Fraud Perpetrated Against Businesses and Native American Tribes

Our San Francisco insurance attorneys noticed yet another recent news story involving a businessman using shady methods to cheat customers in a multi-million dollar insurance fraud scheme. It is sad that there seems to be no end to the various schemes unscrupulous people create to take other people’s money, and the insurance industry certainly has seen its fair share of these schemes recently.

This particular scam was allegedly perpetrated by a 43-year-old former El Dorado businessman named Gregory J. Chmielewski. He was arrested in Arizona on October 24 and arraigned this week in the United States District Court in Sacramento. He is being held without bail, according to the U.S. Attorney’s Office and is charged with both fraud and money laundering.
Mr. Chmielewski’s scam involved setting up a company called Independent Management Resources in Roseville to provide low-cost workers’ compensation insurance to high risk occupations like construction workers. He then partnered with a Native American tribe, the Fort Independence Indian Reservation in Inyo County, to create another company called Independent Staffing Solutions. The tribe owned the company but Mr. Chmielewski essentially controlled the operations. This company also purported to provide insurance at lower rates than traditional insurance companies.

When the California Department of Insurance cracked down on these “low-cost” companies springing up, the Independent Staffing Solutions employees were instructed to act like it was a truly tribal company, located on the reservation in Inyo County, according to the indictment.

The indictment also alleges that once the companies were set up, Mr. Chmielewski starting taking millions from them for his own personal use. And then Independent Management Resources filed for bankruptcy in Nevada in 2008. Those court records show that Independent Management Resources owed Independent Staffing Solutions $7 million. The Native American tribe lost big in this scam, as did the employers who purchased workers’ compensation insurance from Mr. Chmielewski’s company. California Insurance Commissioner, Dave Jones, said, “Preying on California employers while profiteering on the reputation of a tribal nation to commit insurance fraud is deplorable.” The tribe also welcomed the arrest, stating that the $7 million owed was a huge loss for the tribe and left them with numerous unpaid bills.

Other Native American tribes with whom Mr. Chmielewski partnered in similar scenarios- setting up a company and running it for them, while stealing money from the company- are not named in the indictment. If convicted, Mr. Chmielewski faces up to 30 years in prison for his crimes, plus possible fines.

San Francisco Insurance Attorneys
The San Francisco insurance attorneys at the Brod Firm are experienced in helping clients deal with all kinds of insurance law issues and in advocating against powerful and wealthy insurance companies. In these big cases involving fraud and criminal actions, the individual customer easily be forgotten. If you have been the victim of an insurance scam, contact a California insurance attorney in your area to see what legal avenues are available.