A New York litigation funder and the fifth member of a $31 million trip-and-fall fraud scheme has been arrested and charged in Manhattan Federal Court.
An indictment has been unsealed charging Adrian Alexander with conspiracy to commit mail and wire fraud, mail fraud and wire fraud in connection with a scheme to obtain fraudulent insurance reimbursements and other compensation for fraudulent trip-and-fall accidents. Alexander was arrested and will be presented before United States Magistrate Judge Robert W. Lehrburger.
A prior indictment in the case charged New York lawyers George Constantine and Marc Elefant and New York doctors Sady Ribeiro and Andrew Dowd for their participation in the fraud scheme. The superseding indictment adds Alexander, who allegedly funded fraudulent lawsuits in furtherance of the trip-and-fall scheme, as the fifth individual charged in the case. The case is assigned to United States District Judge Sidney H. Stein.
“As alleged, a New York litigation financier has been implicated in this massive trip-and-fall fraud scheme, along with lawyers and doctors who were previously charged,” said U.S. Attorney Damian Williams in a press release issued by the U.S. Department of Justice. “The defendant is alleged to have knowingly financed scores of fraudulent lawsuits, preying upon the desperation of others for his own financial gain.”
According to the allegations in the superseding indictment, from around January 2013 to around April 2018, Alexander and his codefendants engaged in an extensive fraud scheme through which the defendants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits.
Fraud scheme participants recruited individuals to stage or falsely claim to have suffered trip-and-fall accidents at particular locations throughout the New York City area. In the course of the fraud scheme, scheme participants recruited more than 400 individuals.
In the beginning, scheme participants would instruct individuals to claim they had tripped and fallen at a particular location, when in fact they had suffered no such accidents. Eventually, at the direction of the lawyers who filed fraudulent lawsuits on behalf of the individuals, scheme participants began to instruct them to stage trip-and-fall accidents. Common accident sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks and purported potholes.
After the staged trip-and-fall accidents, individuals were referred to specific attorneys, including George Constantine and Marc Elefant, who would file personal injury lawsuits against the owners of the accident sites and/or insurance companies of the owners of the accident sites. The fraudulent lawsuits did not disclose that the individuals 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, together with others known and unknown, attempted to defraud the victims of more than $31 million.
The individuals were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors, including Andrew Dowd and Sady Ribeiro. The fraud scheme participants advised the individuals that if they intended to continue with their lawsuits, they were required to undergo surgery. As an incentive to getting surgery, the recruited individuals were offered a payment of typically between $1,000 and $1,500 after they completed surgery. Patients generally were told to undergo two surgeries. Doctors in the fraud scheme, including Dowd and Ribeiro, were expected to conduct these surgeries regardless of the legitimate medical needs of the individuals.
Members of the fraud scheme often recruited individuals who were extremely poor or who were desperate enough to submit to surgeries in exchange for the small post-surgery payments. Members of the fraud scheme also recruited individuals who were drug addicts. It was also common for scheme participants to recruit individuals from homeless shelters in New York City.
The individuals’ legal and medical fees were usually paid for by litigation funding companies, including a funding company owned by Alexander, even if the individual maintained medical coverage through an insurance company or a government-subsidized program. The funding companies also paid the fraud scheme organizers and participants referral fees, typically $1,000 to $2,500, for each individual who signed a funding agreement.
In exchange for funding individuals’ medical and legal costs, the funding companies charged the individuals high interest rates, sometimes up to 50% on medical loans and up to 100% on personal loans. The interest rates were so high that often, the majority of the proceeds that were awarded in the fraudulent lawsuits were paid to the funding companies, lawyers, doctors and others, with the individuals receiving a much smaller percentage of the remaining recovery.
Alexander had boasted to investors that his funding company had annual returns in excess of 30%. In addition to owning one of the primary funding companies used in the fraud scheme, Alexander owned an MRI facility that performed MRIs on many of the individuals.
He is charged with conspiracy to commit mail and wire fraud, which carries a maximum sentence of 20 years in prison, mail fraud, which carries a maximum sentence of 20 years in prison, and wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Source: U.S. Attorney’s Office, Southern District of New York
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