Down to Cases- Fraud: Serious crime does serious time

Insurance fraud is a serious crime that increases the cost of insurance that clients pay. Estimates indicate that fraud perpetrators steal approximately $100 billion a year from insurers. Although insurance fraud is a major crime in all but two or three jurisdictions, it is seldom prosecuted and the punishment often is minimal. An exception to the rule is the California case of People v. Zanoletti, 170 Cal.App.4th 1516, 89 Cal.Rptr.3d 156 (Cal.App. Dist.2 02/10/2009) modified by People v. Zanoletti, No. B199682 (Cal.App. Dist.2 04/28/2009). The Zanolettis, Ramon Alfonso (Alfonso) and his wife, Magdalena Rosalis (Magdalena) operated an automobile accident fraud “mill,” where they fraudulently inflated medical treatment of those involved in legitimate automobile accidents. Every insurance agent and broker should be aware of these schemes and, if any evidence that one of your clients is involved as a victim, report the suspicion to the insurer’s special investigation unit and/or the state fraud unit. Alfonso and Magdalena were convicted of insurance fraud by jury, and appealed judgments. Specifically, Alfonso was convicted of 19 counts of felony insurance fraud with findings of a pattern of fraudulent taking of more than $100,000 and damages exceeding $50,000. He also was convicted of one count of misdemeanor unauthorized practice of law. Magdalena was convicted of the same insurance fraud counts and special allegations, plus another 19 counts of felony insurance fraud with the same special allegations. The trial court denied probation and sentenced each appellant to 22 years in state prison. The trial court also ordered each to pay a $200 restitution fine, a $20 court security fee, a $200,000 aggravated white collar crime fine, and $108,533 in victim restitution to the defrauded insurance. The Court of Appeal affirmed. California Highway Patrol Sergeant Tannon Brown, an expert on automobile insurance fraud, led a multi-agency investigation on insurance claims arising from patients listed in the clinic’s capping book. The investigation focused on 21 patients discussed in detail in the opinion, and in the period between January 2003 and December 2004. Sergeant Brown opined that the clinic was an insurance fraud mill. Insurance fraud is proscribed by statute in California. The evidence in the case overwhelmingly established that Alfonso and Magdalena were part of a sophisticated conspiracy to make fraudulent insurance claims. The court concluded that multiple convictions were appropriate because both Alfonso and Magdalena were involved in multiple acts of insurance fraud in the operation of the medical clinics and fake law firm. Insurance fraud is concerned with the means rather than the end. The crime is complete when an individual “[k]nowingly prepare[s], make[s], or subscribe[s] any writing, with the intent to present or use it, or to allow it to be presented, in support of any false or fraudulent claim.” Analysis While it can be argued that Magdalena and Alfonso had a general scheme to present fraudulent insurance claims, the preparation of any writing with the intent to use it to support a false claim constitutes one violation, and the knowing presentation of a false claim constitutes another separate violation. In addition, the court found that Alfonso also was engaged in preparing fraudulent documents at the law office. For example, with respect to one count, the evidence showed that the paperwork on one alleged patient that was generated at the clinic was then forwarded to the law office, which submitted some of the paperwork to USAA Insurance Co. in support of a fraudulent claim on the alleged patient’s behalf. Magdalena’s separate convictions were appropriately based on the fraudulent claims actually presented by her co-conspirators because the violation is complete when a false claim for payment of loss is presented to an insurance company, or a false writing is prepared or presented with intent to use it in connection with such a claim whether or not anything of value is taken or received. The same analysis applies to all of Magdalena’s convictions. Because Magdalena either directly engaged in or conspired to engage in each of these separate acts of insurance fraud, her convictions were appropriate. A conspiracy exists when the defendant and another person have the specific intent to commit an offense and a member of the conspiracy commits an overt act in furtherance of the conspiracy. Evidence is sufficient to prove a conspiracy if it supports an inference that the parties positively or tacitly came to a mutual understanding to commit a crime. The existence of a conspiracy may be inferred from the conduct, relationship, interests and activities of the alleged conspirators before and during the alleged conspiracy. The evidence overwhelmingly established that appellants were part of a sophisticated conspiracy to make fraudulent insurance claims. Alfonso paid the leases for both the clinic and its medical equipment and paid the clinic’s telephone bill. The sum of the evidence was sufficient for the jury to conclude that multiple claims arose from the ongoing conspiracy between Magdalena and Alfonso to commit insurance fraud. Evidence was presented that each of the witnesses who testified had been charged with insurance fraud for their role in the crimes and was testifying pursuant to a plea agreement, defense counsel emphasized that the testifying witnesses were pursuing plea bargains and argued that they were not impartial witnesses, and the court instructed the jury with the standard instructions regarding the credibility of an accomplice. Magdalena attempted to convince the court to acquit her by arguing that there was no corroborating evidence specifically as to the element that the claims were fraudulent. She pointed out that in the absence of the accomplices’ testimonies that she told them to sign for more treatments than they received, and in the absence of Pineda’s out-of-court statements as reflected in Sergeant Brown’s testimony, there was no evidence that any of the claims presented were fraudulent. But there is no requirement that the corroborating evidence establish every element of the crime. The corroboration required is evidence tending to connect the defendant to the crime. In this case, we find that the corroborating evidence was sufficient because it tended to connected appellants to the crimes. Moreover, each of the accomplices was subjected to vigorous cross-examination by defense counsel. Both the prosecutor and the defense counsel pointed out in closing argument that the issue was which of the stories should be believed. Thus, the jury knew that the accomplice testimony should be viewed with caution. The Court of Appeal affirmed the 22-year sentences, and Magdalena and Alfonso must serve their times in jail for their crimes.