Articles from the July 2010 edition of the Minnesota Fraudster.
When it comes to fighting crime, it may seem unusual for database searches, electronic evidence and agency collaboration to play a role. Yet specialists who use these very sources of information are starting to support traditional detectives in their investigations.
Police officers from agencies that lack these specialists may not be familiar with their work and the role they play. Many citizens are not even aware their positions exist. Yet these specialists are part of a new trend in law enforcement. They are criminal intelligence analysts, and they prosecute criminals through communication and technology.
At the Insurance Fraud Division, analysts play a critical role in investigations. They help find and gather evidence on potential cases of fraud in Minnesota. Working in the public's interest, they protect consumers and build cases against suspects.
Analysts also assist detectives, working to get them information when detectives request it. An analyst often spends time gathering intelligence, writing reports and organizing evidence to back up active cases. These tasks require many skills; among them an adroitness for many different sources of information.
Analysts regularly use databases on the state and federal levels to gather facts. Some of them, such as the National Insurance Crime Bureau, are broad sources that extend far beyond the scope of the IFD. Others, like Daedalus, a database that keeps tabs on Minnesotans filing for workers' compensation, are different. They focus on narrower areas that are particular to certain Minnesotan citizens.
Computer databases, however, are not the only resource analysts use in building a case. Gathering evidence in the field also plays a key role. The IFD takes photos and picks up objects from the scene during a search to later examine in the office. Laptop computers are frequently brought in, as often suspects will digitally store records of white-collar crime. Pieces of evidence stay with the division as long as a case stays open.
Evidence may hold very sensitive material, so analysts and detectives need to handle it with care. They enter anything they obtain during a search warrant into a log back at the office. After, they store it in a numbered box in a secure room. Keeping track of it stops anyone from tampering with, stealing or losing it. The evidence will always be there when analysts and detectives need it.
For security, only three people at the IFD can go in the evidence room. The first is the police chief, who not only can enter the room but often grants use of evidence to those that need it.
The other two are analysts called evidence custodians. Their job is to keep the room secure and orderly, and to retrieve items when detectives need to reference them. Leaving evidence in the care of so few simplifies the process and reduces the number of mistakes and other issues. Every item follows a policy that tells when they will release it and whether they will return it to its owner or destroy it.
Most other material analysts refer to in their work on a case stays confidential while the case is still open. If some of it were in the public's hands, it could ruin the case. Often, the IFD makes material public once it charges a suspect and the case enters the court system. If it has too little evidence, it may close the case and make it public.
Analysts stretch their resources beyond the office. Local police in the cities and counties of Minnesota and sometimes in other states and at the national level often help them in an investigation. Analysts estimate other agencies aid in at least 60 to 70 percent of cases. They may have information or have the suspects in their jurisdiction.
The public also helps analysts through the Fraud Tip Line, found at 1-888-FRAUD MN or on the IFD web site. Through the line, they receive hints about potential cases of fraud. While not always reliable, these tips are a starting point. They might later reveal dire crimes. The IFD estimates about one-quarter of tips lead to investigations. It also keeps citizens who give tips safe and may make callers' identities secret to keep them from harm.
Analysts at the IFD play a key role in its success. With backgrounds in insurance, military and law enforcement fields, their work aids the division's goal of stopping insurance fraud and prosecuting it when it occurs.
According to the Insurance Federation of Minnesota, insurance fraud costs each Minnesota family up to $900 annually. Nationwide, the cost is even more staggering. The Coalition Against Insurance Fraud pegs the cumulative cost at around $80 billion annually. It's a vicious cycle that begins with insurance companies raising premiums to compensate for the losses they've taken as a result of fraud. Companies forced to pay those higher premiums then pass the cost on to their employees and consumers in the form of higher insurance costs and higher prices for the goods they sell.
In difficult economic times, insurance fraud is a crime we see committed more frequently. Out of desperation, otherwise law-abiding citizens try to get rid of a mortgage or car payment. Last year, we noticed a sudden jump in the number of reported insurance fraud cases involving arson. It's a trend that most likely can be attributed to cash-strapped consumers and small businesses struggling to get out of debt. In some instances, hardened criminals commit mortgage fraud to buy multiple properties for low prices, and then burn them for insurance payouts.
In most cases, insurance fraud is simply a crime of greed. Unscrupulous doctors, lawyers, bankers and insurance agents view it as a way to line their pockets. Insurance fraud often coincides with other fraudulent activity such as mortgage fraud, securities fraud and health care fraud. Shady chiropractors and other medical providers have been known to prey on unsuspecting crash victims, luring them to sham clinics and billing insurance companies for non-existent treatments. Organized gangs sometimes place their own members in health care facilities so they can steal doctor and patient IDs and then use the information to obtain prescriptions for pain-killer drugs. The drugs are then sold on the street to fund the gang's other nefarious activities.
