Texas Man Arrested, Charged in $3.5M Staged Accident Fraud Scheme

April 30, 2013

A Duncanville, Texas, man faces federal charges in an alleged multi-million dollar staged accident fraud scheme.

The U.S. Attorney’s Office for the Northern District of Texas reported that Leroy Nelson was arrested by federal agents on felony charges, outlined in an indictment returned by a federal grand jury in Dallas.

The indictment charges Nelson with six counts of mail fraud and six counts of engaging in illegal monetary transactions, according to the announcement by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

The indictment alleges that from at least 2005, Nelson and others, devised a scheme to defraud multiple insurance companies by submitting false claims for fictitious automobile accidents. As part of the scheme, Nelson promised cash payments to individuals he recruited for them to falsely report to their automobile insurance company that, while driving, they damaged a piece of equipment that was on the road or that was being hauled by a trailer, according to the federal prosecutors. Nelson provided scripts to these individuals that instructed them on how to report the damage to their insurance company.

The U.S. Attorney’s Office alleged that Nelson fabricated the written claims and submitted them to insurance companies. The damaged equipment was described as very technical in nature, such as: a “Remote Aircraft Landing Marker,” a “chemical Pipeline Examiner” or a “Seismographic Probe.”

The claims would include a fictitious repair estimate and a photograph of the equipment. The claimed repair expenses would usually be from $16,000 to $19,000.

When insurance companies paid the claims, checks would be mailed to an address that Nelson provided. He directed the insurance companies’ checks to either warehouses he owned in Duncanville or to private mail boxes he had opened in Minnesota, Missouri, Mississippi, Washington, Arizona, Connecticut and Louisiana.

After establishing the mail boxes, Nelson directed that the mail be forwarded to his address on Explorer Street in Duncanville.

A federal indictment is an accusation by a grand jury and a defendant is entitled to the presumption of innocence unless proven guilty, federal officials noted.

If convicted, however, each of the mail fraud counts carries a maximum statutory penalty of 20 years in federal prison and a $250,000 fine; each of the engaging in an illegal monetary transaction counts carries a maximum statutory penalty of 10 years in federal prison and a $250,000 fine. In addition, restitution could be ordered.

The indictment also includes a forfeiture allegation, which would require Nelson, upon conviction, to forfeit to the government proceeds traceable to the property as well as seven vehicles, including two Mercedes, a motor home, a boat and his residence on Explorer Road in Duncanville.

The investigation is being conducted by the FBI, Internal Revenue Service Criminal Investigation and the U.S. Postal Inspection Service. Assistant U.S. Attorney Christopher Stokes is in charge of the prosecution.

Source: U.S. Attorney’s Office for the Northern District of Texas

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