More than 100 active duty Navy service members, most of them enlisted sailors, were targets of a scam by a company known as Go Navy Tax Services that sold over 4,700 expensive, unnecessary life insurance policies under the guise of tax preparation services. To pay the premiums on the policies, the defendants fraudulently gained entry to the Department of Defense’s payroll system and set up automatic payments to bank accounts that were opened without the knowledge or consent of the service members. The total loss to victims is about $4.8 million over 10 years. [TWEET THIS]

Paul Flanagan, 54, Ranjit Kalsi, 52, and Gregory Martin II, 49, were indicted by a grand jury in San Diego, California on 36 counts of conspiracy to commit fraud, grand theft, forgery and identity theft. The San Diego County District Attorney’s Office worked with the California Attorney General’s Office, California Department of Insurance and Naval Criminal Investigative Service to investigate and prosecute this case.

Defendants Martin and Kalsi were arrested were arrested July 9 and were arraigned July 10. Defendant Flanagan was arraigned today. All pleaded not guilty and will be in court again on July 17 at 1:30 p.m.

“The victims of this scam were young women and men serving our country who were essentially tricked into signing up for something they didn’t need and couldn’t afford,” said San Diego County District Attorney Summer Stephan. “Working with our law enforcement partners in California and at the Navy, we were able to shut down this operation and we will work to get money back into the pockets of service members who were taken advantage of.” [TWEET THIS]

A grand jury heard testimony from 40 witnesses over a 2-week period, ultimately handing down indictments on July 8. Investigators say the defendants easily scammed sailors because of their understanding of the inner-workings of myPay, the Department of Defense payroll system. The defendants would first hook victims with free tax preparation services, but then upsell them on life insurance policies described as savings accounts.

“Enlisted sailors were not given a choice as to whether they wanted a supplemental life insurance policy,” DA Stephan said. “That decision was made for them through corrupt and fraudulent methods.”

The defendants convinced service members to set up automatic payments in the form of “allotments” for what was characterized as a retirement investment and misrepresented the life insurance policy forms to convince service members to sign.

The Navy Region Southwest Office of the Inspector General Investigators, in concert with Special Agents from NCIS Southwest Field Office, spent countless hours bringing this case together. The efforts culminated in working hand-in-hand with the California Department of Insurance and Department of Justice.

“The Navy applauds the cooperative effort of this joint civilian-military investigation,” said Navy Region Southwest spokesman Brian O’Rourke. “Financial predators are sadly a reality for many military families, even in areas as traditionally supportive to the troops as San Diego. Service members who suspect they may be the victims of fraud are encouraged to contact their local military legal assistance office.”

Since defendant Flanagan operated his crooked business – Go Navy Tax Service – out of a trailer directly across from the entrance of the 32^nd Street Naval Station, complete with posted Navy flags, many service members assumed he was affiliated or sanctioned by the Navy.

“Service members have given so much to our country – they should not have to worry about being targeted and taken advantage of by malicious scammers,” said Attorney General Xavier Becerra. “We will not tolerate this predatory and criminal behavior. The California Department of Justice and our law enforcement partners will continue to vigorously prosecute scammers who prey on American heroes who fight for our country.”

While members of our armed forces were protecting our freedoms, Flanagan and his co-defendants were making millions off of their service. Flanagan was making $400,000 a year in commissions he would receive from the life insurance policies he sold.

“These defendants defrauded targeted an honored group of individuals who have dedicated their lives to protecting and serving our nation,” said Insurance Commissioner Ricardo Lara. “The alleged actions of these individuals have resulted in the loss of $4.8 million and have harmed thousands of military personnel. I am committed to working with the San Diego District Attorney’s Office and the Attorney General’s Office to put a stop to those who take advantage of hard working Californians.”

If convicted, the defendants are facing more than 20 years in prison. [TWEET THIS]

LEE EN ESPAÑOL

When you think of auto theft, you might think of vehicles being hot-wired and stolen off the street, brought into ‘chop shops’ and sold for parts. But beginning in December 2017, investigators with the San Diego Regional Auto Theft Task Force (RATT) began looking into a massive auto theft scheme of a different kind. The investigation revealed that the defendants fraudulently purchased vehicles, laundered money, set up fake companies and scammed banks to get away with millions of dollars, making it one of the biggest auto theft-related cases in recent memory in San Diego.

San Diego County District Attorney Summer Stephan today joined RATT Commander, California Highway Patrol Captain, James Portilla, to announce that 21 defendants have been charged as a result of ‘Operation Blindside,’ an investigation led by RATT and supported by its law enforcement partners. Investigators followed a trail of multiple financial schemes that ultimately led to the identification of over 100 vehicles obtained through fraudulent means.

[WATCH THE ANNOUNCEMENT LIVE STREAMED, HERE]

During the investigation several other methods of defrauding vehicle finance companies, financial institutions and payment processing companies were discovered.  Investigators learned that 21 defendants formed 54 shell companies and opened in excess of 45 bank accounts at various financial institutions to facilitate the fraudulent scheme and launder money. The total amount of fraud exceeds $5 million.

