Three members of a $31.7 million trip-and-fall scheme to defraud New York City businesses and their insurance companies have been sentenced to prison.
Bryan Duncan, Robert Locust and Ryan Rainford were sentenced by U.S. District Judge Disney H. Stein in connection with their participation in the multimillion dollar fraud scheme. Duncan was sentenced to 80 months in prison, Rainford was sentenced to 68 months in prison, and Locust was sentenced to 60 months in prison.
This comes after the three were convicted on May 28, 2019, for their participation in a conspiracy to commit mail and wire fraud following a three-week trial before Judge Stein. The jury also convicted Duncan of a second count of conspiracy to commit mail and wire fraud, along with one count of mail fraud and one count of wire fraud.
Co-conspirators Peter Kalkanis, a former chiropractor, and Kerry Gordon previously pled guilty before Judge Stein to conspiracy to commit mail and wire fraud, mail fraud and wire fraud. Kalkanis also pled guilty to aggravated identity theft. Kalkanis and Gordon have yet to be sentenced.
“Bryan Duncan, Robert Locust, and Ryan Rainford were each sentenced to lengthy prison terms for their roles in an age-old fraud scheme that was callous and exploitive,” said Manhattan U.S. Attorney Geoffrey S. Berman in a press release announcing the sentencing. “They honed the slip-and-fall ‘accident’ to an efficient operation, recruiting people to stage accidents, filing fraudulent lawsuits against property owners, steering ‘accident victims’ to particular crooked medical clinics, and often even directing them to have unnecessary surgeries.”
According to the evidence introduced at trial, other proceedings in this case and documents previously filed in Manhattan federal court, Duncan, Locust and Rainford engaged in the fraud scheme between approximately 2013 through 2018. The scheme involved defrauding businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits as a result.
Fraud scheme participants, including the three defendants, recruited hundreds of individuals to stage trip-and-fall accidents at particular locations throughout New York City and to claim that they injured themselves as a result of their accidents. Common accident sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks and purported pot holes.
The three defendants instructed the recruited patients to claim that they sustained injuries to particular areas of their bodies, including the knees, shoulders and backs. After the staged trip-and-fall accidents, recruited patients were referred to specific attorneys who would file lawsuits against the owners of the accident sites and 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. The three defendants, together with others, attempted to defraud their victims of at least $31,791,000 during the scheme.
The recruited patients were also instructed to receive ongoing medical treatment from certain chiropractors and doctors. The fraud scheme participants advised the recruited patients that if they intended to continue with their lawsuits, they were required to undergo surgery to increase the value of their fraudulent lawsuits. The medical procedures included discectomies, spinal fusions, non-surgical epidural injections and knee and shoulder surgeries.
As an incentive to getting surgery, the recruited patients were offered payments after they completed surgery as well as a percentage of any settlement payments from their lawsuits. Patients generally had two surgeries and received between $1,000 and $1,500 after each surgery.
“The whole essence of this conspiracy is find the down-and-out, find the desperate, find the homeless,” Judge Stein said during Locust’s sentencing, according to the press release. “No person who has a job and education and can support his or her family even minimally is going to say, ‘Oh, I’ll undergo unnecessary back surgery for a thousand dollars.’ These people were vulnerable and desperate.”
The three defendants recruited low-income individuals as patients. In some instances, they even recruited patients from homeless shelters in New York City, according to the release. Over the course of the trial, more than 20 witnesses testified, including 11 patients who admitted to staging trip-and-fall accidents at the direction of Duncan, Locust, Rainford or other co-conspirators.
Duncan was one of the organizers and leaders of the scheme. He recruited patients into the scheme, organized the recruited patients’ legal and medical appointments and assisted in procuring the funding for the recruited patients’ medical treatment and lawsuits. Duncan and his partner Kerry Gordon, who started their own case management and legal funding companies, made more than $1.5 million in profit from the fraud scheme.
Locust and Rainford helped recruit patients into the fraud scheme, transported patients to medical and legal appointments, identified potential accident sites, made payments to recruited patients and coached recruited patients on faking their injuries. Kalkanis paid his co-defendants to recruit patients into the scheme and transport the patients to medical and attorney appointments.
In addition to the prison terms, Duncan, Rainford and Locust were each sentenced to three years of supervised release.
Source: U.S. Attorney’s Office, Southern District of New York
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