The Bureau of Workers’ Compensation (WC) Fraud has five dedicated squads located throughout the State. The Bureau received over 1,300 Workers Compensation referrals this past fiscal year. These referrals include working without Workers’ Compensation Coverage, Claimant Fraud, Premium Fraud and Money Service Business Fraud. The Bureau squads are located in Tampa, Orlando, West Palm Beach, Miami and the MSB squad which is comprised of Division Detectives from the West Palm Beach and Broward Field Offices, as well as two Broward County Sheriff’s Office and one Palm Beach County Sheriff’s Office Detectives.
REPORT WORKERS' COMPENSATION FRAUD - DFS FRAUD HOTLINE
Major Branch started his law enforcement career in 1995 with the Boynton Beach Police Department. There he served in many capacities, including patrol, multi-agency narcotics task force, detective, street level narcotics investigations, and senior member of the tactical street crimes unit.
Major Branch joined the Florida Division of Insurance Fraud in May 1999, and was assigned as a detective to the West Palm Beach Workers’ Compensation squad. This later developed into the 440 Task Force, a squad charged with the investigation of workers’ compensation premium fraud throughout Florida. As a detective, Major Branch initiated and conducted several large-scale premium fraud investigations which included a newly-discovered facet, the inclusion of non-traditional money service businesses (check cashing stores) as a facilitator. He investigated, and subsequently charged the owners and operators of three of the largest check cashing stores in Broward County.
In October of 2008, he was promoted to lieutenant and supervisor of that unit. In July 2009, he was appointed chief of the Bureau of Workers' Compensation Fraud. Major Branch holds a bachelor’s degree in criminal justice from Florida Atlantic University, a master’s degree in criminal justice administration from Lynn University, and is also a certified fraud examiner. Major Branch speaks extensively on the topics of workers' compensation fraud and money service business investigations, serves as a Division of Insurance Fraud instructor, and as an adjunct instructor in the criminal justice departments of several colleges and universities.
Captain Vance T. Akins started his law enforcement career with the Okeechobee County Sheriff’s Office in 1980. He has over 29 years of law enforcement and investigative experience. Captain Akins’ law enforcement experience ranges from street level crimes such as narcotics, grand theft, homicide, internal investigations, insurance and white collar crimes. Captain Akins has served over half of his career as an investigative supervisor holding the ranks of sergeant, lieutenant and criminal investigations bureau chief.
Captain Akins has participated in legislative reform concerning workers’ compensation fraud and is a member of the Florida Workers’ Compensation Task Force. Captain Akins has been stationed at the West Palm Beach Office Field Office for the past 15 years.
Captain Akins is a certified law enforcement instructor, teaching at the DFS fraud detective’s academy. Captain Akins is a graduate of the University of Louisville, Kentucky, Southern Police Institute Command Officers Development Course, and represents DIF at many public speaking engagements.
Captain Akins was named captain of the the Bureau of Workers' Compensation Fraud in April 2010.
Ruthell J. Harris holds a bachelor’s degree in Criminal Justice from Florida State University. In 1985, the Department of Corrections hired Lt. Harris as a correctional probation officer, and she worked supervising both felony and sexual offenders.
After 15 years with probation, Lt. Harris entered the police academy and, in 2000, received her State of Florida police certification. In that same year, she continued her law enforcement career by becoming an investigator with the Division of Insurance Fraud. In July 2008, Lt. Harris was promoted to her current position as supervisor of the Orlando Field Office workers’ compensation squad where she continues to develop her anti-fraud and management skills while supervising a squad of detectives.
Lt. Harris is a 2009 graduate of the Southern Police Institute (University of Louisville) Command Officers Development Course (SPI-Class 51).