“This criminal enterprise involved a network of individuals and dozens of shell companies that allowed the ringleader to pull the strings and carry out this scam for over 3 years,” said District Attorney Stephan. “Banks, vehicle finance companies —and ultimately the consumer—are all victims of this aggressive organized criminal operation.”

The San Diego County District Attorney’s Office charged 21 defendants with more than 275 felony violations relating to their fraudulent conduct. Law enforcement made arrests and executed multiple search warrants across San Diego, Riverside and San Bernardino Counties last week. The defendants face various felony charges including money laundering, auto theft, grand theft and theft by false pretense. Thirteen of the suspects that have been arrested as part of Operation Blindside have been arraigned. One additional defendant is scheduled to be arraigned today at 1:30 p.m. in San Diego Superior Court and another defendant is in custody in Washington state. There are outstanding arrest warrants for the remaining six defendants.

During Operation Blindside, more than 100 vehicles were identified, of which 75 vehicles became the primary focus of the vehicle fraud investigation.  The estimated value of those vehicles is approximately $3.75 million dollars. The vehicles included high-end luxury vehicles, motorhomes, recreational vehicles and water crafts.

“As newer vehicles become equipped with effective anti-theft technologies, traditional methods of stealing vehicles are not as effective,” said RATT Commander James Portilla, “As a result, we have seen an increase in vehicle theft using a variety of fraud schemes.”

Defendant Bryan Orr, 34, was the ringleader of the elaborate scheme involving a network of co-conspirators.

In one scam, a straw buyer would purchase and finance a new vehicle. Thereafter, the auto loan would be paid in full by other co-conspirators.  Once the title to the vehicle was sent to the purchaser, the vehicle would be immediately re-sold. Once the sale proceeds were secured, the individuals who made the payments would falsely report the fraudulent use of their bank accounts, leading financial institutions to refund the payments that had been made on the vehicles. Immediately the funds were withdrawn and passed on to Orr. For their effort, the co-conspirators received a percentage.

The purchase of vehicles was not the only one fraudulent scheme used by Orr to steal from financial institutions. Vehicle loans, business lines of credit, and personal credit cards were issued to several of Orr’s accomplices so that he could further defraud the financial institutions.

Another fraudulent scheme involved the purchase or return of “merchandise” between the various shell companies. Once the seller withdrew the proceeds from the transaction, the buyer would dispute the purchase and receive a provisional credit from the bank. Similar to the vehicle purchase scheme, upon receipt of the refund, the funds would be withdrawn immediately or used to make fraudulent purchases with other “shell companies.” Orr used the shell companies to steal in excess of $2.5 million from banks during this time period.

One defendant created false financial documentation that enabled the purchase of vehicles by individuals with little to no income. Multiple Defendants were also involved in the sale and purchase “trade-lines.” The inflated credit rating creates a false sense of credit worthiness for lenders. Vehicle loans, credit cards and business lines of credit have been issued to several Defendants so that Orr could continue to defraud.

To create the appearance of legitimacy, fake websites were created for the various “shell companies.” The websites were researched by the financial institutions seeking to verify its customers’ employment or the existence of the business when reviewing request for refunds relating to disputed purchases.

If convicted, Bryan Orr faces over 100 years in prison.

Operation Blindside began with an investigation lead by the Regional Auto Theft Task Force (RATT). Ultimately, the investigation expanded to include investigators from the San Diego County District Attorney’s Office, National Insurance Crime Bureau, California Department of Motor Vehicles, and various other local, state and federal investigative units.

According to CHP statistics, last year 10,213 vehicles were stolen in San Diego County, a 2.8% reduction from the year before.  From January through May 2019, 4,083 vehicles were reported stolen.

[WATCH THE ANNOUNCEMENT LIVE STREAMED, HERE]

The mission of San Diego County’s Regional Auto Theft Task Force (RATT) is to collaborate effectively to reduce the incidence of vehicle and cargo theft and increase the arrests and prosecution of professional thieves using regional pro-active investigative methods and public education.  The task force is led by the California Highway Patrol and members include the San Diego Police Department, San Diego County District Attorney’s Office; San Diego County Sheriff’s Department; Chula Vista Police Department, La Mesa Police Department, National City Police Department California Department of Insurance; California Department of Motor Vehicles; National Insurance Crime Bureau (NICB); San Diego County Probation Department; United States Border Patrol; and United States Secret Service.

When Marlene Ruiz, a bank employee for over 30 years, noticed that her elderly and wheelchair-bound client was falling victim to an obvious scam, she intervened and was able to prevent the victim from having thousands of dollars stolen from his bank account. Marlene’s story is just one example of financial elder abuse and exploitation that bank employees sometimes witness and are required to report under California Mandated Reporter laws. Coinciding with Financial Elder Abuse Awareness Month, District Attorney Summer Stephan today announced an outreach campaign to increase awareness and remind financial institution employees about their legal duties as mandated reporters when they see suspected financial elder abuse. [TWEET THIS]

“Bank and credit union employees are some of our best eyes and ears for spotting and preventing the exploitation of older and dependent adults,” said District Attorney Summer Stephan. “Employees in financial institutions can make a real difference in the lives of some of the most vulnerable in our community to help protect them from losing their life savings.”

