Office Manager Convicted of 51 Felony Counts in Massive Patient Referral Scam

Service Members Scammed out of $4.8 Million

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 32nd 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]