Fraud News: Arson Scheme, Fraudulent Storm Claims, Fake COIs

October 30, 2018

California Man Sentenced to Six Years in Prison for Fraud in Connection with Arson Scheme

U.S. District Judge Morrison C. England Jr. sentenced Brian J. Stone of Sacramento, Calif., to six years in prison and to pay over $243,000 in restitution and a $12,500 fine for his convictions on 13 counts of wire and mail fraud, U.S. Attorney McGregor W. Scott announced. After sentencing, Stone was remanded into custody.

Stone, a former California attorney, was disbarred in 2001. According to evidence presented at a four-day trial and at sentencing, Stone participated with co-defendant Jamal Shehadeh in a multiyear fraud scheme involving several fraudulent fire insurance claims in the Sacramento area that spanned from 2009 through 2013, often utilizing his legal skills in the process. Jamal Shehadeh separately pleaded guilty to arson and admitted to setting or causing to be set fires as a part of the fraud scheme. Among other things, Stone assisted Shehadeh with insurance claims after fires at 511 Broadway in June 2010, 5725 Marconi Avenue in September 2012, and at 2764 Fulton Avenue in June 2013.

In late 2012, co-defendant Jamal Shehadeh had rented space at that location in the name of a supposed auto parts supply business. Stone had been helping Shehadeh unsuccessfully fight an eviction action during the months prior to the fire. On the night the eviction took effect, the fire occurred at 2764 Fulton, and the supposed auto parts business later filed an insurance claim with State Farm. While helping with the insurance claim, Stone recruited a local contractor to create a fake invoice and lie to State Farm regarding debris removal work performed after the fire. In a series of emails, Stone directed the local contractor to keep 10 percent of the money that they would get from State Farm from this fraud, and send the other 90 percent to Stone in a cashier’s check.

The scheme was uncovered when the local contractor reported it to State Farm. The FBI later executed search warrants of Stone’s office and email account, finding copies of documents outlining the fraud.

This case is the product of an investigation by the Federal Bureau of Investigation and IRS Criminal Investigation, with assistance from the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Sacramento Fire Department; the Sacramento Metropolitan Fire Department; and the Sacramento Sheriff’s Department. Assistant U.S. Attorneys Michael D. Anderson and Christopher S. Hales are prosecuting the case.

Two other defendants were charged in the case. Jamal Shehadeh pleaded guilty to two counts of arson to commit a felony on February 10, 2018, and was sentenced to 30 years in prison. Saber Shehadeh was convicted of three counts of mail fraud on June 4, 2018, after a seven-day jury trial, and is scheduled to be sentenced on October 18, 2018.

Florida Man Charged With Making False Storm Assistance Claims

Authorities say a Florida man made nearly $58,000 from fraudulent disaster assistance claims following three major storms.

The U.S. Attorney’s Office in Jacksonville says 46-year-old Lepoleon Spikes was arrested Wednesday on five counts of wire fraud involving fraudulent applications made to the Federal Emergency Management Agency. He faces up to 20 years in prison on each count. The government is also seeking the money’s return.

An indictment says Spikes provided false information when he applied to FEMA and received $24,870 for rental assistance after Tropical Storm Debby in 2012. Records show he received another $12,016 after Hurricane Matthew in 2016 and finally $20,802 after Hurricane Irma in 2017.

Spikes is scheduled to go on trial Dec. 3.

Faked Certificates of Insurance Leads to $43,000 Restitution Order

The owner of a Columbus, Ohio, cleaning company who continued to run his business after his workers’ compensation insurance lapsed in 2010 paid more than $43,000 in restitution to the Ohio Bureau of Workers’ Compensation (BWC) at his court hearing Oct. 18.

Gyorgy Benedek, owner of Maintenance Free Building Services Inc., pleaded guilty to a reduced charge of Failure to Comply after submitting a check to BWC for $43,069 in the Franklin County Court of Common Pleas. The plea followed a BWC investigation that revealed Benedek provided falsified BWC certificates of coverage to land a cleaning contract with another company.

“We got a tip from a company doing business with Mr. Benedek that his BWC certificates looked suspicious, so we checked it out,” said Jim Wernecke, director of BWC’s special investigations department. “We found multiple problems with the certificates indicating Mr. Benedek was attempting to skirt his legal obligation to protect his employees and carry proper insurance.”

Among BWC’s findings:

  • Benedek provided three BWC certificates showing the signature of former BWC Administrator/CEO Marsha P. Ryan when it should have been the signature of her successor, Stephen Buehrer.
  • The certificates were dated during a period Benedek’s policy was lapsed.
  • Benedek reported zero payroll between 2009 and 2015, but a BWC audit found he had more than 30 employees during that time and unreported payroll of more than $650,000.

Was this article valuable?

Here are more articles you may enjoy.