Tag Archives: fraud

AG sues paralegal selling fake court order

KNOXVILLE, Tenn. (AP) — A Tennessee state judge has ordered a Knoxville paralegal to turn over his files and even the contents of his Facebook profile after the state attorney general accused him of ripping off legal customers.

The Tennessee Attorney General’s office has filed a lawsuit against paralegal Jonathan Trotter, the Knoxville News Sentinel reports (http://bit.ly/29E18U8 ). The lawsuit alleges Trotter began advertising his legal services on Facebook after he completed a 17-week paralegal certificate program at the University of Tennessee in 2013.

Assistant Tennessee Attorney General Nate Casey says one woman paid Trotter $800 to help gain custody of her grandson. Trotter gave the woman a court order signed by a judge granting her custody. Casey said the order was a fake and Trotter had forged a judge’s signature.

The attorney general filed the lawsuit under the Tennessee Consumer Protection Act. No criminal charges have been filed, but the allegations have been referred to the Knox County district attorney general.

Trotter has not responded to the lawsuit.

Certified paralegals can perform some legal services, such as preparing court documents. But they cannot practice law, including setting fees, representing clients in and out of court and giving legal advice.

“(Trotter) was not supervised by an attorney and did not have an attorney review the legal documents he prepared for consumers,” the lawsuit stated. “As a result, (Trotter) has provided consumers with erroneous, deficient and ineffective legal advice and documents, and consumers have suffered substantial injury due to (his) unlawful conduct.”

In issuing the order, Knox County Circuit Court Judge Bill Ailor wrote “an injunction is necessary to protect consumers and legitimate business enterprises from defendant’s unfair and deceptive business model.”

State penalizes three for insurance fraud

News release from Department of Commerce and Insurance
NASHVILLE – The Tennessee Department of Commerce and Insurance (TDCI) announces disciplinary actions today against three former Tennessee licensees for misappropriation, failure to report administrative actions, and felony convictions involving fraud.

The punishments were the result of months of work by TDCI’s Insurance Fraud Investigations and Legal teams who ensure the protection of Tennesseans by holding licensees who are engaged in unlawful activity accountable for their misdeeds.

“In announcing these actions today, we hope Tennessee insurance consumers recognize that TDCI is here to help,” said TDCI Assistant Commissioner Michael Humphreys. “Every day our investigators and attorneys are tracking down alleged wrongdoing in order to protect Tennessee insurance consumers. If something doesn’t feel right, we encourage Tennesseans to contact our office for assistance.”

Details of the cases include:

John Paul Kill (Peachtree Corners, Ga.): As a result of a default hearing on Oct.15, 2015, an Order issued by an Administrative Law Judge (ALJ) became Final on Nov. 4, 2015, revoking John Paul Kill’s insurance producer license and imposing a $100,000 civil penalty. The penalty was based on a finding of 48 violations of the Tennessee insurance code for conduct involving the misappropriation of insurance premiums. The ALJ found that on 11 different occasions Kill collected premiums from clients for truck insurance, kept the funds, and never purchased policies totaling over $50,000 in misappropriated premiums. In addition, Kill was convicted of insurance fraud in the United States District Court for the Northern District of Georgia for misappropriating approximately $3,700,000 collectively from a total of 800 trucking companies across 22 states.

Richard Christopher Ferrell (Nashville, Tenn.): A Final Order issued by an ALJ and effective Nov. 5, 2015, revoked Richard Christopher Ferrell’s insurance producer license and imposed a $5,000 civil penalty for failing to report administrative actions that occurred in several other states. Ferrell was found to have committed five violations of Tennessee Insurance law. The violations began with the suspension of his Maine non-resident insurance producer license for encouraging a client to submit an inaccurate address to receive a reduced health insurance rate. Several other states took administrative actions when it was discovered that Ferrell failed to report actions taken in other states, including his failure to report to TDCI.

John Winston Fisher (Nashville, Tenn.): A Final Order, effective Nov. 11, 2015, has been issued revoking John Winston Fisher’s public adjuster license and imposing a $2,000 civil penalty. Pursuant to a default hearing held on Oct. 22, 2015, an ALJ found Fisher to have violated Tennessee insurance law for having been convicted of two felonies involving fraud. On Jan. 20, 2015, Fisher was convicted in the United States District Court for the Middle District of Tennessee for two federal felony counts of Mail Fraud. Fisher was sentenced to five years in prison and ordered to pay $582,836.23 in restitution to State Farm Insurance Company. The initial indictment contained facts charging Fisher with conspiracy to burn down a residential building and present a false claim for fire insurance coverage.

