Thursday, Aug. 14, 2003. Page 3
Hundreds Charged in U.S. Scam
Combined Reports GARDEN CITY, New York -- Hundreds of people -- including doctors, lawyers, chiropractors and psychologists -- have been indicted on insurance fraud and other charges involving millions of dollars in claims on staged auto accidents that prosecutors say was part of an organized crime ring with links to Russia.
Nearly 600 indictments have been filed in connection with the Brooklyn-based fraud ring, and further charges are likely, Suffolk County District Attorney Thomas Spota said Tuesday.
The charges follow a yearlong investigation into accidents that took place on Long Island and in New York City, Spota said. Only 86 defendants have been arraigned so far, but the remaining indictments are expected to be unsealed in the coming days and weeks, he said.
Many of those arrested so far are U.S. citizens of Russian descent living in the Brighton Beach section of Brooklyn, said Robert Clifford, a spokesman for Spota.
Clifford said investigators "definitely know profits gained by the ring ... were accessed by counterparts in Russia. This was an organized criminal enterprise."
Some profits from the frauds were channeled to businesses in Russia, while others were funneled into a Swiss bank account and withdrawn by Russian citizens, authorities said.
"It's one of the biggest busts in the nation in terms of its breadth, its scope and the dollars involved," said Robert Hartwig, the chief economist of the Insurance Information Institute, an industry group. "We're talking about bringing down an entire network. It's analogous to bringing down a drug kingpin."
Spota said the ring used "runners" and "crash dummies" in cars that would cut in front of other cars, often driven by women with children or by elderly people, slam on the brakes, and cause a crash. The authorities said the investigation dates to 2001, when they received word from insurers who noticed the same names were popping up over and over on insurance claims. One runner was involved with about 1,000 accidents.
The frauds began with accidents in which a runner would recruit friends, relatives or strangers, promising them $500 apiece for participating. The runner would load them into an inexpensive sturdy American car -- usually an aging Cadillac or Lincoln -- and drive onto a highway, then veer in front of an unsuspecting driver to cause an accident, usually a fender bender. The accidents were staged mainly in Brooklyn, Queens, Long Island and Westchester.
In the confusion, the driver would dart from the car and be ferried away in another automobile, leaving someone else to pose as the driver, in order to avoid being connected to a string of accidents. Sometimes, the getaway car would disgorge people who would later claim to have been in the accident, Clifford said.
The passengers then went to one of several counterfeit medical clinics in Brooklyn and Queens that had been set up specifically to treat them, prosecutors said. The clinic management filed no-fault insurance claims and ordered a barrage of tests and procedures, sometimes performing them and sometimes not, the prosecutors charged.
The clinics were financed by lawyers, accountants and other investors, though doctors are listed as the owners. Lawyers whom prosecutors said were aware that the claims were false often called the insurance companies and threatened to file suits if the claims were not paid.
Each passenger could bring in $50,000, officials said. According to Peter Smith, a Suffolk County assistant district attorney who investigated the ring, runners received $1,500 per "patient" while the "crash dummies" received up to $500 per crash. The lawyers who pressed the claims reaped one-third of the profits, and the clinic managers received another third.
Some of the passengers had been in 30 or 40 accidents, though prosecutors said that one man who was indicted, Aleksandr Tarashchansky, had orchestrated as many as 1,000. Tarashchansky, speaking in halting English, referred questions about the charges to his son, who in turn referred them to Tarashchansky's lawyer, who could not be reached for comment.
Prosecutors said Tarashchansky carried a small book that contained the names of 300 doctors, clinics and other contacts.
In all the alleged accidents announced Tuesday, the insurance company was State Farm, which allegedly was defrauded out of $48 million.
"That's the hidden cost of fraud," said Sam Lantz, a State Farm claim manager. "If you buy insurance in the state of New York, you're paying for this crime." (AP, NYT)