Lt. Rapp began her diverse career with the Florida Division of Insurance Fraud in May 2002, when she was hired as a detective assigned to the Tampa Field Office. During her first three years as a detective, Lt. Rapp worked primarily on personal injury protection (PIP) fraud cases. Lt. Rapp was one of four detectives who worked on a protracted PIP investigation that led to the arrests of 14 individuals and resulted in the first set of patient brokering convictions in Hillsborough County, in 2005. Prior to being promoted in 2008, Lt. Rapp worked a variety of general fraud cases, and she specialized in the investigation of licensee fraud. In June 2008, Lt. Rapp won a Davis Productivity Award for her work on a case that she worked jointly with the Division of Agent and Agency Services and the Statewide Prosecutor’s Office. The investigation resulted in the arrest and conviction of an insurance agent who misappropriated homeowner’s insurance premiums from over 40 victims, in multiple counties, during an active hurricane season. Lt. Rapp currently serves as a lieutenant for the Bureau of Worker’s Compensation Fraud, Tampa West Central Field Office, where she oversees a squad of five detectives who work closely with the Division of Worker’s Compensation Compliance and members of the insurance industry to combat worker’s compensation insurance fraud.
Lt. Rapp has an associate’s degree from Nassau Community College in New York, and bachelor’s and master’s degrees from the University of South Florida, Tampa. In December 2010, Lt. Rapp obtained a Ph.D. from the University of South Florida in adult education and research and measurement.
Deborah de la Paz-Boxer earned a Bachelor of Arts degree in criminal justice from the University of Central Florida in 1993. Lieutenant de la Paz-Boxer graduated from the Palm Beach Community College Police Academy in 1994, following which she began her law enforcement career with the Florida Atlantic University Police Department (FAU PD). While employed by FAU PD, Lt. de la Paz-Boxer served as a uniformed officer and also assisted the detective bureau with conducting follow-ups and criminal investigations resulting in successful prosecutions.
In March of 2000, Lt. de la Paz-Boxer joined the Division of Insurance Fraud as a detective. Lt. de la Paz-Boxer has conducted a variety of investigations ranging from health, life, auto & property fraud, large scale solicitation and personal injury protection, workers compensation fraud, workers’ compensation premium fraud, and check cashing/money service business fraud cases. Her investigations have resulted in arrests and successful prosecutions as well as substantial restitution to victims and investigative costs to the state of Florida. Lt. de la Paz-Boxer has volunteered and participated in the Broward County auto theft task force, the Broward Sheriff’s Office Department of Homeland Security Counter Terrorism Unit and most recently the Treasure Coast human trafficking coalition.
In March of 2010, Lt. de la Paz-Boxer was promoted to her current position as a supervisor of one of the workers’ compensation squads in the West Palm Beach Field Office. Her squad includes two Broward Sheriff’s Office detectives temporarily assigned to the Division to assist in the targeting of money service businesses which are facilitating large scale worker’s compensation premium fraud schemes in Palm Beach, Broward, and Dade Counties, with expansion of investigative efforts to the West Coast of Florida planned soon.
Lt. Whipple, who has been with the agency since 1999, heads up the workers’ compensation fraud squad in West Palm Beach and holds a bachelor’s degree in business. Lieutenant Whipple formerly was an officer/plain clothes investigator with the Florida Marine Patrol, currently known as the Florida Fish and Wildlife Commission, from 1990 to 1999. Florida Marine Patrol Enforcement included state and federal violations involving safety equipment inspections, fisheries violations and drug trafficking enforcement, etc.
During his tenure with the Division of Insurance Fraud, Lt. Whipple has worked as a detective on an insolvency squad and a workers' compensation squad in the south Florida area. His investigative knowledge includes, but is not limited to the following areas: insurance agent fraud, organized scheme to defraud and workers' compensation fraud.
Lt. Whipple transferred to Tallahassee headquarters in 2007, where he was assigned to the training unit as a radio tech/ detective responsible for maintaining the agencies sworn members’ certification standards. He was promoted to lieutenant in May 2008, and in August 2009, he left the training unit. He briefly headed up the workers’ compensation fraud squad in West Palm Beach. In 2010, Lt. Whipple transferred to the general fraud squad in West Palm Beach to oversee a variety of insurance fraud investigations. He currently has accepted the lateral transfer to lieutenant’s position overseeing the workers’ compensation fraud squad in West Palm Beach once again.
Lt. Whipple is currently in his 22nd year in sworn active service for the State of Florida.
This case involving Andrew George was predicated by information received from the Division of Workers’ Compensation Bureau of Compliance and FirstComp Insurance and Guarantee Insurance.
