There is another insurance scam in California. According to recent news reports, a former sales associate with the American Family Life Assurance Company (AFLAC) was arrested this week on mail fraud charges over scamming $4 million in disability benefits from AFLAC by creating a fictitious employer.
Patricia Diane Smith Sledge from Irvine was charged by a federal grand jury with her part in the scam to submit fraudulent insurance claims to AFLAC for fake business with fake injured employees. In this type of fake employer scam, someone registers businesses that do not actually do anything and have no real employees. After registering the business, the scammers file claims of fake employees who lost their jobs or were injured and then take the unemployment and disability insurance benefit checks, which are sent through the mail.
Ms. Sledge was a sales associate with AFLAC who sold the disability policies to other people in the scheme. Soon after getting the policies, the claims for the fake injuries started coming in. Ms. Sledge received a portion of the illegal proceeds from this scam. She was fired by AFLAC in October 2011, due to an AFLAC internal investigation. Now she faces jail time, as each count of mail fraud (Ms. Sledge is charged with four counts)carries a maximum sentence of 20 years in federal prison.
California Insurance Commissioner, Dave Jones, said, “Unscrupulous life agents who allegedly commit crimes by creating ghost businesses and non-existent employees to game the system will be apprehended and prosecuted. A disability insurance fraud scheme such as this drives up the cost of coverage and premiums for both consumers and providers, and the department is committed to rooting it out.”
Ms. Sledge’s case is related to two other cases making their way through the court system for the same fictitious employer scheme. Last November, an individual from Orange County, Navesia Samuels, was also charged with mail fraud for involvement in a similar scheme involving AFLAC, which included about $400,000 in fraudulent unemployment and disability benefits. And this past March, there were four related cases involving seven different people indicted by a federal grand jury for these schemes. These seven individuals defrauded state and federal unemployment and disability insurance, as well as AFLAC, with total losses in the hundreds of thousands of dollars.
All of these cases are the product of a joint investigation by the Department of Labor-Office of Inspector General, the Federal Bureau of Investigation (FBI), the Social Security Administration-Office of Inspector General, the California Employment Development Department, and the California Department of Insurance.
United States Attorney, Andre Birotte, Jr., told reporters, “Disability and unemployment insurance fraud is shameful conduct that wastes both taxpayer and insurance company dollars by siphoning away money from the people who actually need these benefits, such as the unemployed and the disabled, and diverting it to the greedy.”
San Francisco Insurance Attorneys
If you are the victim of an insurance scam, contact an experienced insurance lawyer in your area today. The government and investigators work on the broader scope and stopping the scam, but a lawyer will work on your case personally.
See Our Related Blog Posts:
“Living-Trust Mills” and Seniors
Unlicensed Insurance Agent Arrested for Fraud