we provide low rate auto insurance in ky! call us today for a free kentucky auto insurance quote at (502) 245-3625.
"What causes my insurance rate to increase?"
We often hear this question from our current and prospective customers. We recently read of an insurance fraud case where 2 workers compensation carriers in kentucky received fraudlent claims. The article gives an outline of the case. here is the link: Middlesboro Newspaper.
Here is the article as it appears in the newspaper
"Two sentenced for role in insurance scam
Two Tennessee men have been sentenced to 25 months in prison, four months after pleading guilty to mail fraud related to a scheme to hide employees from workers compensation insurance companies.Oliver Bruce Hurley, 54, of Speedwell, Tenn., and Charles William Johnston, 56, of Tazewell, Tenn., appeared before U.S. District Judge Jennifer Coffman in Lexington on Friday.Prosecutors said the men were part of a scheme to defraud insurance companies of more than $6 million.A third person, Gary Slater, 47, Harrogate, Tenn., was found guilty by a jury in August on charges of mail fraud and money laundering. He is scheduled for sentencing on Dec. 16. At the same trial, jurors found Slater's wife, Anita Carol Slater not guilty of the same charges.The prison sentences for Hurley and Johnston were about one-half of what they could have received under federal sentencing guidelines. Coffman accepted the prosecutor's recommendation that the sentenced be reduced because both men had cooperated fully in the investigation from the time of their arrest by assisting authorities in uncovering all the evidence. Additionally, both testified at the Slaters' trial.Evidence at the trial showed that Gary Slater owned a company that provided temporary employees to coal mines in the Middlesboro area. The company employed more than 100 miners, but paid insurance premiums for only 15, said U.S. Attorney Gregory Van Tatenhove.
Van Tatenhove said the scheme involved creating two separate companies on paper with similar names. These companies changed their names several times, adding to the confusion. One employed about 10 percent of the miners, and the other employed 90 percent of them. An insurance policy would be purchased for the smaller of the companies, drastically reducing the amount of their worker's compensation insurance premium.Because the companies had very similar names, coal mine operators using the employees were fooled into believing everyone was covered. Between October 1999 and June 2004 the names Carol Dale Contracting, Inc., Carol-Dale, Inc., B&G Contracting, Inc., B&G, Inc., Cumberland Gap Contracting, Inc., and Cumberland Gap, Inc. were used for the companies."Whenever an employee was injured, the company would either arrange to pay off the injured worker to avoid filing a claim, or they would file the claim in the name of the covered company," Van Tatenhove said in a press release."Between 1999 and 2004, the companies were able to defraud two insurance companies, Kentucky Employers Mutual Insurance Company (KEMI) of Lexington, and the American International Group, Inc. (AIG) of New York, of over $6 million."Evidence at Slater's trial also showed that the men engaged in an elaborate scheme to avoid paying taxes on the profits of the employment service, according to Van Tatenhove. They accomplished this by creating false business expenses and invoices from fictitious trucking companies. Money was moved from one company account to another, before being cashed at Gambrel's Grocery in Arjay, with the use of fictitious gasoline purchase invoices.Slater was described as the ringleader of the scheme, with Hurley assisting by lending his name to the creation of the various companies where payroll was hidden from the insurers. Johnston assisted by doing the bookkeeping for the companies, including the keeping of fictitious books to show to insurance auditors.In addition to the prison sentences, Coffman fined Johnston $250,000 and ordered him to pay $1 million in restitution to the insurance companies - he has 60 days to pay and told the court the money would come from the sale of his business, J & J Accounting - and Hurley was ordered to pay $500,000 in restitution, which he paid several weeks ago.In a related case, Coffman sentenced Carolyn Gambrel to six months of home incarceration for laundering money from the scheme at her grocery store in Arjay. Gambrel, 55, also was fined $30,000 and placed on three years of probation.According to Van Tatenhove, prosecutors do not plan to request leniency for Slater, who faces a potentially stiff sentence of incarceration, fines and restitution.In January, federal officers seized or placed under court ordered restraint numerous assets belonging to Slater and Hurley, including cash, certificates of deposit, vehicles, airplanes, homes and personal assets. The total amount seized approached the $6 million involved in the crime.The investigation leading to the indictments in this case was a joint effort by a number of private and government entities. The investigation began with in-house auditing and questioning by officials at KEMI. Later, the matter was turned over to the investigating arm of the Kentucky Department of Insurance and ultimately to the United States Postal Inspection Service. Officials from AIG were alerted that they were potential victims and also provided support to the investigation."
Unfortunately, it is cases similar to these that cause insurance rates to increase.
No comments:
Post a Comment