloria Long’s license on July 2, 2001. This matter is scheduled for trial before the Delaware County Common Pleas Court.
9. Duo Indicted on 52 Felony Charges in $760,000 Fraud
Carl Fanaro – Columbus: On July 1, 2005 Fanaro and a co-defendant, William Mayes, were indicted on 52 felony charges relating to the illegal sales of securities. They were indicted on Jan. 27, 2006 on 105 felony charges, including securities violations, receiving stolen property and engaging in a pattern of corrupt activities. These charges arose out of allegations as to their conduct in making sales of investment contracts to a number of Fanaro’s insurance clients. Fanaro’s insurance license was revoked on Dec. 8, 2004. The criminal charges are set for trial before the Licking County Common Pleas Court.
10. Trial Date Set in $60,000 Staged Accident Case
Terri Pennington – Columbus: Between July and September of 2004 Pennington was allegedly involved in five staged accidents in Franklin County. These accidents involved claims of bodily injuries being filed with various insurance companies. On July 28, 2005 Pennington and five others were indicted on charges of insurance fraud, theft and falsification. The case is scheduled for trial before the Franklin County Common Pleas Court.