A judge in Louisiana and a prosecutor in Texas have taken action to block two separate insurance fraud schemes: One by a law firm whose lawyers admitted filing claims on behalf of homeowners it did not represent and another by a public adjuster accused of pocketing settlement checks.
Circuit Court Judge Brian K. Abels in Amite, Louisiana on Monday issued a temporary restraining order that bars McClenny Moseley & Associates from spending any of the fees it has earned from clients who were solicited by means that are inconsistent with state law. The order also bars MMA and Apex Roofing and Restoration from filing any new lawsuits, acting on any of the lawsuits they have already filed and signing on any new clients from websites without proper notice.
Separately, a grand jury in Kimble County, Texas indicted Andrew Joseph Mitchell on a second-degree forgery charge for allegedly signing the names of property owners on settlement checks so he could keep the funds for himself. Mitchell is currently jailed in Louisiana after being charged with running a similar scheme there.
Prosecutors in Louisiana have accused Mitchell of stealing $268,000 from multiple victims. His adjusting business, Mitchell Adjusting International LLC, was located in Clear Lake Shores, Texas, but he solicited clients across the country online, the Texas Department of Insurance said in a press release Thursday.
“We have other victims here in Texas we’re referring to prosecutors, but Mitchell is currently in jail in Louisiana, and we know of investigations in at least two other states,” stated Sgt. Mark Pardaen, a TDI fraud investigator.
Louis Carter III filed the class-action lawsuit against McClenny Moseley that prompted the restraining order. Judge Abels said in his order that Carter made a “prima facie showing” — meaning clear on its face — that the law firm violated a Louisiana statute section that regulates professional corporations. In addition to ordering MMA not to spend any money from client fees for cases that were solicited illegally, the order prohibits MMA from:
- Prosecuting any lawsuit or claim solicited by Velawcity, a marketing firm that MMA promised to pay $13.9 million for “prescreened client leads.”
- Prosecuting any lawsuit or claim solicited by Apex or other restoration contractors.
- Prosecuting any lawsuits in cases without engagement letters.
- Operating any website designed to gather clients that does not include a reference to MMA and a statement that it is an advertisement for attorney services.
- Contacting potential clients without indicating at the beginning of the communication that the communication is an advertisement for legal services.
Abels ordered representatives for the law firm and Apex to appear before him on March 23 to show cause why the temporary restraining order should not be made permanent. Apex employees allegedly walked door to door in hurricane-damaged neighborhoods to solicit business for itself and MMA.
The restraining order duplicates for state courts the same restraints that US District Judge James Cain Jr. has imposed on the MMA law firm in the Western District of Louisiana. The Louisiana Supreme Court has also suspended indefinitely MMA’s managing attorney in Louisiana, William R. Huye III, from the practice of law after a judicial inquiry revealed 856 instances where he had told insurers that his firm represented homeowners when actually it represented Apex.
Apex said in a statement last week that Louisiana regulators have not accused it of any wrongdoing. “As a company, we rely on various attorneys to ensure compliance with laws and regulations, and one of those firms we previously worked with is the subject of regulatory action,” the company said in a statement emailed to the Claims Journal.
Judge Abels’ order, however, also orders Apex to cease filing and prosecuting lawsuits. Apex’s spokeswoman could not be reached for comment about the action on Thursday.
The Claims Journal reported last week that three attorneys who once worked at MMA’s New Orleans office have left the firm. With Huye’s law license suspended, that leaves no legal professional left in the state the some 2,200 hurricane-damage lawsuits filed by the firm.
“Even though the federal courts previously stayed all their cases and it doesn’t appear MMA has any Louisiana lawyers left to handle the cases, the TRO granted by the state court is significant in that it precludes them from spending any fees earned previously earned from these matters,” said Steve Badger, an insurance defense attorney and partner with the Zelle law firm in Dallas. “If there is a pot of money sitting somewhere, they cant spend it now.”
“As to Aga, the indictment is only significant in that it increases the likelihood that Mr. Aga/Mitchell will be in custody the remainder of his life. He will spend the next several years being transported from state to state for criminal hearings.
Badger said the new charges against Mitchell, who changed his name from Andrew Aga, will increase the chances that he will remain the rest of his life behind bars.
“He will spend the next several years being transported from state to state for criminal hearings,” he said.
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