Pennsylvania Agency Owners Indicted for Fraud

November 4, 2011
Penn. Agency Owners Indicted

Insurance agency owners from Pennsylvania were indicted this week with 13 counts of wire fraud, mail fraud and conspiracy to commit wire and mail fraud.

Bruce and Irene Gardner, of Richboro, and Michael Gardner, of Philadelphia, owned and operated Gardner Financial Services, an insurance brokerage agency.

According to the U.S. Attorney’s Office in Philadelphia, the indictment charges that defendants used the insurance agency to defraud clients, insurers and finance companies.

Later, when the Pennsylvania Insurance Commission discovered the fraud and threatened to revoke the company’s license, defendants Bruce Gardner, Michael Gardner, and Irene Gardner inflated the sales price of the company by misrepresenting the numbers of clients and policies.

If convicted, Bruce Gardner and Michael Gardner face a maximum sentence of 230 years imprisonment, a three-year term of supervised release, a $3.25 million fine, and a $1,300 special assessment. Irene Gardner faces a maximum sentence of 45 years imprisonment if convicted. All defendants are presumed innocent until proven guilty.

• Here are some other insurance fraud stories making news this week in the northeast:

N.Y. Companies Accused of Fraudulent Claims

Allstate said on Friday it is seeking to recover more than $5 million from 21 New York-area defendants. The insurer says 17 laypersons, rather than licensed professionals, illegally owned and controlled three professional acupuncture corporations and used them to submit fraudulent billing to Allstate.

The lawsuit alleges that the defendants submitted or facilitated the submission of claims for acupuncture services through professional corporations that were never eligible to collect no-fault insurance benefits.

The insurer’s complaint was filed under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and New York common law.

The lawsuit was filed following an investigation by Allstate’s special investigative unit. The suit seeks reimbursement for personal injury protection benefits Allstate paid on behalf of its customers. Since 2003, Allstate has filed 33 fraud lawsuits in New York, seeking nearly $180 million in damages.

N.J. Social Worker Sentenced to Probation

A Toms River, N.J., social worker was sentenced to five years of probation on Friday for fraudulently billing insurers for services not rendered.

Mary Rizzuto, a licensed clinical social worker, admitted that between 2003 and 2008, she fraudulently obtained money from Horizon Blue Cross Blue Shield and Guardian Life by submitting claims for professional services supposedly provided to insureds.

But it was found that she did not actually provide these services as she had claimed. In addition to probation, she is ordered to pay $76,304 in restitution. She is also due for disciplinary actions before the New Jersey Board of Social Work Examiners.

Penn. Motorist Filed Fraudulent Report

A Hatfield Township, Penn., motorist got a two-year probation sentence this week for auto insurance fraud. Mark DiMichele admitted that he filed a fraudulent stolen-car report and filed a claim with his insurer, in an attempt to allegedly hide his involvement in a hit-and-run accident where there was property damage.

After filing an official theft report with police, the motorist was accused of filing a written insurance claim with his insurer. The driver also received a 1-year probation sentence after pleading guilty to not stopping at an auto accident he was involved in.

Penn. Businessman Convicted of Felony

An Abbottstown, Penn.-based home contractor has been convicted of third-degree felony involving insurance fraud. Steven Gebhart was found guilty of withholding pertinent information from his insurer, which was investigating an arson of his office.

He was accused of providing the insurer with an inaccurate inventory in his office that was burnt down. The insurer had paid $200,000 for the loss.

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