The Final Orders may be appealed in Chancery Court within 60 days of the Final Order.

About the Tennessee Department of Commerce and Insurance: TDCI is charged with protecting the interests of consumers while providing fair, efficient oversight and a level field of competition for a broad array of industries and professionals doing business in Tennessee. Our divisions include the Athletic Commission, Consumer Affairs, Tennessee Corrections Institute, Emergency Communications Board, Fire Prevention, Insurance, Tennessee Law Enforcement Training Academy, Peace Officers Standards and Training, Regulatory Boards, Securities, and TennCare Oversight.

Statewide TennCare fraud bust: 24 arrested

News release from Department of Finance and Administration
NASHVILLE, Tenn. – A statewide round-up of suspects has netted two dozen arrests of suspects charged with TennCare fraud. The suspects are charged in various counties on numerous TennCare fraud charges, including under-reporting income, living out of state, failing to disclose resource information and transferring property in order to qualify for TennCare, doctor shopping, presenting forged prescriptions or selling prescriptions. all received using TennCare benefits.

The Office of Inspector General (OIG) conducted a statewide roundup concluded today, with special agents fanning out across the state to crack down on those who had an outstanding warrant for TennCare fraud. The roundup is part of a new approach to take people into custody soon after an indictment by a grand jury and to locate and arrest fugitives.

“We want everyone to know that if someone is involved in committing TennCare fraud, the chance of getting caught has increased substantially,” Inspector General Manny Tyndall said. “Our office will investigate, prosecute, and arrest those who abuse the TennCare program. It should also be noted that investigations and arrests have been expedited because of the efforts of local law enforcement agencies to assist the OIG in combatting combat TennCare fraud.”

OIG Special Agent teams were positioned in all three grand divisions of the state—East, Middle, West—with a list of individuals wanted along with identifying information and warrants. The toughest task was finding the people they were trying to serve, because so many had multiple addresses.

Those arrested are:
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TennCare fraud unit gets new chief

News release from Department of Finance and Administration:
NASHVILLE – A veteran law enforcement professional has been named to lead Tennessee’s Office of Inspector General (OIG), which pursues fraud among members of TennCare, the state’s healthcare insurance program. Emmanuel (Manny) Tyndall, of Clarksville, Tenn., has been with the OIG since December of 2004, and was one of the first five special agents hired to work in the agency’s criminal investigation division. Most recently, he served as Assistant Inspector General. Both the OIG and TennCare are part of the Department of Finance and Administration.

“We had many very good candidates for this important role, and Manny has the key qualities that will continue the challenging work of the agency,” F&A Commissioner Larry Martin said. “He has the background for this position, and it’s certainly favorable that he has served in a leadership role at the OIG. We look forward to working with him in the years ahead.”

Tyndall holds master’s degrees in Criminal Justice and Health and Human Performance. He is also a graduate of the Tennessee Law Enforcement Training Academy and the FBI National Academy. He has been a state employee for approximately 20 years and is a retired veteran of the U.S. Army. Tyndall’s appointment is effective immediately.

“I’ve watched the OIG grow from infancy to the most professional health oversight and law enforcement agency I know of,” Tyndall said. “I look forward to continuing the advancement of a successful, skilled and specialized agency that ultimately reflects positively on the state and works hard to fulfill its mission to preserve TennCare.”

Tyndall succeeds Deborah Faulkner, who started the OIG in 2004 and this summer became Assistant Police Chief in the City of Franklin, which is nearer to her home and family. Faulkner is now Chief of Police for Franklin.

The OIG, which is separate from TennCare, began full operation in February 2005 and has investigated cases leading to over $5 million being repaid to TennCare.

