Fraud Roundup

October 3, 2011

Former Controller for Texas Insurer Sentenced for Wire Fraud Scheme

The former controller for a Houston-based property/casualty insurance company has been sentenced to 120 months in federal prison for her conviction of conspiracy to commit wire fraud involving almost $1 million in loss to the victim company, according to the U.S. attorney’s office.

U.S. Attorney José Angel Moreno said Carla Jean Johnson, 40, of Houston, was sentenced by U.S. District Judge Melinda Harmon. The announcement noted that Johnson abused a position of trust, using her leadership role to involve 13 others to assist in the theft which took place over a two-year period.

Johnson, the former controller for Columbia Lloyd’s, will be required to serve a three-year-term of supervised release upon completion of her prison sentence and was ordered to pay $977,418.38 in restitution. The court stated that the defendant’s actions “substantially affected the company and individuals to a great degree.”

The one-count indictment, returned Dec. 14, 2010, alleged that Johnson worked as controller of a Houston insurance company beginning in 2005. On or about, July 11, 2007, through July 11, 2009, Johnson began sending money from the company’s account to her friends, family and at least one co-worker, who would then return some of the money to Johnson.

On April 21, 2011, Johnson pleaded guilty to the wire fraud.

The fraud was discovered July 11, 2009, when Johnson and co-defendant Donnie Smith, 33, of Houston and Atlanta, Ga., tried to cash a Columbia Lloyd’s check for $180,000 made out to Smith at a local Wachovia branch. Johnson was fired from her position as controller July 13, 2009, when company officials confirmed to Wachovia that the check was fraudulently issued.

Upon a close examination of their accounts, the company, along with the FBI, discovered additional fraudulent withdrawals by Johnson. She had disguised her theft in some instances by listing the payee as an insurance company or by listing a claim or policy number on the document authorizing the transfer of money to a co-conspirator.

Johnson has been in federal custody without bond since her Dec. 20, 2010, arrest.

Smith previously pleaded guilty and was sentenced on Sept. 2, 2011, to 41 months in federal prison followed by three years of supervised release and ordered to pay $199,914 in restitution.

Another co-defendant, Royce Lamar Smith, 38, of Houston, pled guilty in April 2011 and was sentenced on Aug. 26, 2011, to 60 months imprisonment followed by a three-year-term of supervised release and ordered to pay $168,474.91 in restitution. Royce Smith was on state felony shock probation along with Johnson for a theft from Johnson’s prior employer in 2004.

Texas Car Dealer Convicted in Title Washing Scheme

A federal jury in Texas has convicted a car dealer from Rowlett for “title washing,” a fraudulent process through which a vehicle’s title is corruptly altered to conceal information that should normally be contained on the title, such as a previous salvaged title or a financial lienholder.

U.S. Attorney John E. Murphy said that 49-year-old car dealer Jerry Edward Weaver was found guilty after evidence presented during trial revealed that between June 2009 and October 2010, Weaver, co-defendant Babauk Omeed Harizavi of San Antonio, and others were involved in a scheme to defraud, by requesting and filing fraudulent paperwork with the Texas Department of Motor Vehicles seeking clean Texas vehicle titles using the mechanic’s lien process.

Upon receipt of the clean Texas vehicle titles, the defendants sold those vehicles to unsuspecting consumers or third parties without disclosing the past “certificate of destruction,” “salvage title,” or “parts only” title histories of those vehicles, according to the U.S. attorney’s office.

Weaver, Harizavi and their co-defendants are collectively responsible for 613 fraudulently obtained Texas vehicle titles issued by the Texas Department of Motor Vehicles based on fraudulently filed mechanic’s liens, the U.S. attorney’s office said.

Weaver was convicted on two counts of mail fraud. He faces up to 20 years in federal prison per count; sentencing is scheduled for January.

Co-defendants Babauk Omeed Harizavi of San Antonio, Hassane Mahmoud Kobeissi, of Swedesboro, N.J., Daniel Thomas Bass, of San Antonio, Texas, and Jayeshkum C. Patel, of Sayerville, N.J., previously pleaded guilty to mail fraud.

Hassane Mahmoud Kobeissi also pled guilty to smuggling goods from the United States.

Operation Title Sweep was initiated by the FBI in San Antonio, Texas Department of Public Safety, United States Postal Service and the National Insurance Crime Bureau. Also assisting were the Texas Department of Motor Vehicles and the Office of Inspector General – General Services Administration. The Hartford Insurance Agency also assisted in the investigation.

Topics USA Texas

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Insurance Journal West October 3, 2011
October 3, 2011
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Surplus Lines: State of the Market / NAPSLO Issue, Lloyd’s Syndicate Spotlight, Agency Financial Products Directory (Banks, Funding, Capital for Acqui