Five New York Residents Charged in More Than $31.7M Fraud Scheme

April 20, 2018

Five New York residents have been arrested in a staged slip-and-fall accident scheme that attempted to defraud New York City-area businesses and their insurance companies of more than $31.7 million.

Peter Kalkanis, Bryan Duncan, Kerry Gordon and Ryan Rainford, all of Queens, New York, and Robert Locust, of Brooklyn, New York, carried out the scheme by staging slip-and-fall accidents and then seeking to obtain fraudulent insurance reimbursement and other compensation. Kalkanis, a former chiropractor, was the organizer and leader of the scheme, according to an indictment unsealed in Manhattan federal court.

“As alleged, these defendants employed one of the oldest plays in the fraudster handbook – the fake slip-and-fall routine – to develop a network of ‘fall victims’ to obtain an astonishing $31 million in fraudulent insurance and compensation payouts,” said Manhattan U.S. Attorney Geoffrey S. Berman in a press release issued by the United States Department of Justice. “Allegedly, some of the ‘victims’ went as far as having unnecessary surgery to increase the likelihood of a higher settlement. Today, however, these defendants’ fraud careers are over, and they will be forced to answer for their alleged crimes.”

The indictment alleges that the five defendants have been engaged in the fraud scheme since 2013.

Scheme participants recruited individuals to stage slip-and-fall accidents at locations throughout New York City and to claim they injured themselves and needed medical treatment as a result.

After the staged accidents, recruited patients were referred to specific attorneys who would file lawsuits against the owners of the accident sites and/or their insurance companies. The lawsuits did not disclose that the recruited patients had deliberately fallen at the accident sites or, in some cases, had not fallen at all. During the course of the fraud scheme, the defendants and others attempted to defraud New York City businesses and insurance companies of at least $31,791,000.

The recruited patients were also instructed to receive ongoing chiropractic and medical treatment. The scheme participants advised recruited patients that they were required to undergo surgery if they intended to continue with their lawsuits. As an incentive to getting surgery, the recruited patients were offered payment after they completed surgery as well as a percentage of any settlement payment from their lawsuit.

As alleged in the indictment, Kalkanis paid his co-defendants to recruit patients into the scheme and transport the patients to medical and attorney appointments. He also organized the recruited patients’ legal and medical appointments and assisted in procuring the funding for the recruited patients’ medical treatment and lawsuits.

Duncan, Gordon, Locust and Rainford helped recruit patients into the fraud scheme, transported patients to medical and legal appointments, identified potential accident sites and coached recruited patients on faking their injuries, according to the indictment.

“The intentional misrepresentation of an accidental slip and fall, and the subsequent defrauding of businesses and insurance companies, is a reprehensible crime in and of itself,” said FBI Assistant Director-in-Charge William F. Sweeney Jr. in the release. “But perhaps the most shocking allegation revealed today is the fact that additional incentives were offered for participants to undergo surgery in order to receive payment for their involvement.”

The five defendants are each charged with one count of conspiracy to commit mail and wire fraud, one count of mail fraud and one count of wire fraud. Each charge carries a maximum sentence of 20 years in prison. Kalkanis is also charged with one count of aggravated identity theft, which carries a two-year mandatory prison sentence.

The maximum potential sentences and minimum sentence in this case are prescribed by U.S. Congress and are provided for informational purposes only, as any sentencings of the defendants will be determined by the judge. The charges contained in the indictment and complaint are merely accusations, and the defendants are presumed innocent until proven guilty.

This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Nicholas Folly, Alexandra Rothman and Nicholas Chiuchiolo are in charge of the prosecution. The five defendants were set to be presented yesterday before United States Magistrate Stewart D. Aaron in Manhattan federal court, and the case has been assigned to United States District Judge Laura Taylor Swain.

Source: United States Department of Justice

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