[WATCH News Conference, here]

Studies estimate that $36.5 billion is lost annually in the United States due to elder financial exploitation. In 2018, U.S. banks reported 24,454 suspected cases of elder financial abuse to the Treasury Department, more than double the amount five years earlier. The issue of financial elder abuse is likely to grow just as the elder population increases as well. According to the Pew Research Center, an average of 10,000 Americans are turning 65 years old every day, a pace expected to continue through the year 2030. In San Diego County, during Fiscal Year 2017-2018, Adult Protective Services received 4,563 referrals that involved financial abuse allegations, 14 percent of those came from financial institutions.

The goal of the DA’s new outreach campaign is to partner with San Diego Bank and Credit Union branches to prevent financial elder abuse by reinforcing training of bank employees to identify and to report any suspicious activity before it is too late.

The outreach includes a palm card, a brochure and a training video reminding bank employees about their mandated reporting duties under the law with examples of red flags and warning signs to watch out for, as well as details on how to report any suspected abuse. The video features industry representatives from the Credit Union League and Western Bankers Association, as well as Marlene Ruiz, a local bank employee who helped prevent a financial crime before it happened. Ruiz was honored by the District Attorney’s Office as a Citizen of Courage in 2018 for her actions. In the video, DA Summer Stephan and Sheriff Bill Gore explain the importance of reporting any suspected financial elder abuse.

“The San Diego County Sheriff’s Department takes all reports of financial elder abuse seriously,” said Sheriff Bill Gore.  “Our Financial Crimes and Elder Abuse Units work closely with the District Attorney’s Office to investigate and pursue those who take advantage of this vulnerable population.”

The DA’s Office will distribute these materials to all the banks and credit unions in San Diego County. The outreach also involves collaboration and participation from the two major sectors of financial institutions, the Credit Union League and Western Bankers Association.

“Our association was proud to work with the California Legislature to enact the Financial Elder Abuse Reporting Act in 2005, and proud to support the legislation making the act permanent in 2011,” said Steve Andrews, president and CEO of the Western Bankers Association. “Our member banks are committed to helping prevent financial abuse of the elderly, and have dedicated millions of dollars to train bank employees to recognize the warning signs of potential abuse of our seniors. We applaud District Attorney Stephan’s efforts to draw attention to this devastating crime, and we are so pleased to be a part of this important awareness campaign in San Diego County.”

“SDCCU is in full support of the District Attorney’s new outreach campaign to help stop elder financial abuse. We applaud their efforts and will do our due diligence to help stop this crime,” said Teresa Campbell, president and CEO at SDCCU, which is a member of the California Credit Union League. “At SDCCU, security of our members is of the utmost importance. As San Diego’s largest locally owned credit union and a member of the California Credit Union League, we encourage all credit unions in the County to use these materials to train front-line staff on identifying red flags and remind them that they are required to report suspected abuse.”

In California, the law defines employees of financial institutions, including all banks and credit unions, as legally required to report suspected elder and dependent adult financial abuse whether they have direct contact or handle a transaction with him/her, or even just observe an incident they suspect may be financial abuse. [TWEET THIS]

[WATCH News Conference, here]

A Mira Mesa dentist, April Rose Ambrosio, 58, fraudulently billed multiple insurance companies $592,550 claiming she performed 623 root canals on 75 patients. Ambrosio, who was arraigned in San Diego Superior Court today on 75 counts of insurance fraud, billed eight insurance companies for nearly $600,000 and ultimately received more than $200,000.

Ambrosio’s deception involved billing for more than 100 root canals over a three-month period for a family of four.

“This is a case of repeated and flagrant fraud by a medical professional,” District Attorney Summer Stephan said. “Unfortunately, when scam artists bill for dental services not rendered, they get rich at the expense of honest consumers who ultimately pay the price through higher premiums.”

The Department of Insurance spent two years investigating this case and worked closely with the District Attorney’s Insurance Fraud Division to bring Ambrosio to justice. Investigators say she was running the billing scam for three years.

“Medical providers are held to the highest standard and their patients trust them to be honest when it comes to their care,” said Insurance Commissioner Ricardo Lara. “Ambrosio violated that trust when she fraudulently billed for services she never performed.”

If convicted of all charges, Ambrosio faces up to 83 years in prison. She will next be in court on September 5.

Insurance fraud in the U.S. costs consumers about $80 to $90 billion per year. In California, it is a $15 billion-a-year problem. Insurance fraud is the second-largest economic crime in America, exceeded only by tax evasion. The District Attorney’s Insurance Fraud Division is dedicated to preventing all forms of insurance through outreach efforts, investigation and prosecution. This team handles workers’ compensation fraud, disability healthcare insurance fraud, auto insurance fraud and life insurance and annuity product financial abuse.