Scott County Couple Indicted on Voter Fraud Charges

News release from TBI:
KNOXVILLE – The Tennessee Bureau of Investigation has investigated a case of illegal voter registration fraud in Scott County which resulted in the indictment and arrest of an Oneida couple.
Thirty-seven-year-old Christina Botts and her husband, Carrie Botts, 29, were arrested last evening on indictments returned by the Scott County grand jury yesterday. Christina Botts was indicted on 13 counts of illegal voter registration fraud and Carrie Botts indicted on one count of illegal voter registration fraud.
In October of 2012, the 8th Judicial District Attorney General requested TBI to investigate allegations of the couple fraudulently registering voters in Scott County.
Christina Botts registered 43 individuals during September 2012 and Carrie Botts registered one person and forged a signature on the voter registration application. They were altering address information on voter registration forms so it would appear the individuals lived in the city of Huntsville. The Scott County Sheriff’s Office was also involved in the case.
Both were taken into custody at a relative’s residence in Helenwood yesterday. Christina Botts was booked into the Scott County Jail on $25,000 bond. Carrie Botts bond was set at $1,500.

TN Man Charged With Fraud in Romney Income Tax Scheme

NASHVILLE, Tenn. (AP) — A Tennessee man was charged Wednesday in a scheme involving former Republican presidential nominee Mitt Romney’s income tax returns during the 2012 campaign.
The U.S. Justice Department said a federal grand jury in Nashville indicted Michael Mancil Brown, 34, of Franklin, and charged him with six counts of wire fraud and six counts of extortion.
Brown is accused of having an anonymous letter delivered to the PricewaterhouseCoopers LLP accounting firm in Franklin last August, demanding that $1 million in digital currency be deposited to a Bitcoin account to keep some of Romney’s income tax returns from being released. The Justice Department said Brown falsely claimed that he had gained access to the PricewaterhouseCoopers internal computer network and stolen tax documents for Romney and his wife, Ann Romney, for tax years before 2010.

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Pilot Flying J Fraud Investigator Once Faced Similar Investigation

Excerpt from a Cleveland Plain Dealer story:
CLEVELAND, Ohio — R. Brad Martin was chief executive of Saks Inc. a decade ago when the luxury retailer was embroiled in a fraud investigation that found the company wrongly kept millions of dollars owed to clothing suppliers.
Martin today is the board member at Knoxville, Tenn.-based Pilot Flying J who will sign off on an internal investigation into whether Pilot kept millions of dollars in fuel rebates owed to trucking companies.
The similarities between the two cases and the close ties between Martin and Pilot CEO Jimmy Haslam — for years they’ve moved in the same social circles and their family summer homes are a stone’s throw from each other in the Smoky Mountains — make some question whether Martin can be objective about any findings of fraud at Pilot.
“At the very least there was a cloud over his tenure at Saks,” said Christopher Ideker, a forensic accountant who has participated in many audit committee investigations for companies. “To me, you have a guy calling the shots on an investigation about stealing from customers who was investigated for stealing from vendors. That seems pretty straightforward.”
Leland Wykoff, a shareholder with Saks and its predecessor for 15 years, said he quizzed Martin at Saks’ 2005 annual meeting about how clothing suppliers had been cheated. Wykoff said the CEO took responsibility for what occurred on his watch.
“I leaned forward,” Wykoff said Friday, recalling his conversation with Martin. “I pulled my glasses down on my nose and I locked eyes with him. There was a pregnant pause and I said, ‘Then why are you still here?’ You could have heard a pin drop.”
Haslam, owner of the Cleveland Browns, said he initially didn’t know about any rebate problems at Pilot but said the company’s investigation now shows that about 250 trucking firms are owed money. He suspended several sales managers and took other remedial steps after the April 15 raid by FBI agents on Pilot headquarters.
Chief among Haslam’s moves was his selection of Martin, 61, of Nashville, to oversee the internal investigation at the privately-held company, running on a parallel track to federal agents’ work.
Saks Inc., owner of the venerable Saks Fifth Avenue department store chain, came into regulators’ crosshairs around 2004.
…Saks ultimately settled the SEC complaint about its treatment of vendors without admitting or denying fault — shelling out about $60 million, according to C. Warren Neel, who was head of Saks’ audit committee.
Martin, CEO and chairman between 1989 and January 2006, was never charged in the wrongdoing. His brother Brian Martin, Saks’ general counsel, as well as two other executives, were fired over the scandal, though also never charged.
Neel’s committee found no direct failings among other senior officers. But the committee criticized the level of communication between Saks’ executive suite and board members, and recommended reducing or eliminating bonuses for Brad Martin and the company’s chief financial officer.
Martin stepped down as CEO in a management shakeup within months of the SEC settlement.
Neel, who served as dean of the business school at the University of Tennessee for 25 years and had been invited by Martin to sit on Saks’ board, said the in-house examination was difficult and very uncomfortable.
“The social relationships for me were a major emotional problem,” he said. “I was with friends.”
Neel said he found no evidence that Martin’s brother or other executives “were a major part of the problem, but the SEC required that we do something.”

