3 in New York Charged with Stealing $500K from Insurers Over 10 Years

July 8, 2010

Police in Colonie, N.Y. have arrested three people — including an insurer claims employee– for stealing nearly $500,000 from two insurance companies by allegedly forging and cashing claims checks in a scheme that ran nearly 10 years before it was discovered.

Lisa Kline, of Albany; April Martin, of Colonie; and Harry Mercado, of Albany, were released under supervision of probation pending a hearing, according to officials.

The New York State Insurance Department’s Frauds Bureau said that a joint investigation with local police revealed that Kline enlisted Martin and Mercado to cash checks made out to legitimate claimants who were unaware the checks had been issued. The scheme was allegedly carried out while Kline was employed as a claims examiner by Progressive Insurance Co. between 2000 and 2006 and later when she worked for Mercury Insurance Co. She was fired last December, according to officials.

The three are accused of stealing approximately $122,000 from Progressive and $352,000 from Mercury.

According to investigators, the scheme went undetected because legitimate claims were paid to policyholders before Kline would issue insurance company checks for supplemental payments to the policyholders. She allegedly used fake claims numbers, or in some cases, no claims numbers on the checks. She would then forge claimants’ signatures and countersign checks, making them payable to herself, or hand the checks over to Martin or Mercado to do the same.

Officials said that the scheme was uncovered when a bank clerk noticed an unusual number of checks bearing different claimants’ names being countersigned and cashed by Kline for deposit into her personal bank account. Insurance company audits found that most of the checks cashed were in the neighborhood of around $1,800.

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