Fraud Roundup

June 19, 2006

Marketing fraud scheme results in 560 arrests; $1 billion in losses
More than 560 people have been arrested in an international investigation of mass-marketing fraud schemes that have victimized more than 2.8 million people, the U.S. Justice Department said.

Losses exceeded $1 billion and included bogus lottery, prize and sweepstakes offerings, phony preapproved credit card and card protection deals, and invitations to pour money into nonexistent investments, DOJ said.

The schemes were carried out through telemarketing, mass mailings and the Internet. The 14-month investigation, dubbed Operation Global Con, has so far resulted in 139 arrests in the United States and another 426 in Canada, Costa Rica, the Netherlands and Spain. Sixty-one people have been convicted in the United.

In May, Costa Rican and U.S. authorities made arrests in a phone-based scam in which prospective victims received offers of up to $4.5 million from the Sweepstakes Security Commission and other fictitious organizations. The winners first had to pay “insurance fees.” Some victims were contacted again, this time by people pretending to be customs officials who demanded additional payments, DOJ said.

Attorney General Alberto Gonzales and Federal Trade Commission Chairman Deborah Platt Majoras announced additional details of the operation later at a news conference in Washington.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Eight arrested in California for defrauding insurance carriers
The California Department of Insurance (CDI) Fraud Division conducted an arrest warrant sweep that resulted in the arrests of eight suspects in Tulare, Fresno and San Luis Obispo counties.

The suspects in these cases are being prosecuted by the District Attorney’s offices in Fresno and Tulare counties. The cases involve fraudulent claims made against both automobile and homeowners’/renters’ insurance policies to Pacific Specialty, State Farm and Farmers Insurance Companies. The warrants were issued by Tulare County Superior Court, Fresno County Superior Court and Kings County Superior Court.

Aaron Scott Timmons of Commerce was charged with three felony counts of insurance fraud, with bail set at $300,000. He also was charged with lewd and indecent acts upon a child and held without bail.

Timmons was arrested in Medford, Ore., where he was under an alias. The charges stem from his alleged involvement in a series of staged burglaries in Visalia, used to make fraudulent insurance claims, CDI said. Timmons faces a maximum of seven years in prison and/or a $50,000 fine.

Julie Belinda Dennis of Porterville was charged with two felony counts of insurance fraud. Bail is set at $50,000. Her charges stem from alleged involvement in staged burglaries, CDI said. Dennis faces a maximum of six years in prison and/or a $50,000 fine.

Elizabeth Sue Maxwell of Paso Robles was charged with one misdemeanor count of insurance fraud, with bail set at $10,000. She also was charged with violation of probation on a conviction of possession of alcoholic beverages by a minor. The bail for that was $10,000. She faces a maximum of one year in the county jail and/or a $50,000 fine.

Mark Alan Nelsen of Visalia was charged with two felony counts of grand theft by fraud; one felony count of obtaining money, labor or property using false pretenses; one felony count of conspiracy to obtain money or property using false pretenses; one felony count of forgery; two felony counts of providing false or misleading statements to insurers that would affect a person’s ability to obtain any insurance policy; and one felony count of false impersonation of another in private or official capacity in acts imposing liability, CDI said. Bail was set at $50,000. Nelson also was charged with violation of providing alcoholic beverages to a minor.

Nelson’s charges stem from his alleged participation in an “advance commission” scheme in which he allegedly targeted elderly and disabled persons for sales of insurance policies. If the person did not or could not purchase the policy, he would allegedly assume the person’s identity to purchase the insurance policy, which would be paid for by automatic deduction from a bank account.

Investigators said Nelson sent a money order for the first month’s premium with those applications and fictitious bank account information. Upon issuance of these policies, Union National Life, American Amicable of Texas, and Conseco Life, would send Nelsen a commission check usually equal to the total premiums for the first year of the policy. Nelson faces a maximum of seven years, 10 months in prison and/or a $50,000 fine.

Nyenye King of Visalia was charged with one felony count of insurance fraud, with bail set at $20,000. Her charges stem from an insurance claim made to Danielson National Insurance Co. for a vehicle collision in which King stated she was the driver. Investigation revealed the driver at the time of collision was an individual excluded from coverage, CDI said. King faces a maximum of five years in prison and/or a $50,000 fine.

Ivan Dillard of Visalia was charged with one felony count of insurance fraud and three counts of having prior convictions for specified felonies, with bail set at $100,000. His charges stem from statements he made in support of an insurance claim made to Danielson National Insurance Co. for a vehicle collision in which King stated he was the driver. If convicted, Dillard faces a maximum of 25 years in prison and/or a $50,000 fine.

Ricardo Ruvalcaba of Kingsburg was charged with two felony counts of insurance fraud, one count of destroying or secreting insured property for the purpose of making a false insurance claim, and one count of making a false police report, with bail set at $11,000. His charges stem from his alleged involvement in a “staged vehicle theft” whereby he hid his vehicle at a friend’s home and then reported it stolen. According to CDI, Ruvalcaba made an insurance claim against his carrier, the United States Automobile Association. At the time he reported the theft, Ruvalcaba was unaware that his vehicle was equipped with a LOJACK transponder that allowed the Kingsburg Police Department to locate the vehicle. According to investigators, both he and his friend later admitted the vehicle theft was staged.

Patrick K. Chuman was charged with three felony counts of insurance fraud with bail set at $15,000. His charges stem from a claim against Allied Insurance made for vehicle theft. The vehicle was involved in a hit and run collision shortly before it was reported stolen. Chuman was later identified as being the driver of the vehicle when it was in the collision. If convicted, he faces a maximum of five years in prison and/or a $50,000 fine.

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