Note: Gov. Bill Haslam was a Saks executive 1999-2001.

State Recoups $15M in Undeserved Unemployment Benefits

NASHVILLE, Tenn. (AP) — State Labor Department officials say they have recouped about $15.3 million worth of fraudulently collected unemployment benefits by garnishing tax refunds and other federal payments to people who were not entitled to receive the assistance.
A scathing audit released earlier this year showed that the state overpaid $73 million in unemployment benefits. The overpayments were the result of both fraud and errors at the Department of Labor and Workforce Development. The audit was especially critical of the department’s method for recouping fraudulent benefits.
Acting Department of Labor and Workforce Development Commissioner Burns Phillips said in a statement that the ability to reclaim fraudulently collected unemployment benefits is critical to the business community. He said the department is focused on developing strategies to prevent people from wrongfully collecting the assistance.

Federal Affidavit Says Pilot Chiefs Knew of Rebate Fraud

Federal officials have unsealed the search warrants used in Monday’s raid on Pilot Flying J headquarters in West Knoxville, reports the News Sentinel.
A confidential informant working with federal agents has alleged that a rebate fraud scheme at Pilot Flying J occurred with the knowledge of top executives, including CEO Jimmy Haslam, according to an affidavit made public on Thursday.
The affidavit was filed in support of a search warrant application. Federal agents raided the company on Monday.
The affidavit was filed by Robert H. Root, a special agent with the FBI. It said that in May of 2011, a confidential human source, referred to as CHS-1, contacted the FBI to report knowledge of fraudulent activity by employees.
The affidavit said a current sales employee, referred to as CHS-2, had confided to CHS-1 that employees had been intentionally charging certain customers a higher price than the contractually agreed upon price, then concealing that fact.
The affidavit said CHS-2, a current regional director of sales, was contacted by agents in October and confirmed the existence of the fraud.
According to the affidavit, CHS-2 said the fraud has occurred with the knowledge of Haslam and company president Mark Hazelwood. Specifically the person said rebate fraud-related activities have been discussed during sales meetings in Knoxville at which Hazelwood and Haslam were present.
Root said based on information obtained in the investigation, there is probable cause to believe certain Pilot employees have conspired and schemed to engage in rebate fraud for many years.
Specifically, it said there is probable cause to believe certain employees conspired to defraud customers that were deemed by some employees to be too unsophisticated to catch that their agreed-upon discount deal with Pilot was being changed.

Comptroller: Now You Can Report Waste, Fraud & Abuse Online

News release from state comptroller’s office:
It will soon be possible to report suspected cases of fraud, waste and abuse of public funds in Tennessee over the Internet. Beginning today, you may electronically alert the state Comptroller’s office about suspected government misuse of public funds by visiting: http://www.comptroller.tn.gov/shared/safwa.asp
The Comptroller’s office has provided a toll-free telephone hotline for reporting fraud, waste and abuse of government funds and property since 1983. During that time, the hotline has received more than 17,000 calls.
In the 2012 legislative session, the Tennessee General Assembly expanded the Advocacy for Honest and Appropriate Government Spending Act so government employees and citizens can report allegations of fraud, waste and abuse online as well.
“In this day and age, it makes sense to give people the option to send us fraud reports online,” Comptroller Wilson said. “This is another tool to help ensure that public money is being spent properly in Tennessee. I encourage people to take advantage of this new service if they have reason to suspect fraud, waste or abuse has occurred.”
Similar to the telephone hotline, the online reporting form will allow individuals to make reports anonymously if they wish. The information will be transmitted to the Comptroller’s office over a secure connection.
Individuals who make reports are asked to provide as much detail as possible about their allegations. They may also attach files with supporting documentation that may help those who review the allegations.
Information received over the Internet will be reviewed by the Comptroller’s staff and investigated or referred to the appropriate agencies or departments when warranted.