The Division of Insurance Fraud Prevention, more commonly known as the Insurance Fraud Division (IFD), has been fighting insurance fraud in Minnesota since 2005. The primary focus of the IFD is to deter insurance fraud by aggressively investigating insurance fraud cases for criminal prosecution and promoting public awareness of insurance fraud. In 2010, the IFD plans to implement a statewide private and public awareness campaign to accomplish our strategic goals.
George S. Kyrilis
Chief Law Enforcement Officer
Director, Special Investigations
Division of Insurance Fraud Prevention
Minnesota Department of Commerce
The Insurance Fraud Division keeps a positive working relationship with insurance companies as well as state and local government agencies. It depends on the cooperation of many partners, both in law enforcement agencies and organizations fighting insurance fraud, such as the National Insurance Crime Bureau.
But it aims to do more. In an effort to educate local law enforcement officials and the broader community about insurance fraud, the IFD has launched a statewide insurance fraud awareness program. Since April 2010, IFD detectives have been reaching out to county attorneys, county sheriffs and police chiefs across the state to ensure they are familiar with what insurance fraud looks like and how to combat it. With prepared law enforcement and an informed community backing it up, the IFD can put an even bigger dent in insurance fraud this year and in the future.
According to a complaint filed in Scott County District Court, Reliance Bank came to the Minnesota Department of Commerce in spring of 2009 regarding forged documents. It was refinancing a mortgage on a $3.8 million property that both the State Bank of New Prague and an individual had originally held secured mortgages on, each for over $1 million. The individual's mortgage was subordinate, meaning that if the property were sold, the bank's mortgage would be paid off first, with any leftover going toward the individual's.
The complaint said Reliance Bank would refinance the loan only if the individual mortgagee agreed to keep the subordinate mortgage, which required him to sign off on it. Attorney Andrew M. Morris allegedly forged his signature instead of consulting him while closing on the loan. A year later, when the loan was up for renewal, Reliance Bank discovered the problem and came to the Department, which in turn assigned the investigation to the Insurance Fraud Division.
A detective then investigated the case. According to the complaint file, the detective spoke to the individual mortgagee, who said he did not even know the loan had been refinanced until Morris came to his house and told him he had forged the signature. The individual mortgagee also allegedly said he had no intent to subordinate his loan to Reliance Bank's. The detective showed him the loan-closing document with the signature, and then had him sign a separate sheet of paper to demonstrate his signature. The detective saw a distinct difference in the two. Morris was charged with aggravated forgery and insurance fraud by the Scott County District Court.
Edward W. Oswald made a workers' compensation claim in December 2006 that awarded him $13,000 from the Minnesota Department of Labor and Industry, according to a complaint filed in Ramsey County District Court. The following month, a department employee made a mistake and issued Oswald a check for $55,571.65, a significantly higher amount than he was due. The error went unnoticed until the department audited its financial records in October 2008. At this point, the department notified the IFD and an investigator began work on the case.
According to the complaint, the investigator tried to contact Oswald, calling his home phone and leaving voice mail when he did not answer. He made several other attempts to interview him, but in each case he said Oswald neglected to respond. The investigator then discovered that the check had been deposited at a TCF Bank location, with $1000 of it withdrawn in cash. The complaint states that he examined the banking records for Oswald's account, and found that it had less than $100 listed for each monthly balance before the check was deposited. After the deposit, Oswald allegedly withdrew cash multiple times from his account, often in large amounts. The bank records showed that this resulted in a balance of negative 94 cents by May 2007.
The investigator concluded, according to the complaint, that Oswald cashed and spent the entire amount wrongfully sent to him over the span of about five months. Oswald was then charged with a count of felony theft by the Ramsey County Attorney's Office, and has since pleaded guilty.
Kuntee Singramdoo, a licensed Lakeville real estate closer and title insurer, worked for Walsh Title & Real Estate Services Inc. from February 2004 to February 2008, according to a complaint filed in Dakota County District Court. One of her tasks there was to prepare and distribute checks from Walsh's trust account. During this time, a participant in one of her real estate transactions came to Walsh with questions about a discrepancy between his settlement statement and the money actually paid.
The Minnesota Department of Commerce assigned the IFD to investigate this case for possible insurance fraud. The complaint states that the detective collected documents, obtained search warrants for bank accounts, and suspected Singramdoo used proceeds from the Walsh accounts that funded these checks to pay off personal bills for her and her family members. She allegedly channeled money from lenders to be diverted toward herself by manipulating, concealing or disguising parts of each transaction. These payments would appear on the settlement statement as part of the normal transaction, and allegedly involved hiking up the value of the property by thousands of dollars.
The complaint stated two other men may have been involved: Henry A. Mezqutia, who submitted loan applications, correspondence and other materials to Singramdoo, and Ariel F. Vassallo, a realtor whose name appeared on applications for loans. Arrest warrants are out for both men. Singramdoo was charged with a total of one count of racketeering and 16 counts of theft, theft by swindle and insurance fraud. The amount the complaint file alleges she swindled is estimated to be more than $220,000.