28 Individuals Arrested For Operating A "Fraud Factory" Of Staged Sham Auto Accidents And Insurance Fraud

        Superintendent of Insurance Gregory V. Serio, New York City Police Commissioner Raymond W. Kelly, Queens District Attorney Richard A. Brown, State Taxation and Finance Department Commissioner Andrew S. Eristoff and State Banking Department Superintendent Diana Taylor announced today the indictment of 43 individuals and corporations for engaging in a widespread no-fault automobile-insurance scheme.

        The group includes a reputed Bonanno crime family associate, five lawyers, three medical doctors, a dentist, other state-licensed medical professionals and clinic employees posing as medical professionals, that conspired to defraud insurance companies of millions of dollars by operating a Queens medical clinic as a "fraud factory" that staged sham automobile accidents, submitted false claims and medical reports and provided unnecessary treatment of individuals with feigned injuries.

        Superintendent Serio said, "Operation Fraud Factory uncovered individuals who were defrauding millions of dollars from the no-fault system which can translate into higher auto rates for honest New Yorkers. The Department has been aggressively fighting no-fault fraud working with the Queens DA, NYC Police Department, the Department of Tax and Finance and the Banking Department as a key component in Governor Pataki's strategy to stabilize the auto insurance market. Today's arrests are indicative of the collaborative work that successfully takes fraudsters off of the streets to protect New York's auto insurance consumers."

        Three of the defendants have additionally been charged with money laundering and are accused of concealing over $1 million of the alleged ring's criminal proceeds by negotiating insurance company checks at a Manhattan check-cashing outlet.

        The multiple indictments are the result of a 14-month undercover investigation that began in January 2003 conducted jointly by the New York Police Department's Auto Crime Division, the New York State Insurance Department's Fraud Bureau, the New York State Department of Taxation and Finance's Tax Enforcement Office, the New York State Banking Department's Criminal Investigations Bureau and the Queens County District Attorney's Organized Crime and Rackets Bureau.

        New York is aggressive in its fight against insurance fraud. To report suspected incidents of insurance fraud call 1-888-FRAUD-NY (1-888-372-8369). It should be noted that an arrest is merely an accusation and that a defendant is presumed innocent until proven guilty.