Sister Act Plead Guilty in Md. Scam

January 12, 2006

Maryland Attorney General J. Joseph Curran reported the guilty pleas of all three sisters indicted earlier in a massive scheme to defraud the Maryland Automobile Insurance Fund (“MAIF”) of more than $65,000. Jane Gnacyk, 46, of Severn, Mary Ellen Webster, 37, of Pasadena and Linda Lunghi, 35, Glen Burnie, all pled guilty before the Honorable Paul Goetzke, of the Anne Arundel Circuit Court.

The sisters admitted to stealing $64,912 from MAIF between 1994 and 2003. Defendant Gnacyk was, at all relevant times, employed as an Adjuster in the Claims Department at MAIF. In that capacity, she had authority to approve claims for payment and to issue the payments to claimants without obtaining a supervisor’s approval, in amounts that increased over the more than 20 years that she worked at MAIF.

In processing claims filed in legitimate accidents, Gnacyk would reportedly fraudulently add to MAIF’s computerized loss records the names of fictitious claimants, and then turn around and issue payments or drafts to these phantom claimants, using names identical or similar to those of her sisters, their husbands and their children. She was always reportedly careful to not exceed her authorization limits, so no one would question what she was doing. She would also note addresses for these phantom individuals which were either identical or similar to those of her co-conspirators.

She did this 24 times, in 11 accident files. Fifteen of the checks were reportedly in the name of (or similar to the name of) co-defendant Linda Lunghi, Michael Lunghi, Linda’s husband, or their minor children. The Lunghi payments totaled $42,762.50 . Seven of the fraudulent drafts were reportedly issued in the names of or similar to the names of co-defendant Mary Ellen Webster or her minor children. The Webster payments totaled $19,650. The two remaining fraudulent payments were issued by Gnacyk in the names of non-existent people, not her two sisters, for another $5,000.

The scheme was uncovered by MAIF as a result of an internal audit, resulting in Gnacyk’s termination and referral of the matter to the Attorney General’s Criminal Investigations Division. The Maryland State Police assisted in the investigation.

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