Allegations of fraud were made against Royal Crest Companies, Inc. (RCCI), doing business as Royal Crest Builders and its president, Andrew George. According to the referrals, it was alleged that RCCI committed premium fraud by underreporting payroll to the workers’ compensation insurance companies, FirstComp Insurance and Guarantee Insurance.
RCCI initially reported an estimated payroll in the amount of $12 thousand on their applications for insurance. RCCI also claimed they did not use subcontractors or independent contractors. RCCI failed to inform the insurance companies of payroll changes. Initial premium audits were conducted and based on the documents provided to the auditors, no subcontractors or contract labor was utilized creating no further exposure. The Bureau of Compliance investigation discovered inconsistencies between the reported payroll for RCCI and their actual payroll. BWCC issued a stop work order and notified the carriers of the underreporting of payroll.
The carriers audited RCCI for each year of coverage. With the additional information about underreporting payroll, they were able to review more complete records from RCCI to properly assess their exposure. The audits revealed a difference of final payroll in the amount of $346,905. This is a vast difference from the annual estimated $12 thousand payroll.
George committed workers’ compensation fraud and theft by presenting false information to his insurance agent and insurance companies on his applications for workers’ compensation insurance. George also failed to disclose complete payroll figures to auditors on the initial premium audits. George’s actions reduced his amount of premium for his workers' compensation insurance coverage. The total amount of loss was $43,111.18.
This case was presented to Lee County State Attorney’s Office for prosecution and Andrew George was arrested for premium fraud.
Workers’ compensation claimant David Brownell reported to his employer that he developed respiratory problems due to the inhalation of and exposure to rats and rat feces, during the course of his duties as a correctional officer at Glade Correctional Institution.
The State of Florida Division of Risk Management, Bureau of Workers’ Compensation Claims (SFDRM), hired an investigative surveillance company to conduct and obtain video surveillance of Brownell’s physical level of activities from 2003 through 2011. Brownell had reported to his treating physicians that he was oxygen dependent 24-hours a day, and that he was unable to function daily otherwise. During the course of those years, video surveillance was obtained that contradicted Brownell’s claim that he was oxygen dependant.
The FSDRM has paid $2,787,266 because of Brownell workers’ compensation claim, $563,905 in indemnity benefits, $1,964,229 in medical benefits, and $258,532 in legal and investigative expenses. DIF detectives reviewed copies of Brownell’s past and current medical records, sworn deposition transcripts and video surveillance footage. After carefully reviewing all of the materials, detectives attempted to obtain a sworn statement from Brownell in relation to the allegations; Brownell’s attorney declined to have their client provide a statement.
The investigation revealed that Brownell provided false and misleading information to his treating physicians as is demonstrated by the video surveillance evidence. In fact, Brownell was not dependent on oxygen 24-hours a day like he told his treating physicians. The video shows that Brownell is capable of conducting day-to-day activities without the use of an oxygen device. Specifically, Brownell was captured on video performing in a band and playing a guitar. He was also captured on video attending a concert, smoking cigarettes, and driving himself to places to conduct daily routine tasks without the support of an oxygen tank.
This case was presented to the Hillsborough County State Attorney’s Office and Brownell was arrested. . This case was filed and as a first degree felony and the minimum amount of restitution that was requested was $563,905 (the cost of the indemnity benefits paid to Brownell).
As part of a proactive enforcement effort by the West Palm Beach DIF Workers’ Compensation Squad, detectives observed a landscaping company operating out of Palm Beach County by the name of Coastal Gardens. Coastal Gardens listed 17 employees utilizing unauthorized social security numbers to gain employment. This action constitutes a felony. All 17 were arrested without incident.
In addition, West Palm Beach detectives observed a landscaping company operating out of Martin County by the name of Florida Exotic A Landscaping. The business listed seven employees utilizing unauthorized social security numbers to gain employment. An additional seven individuals were arrested for identity theft in Martin County.
This case involves a company that had several employees doing roofing work on a newly constructed residence. This type of business has a high probability of injuries, due to the nature of the dangerous work. Detectives made contact with the owner of the company who stated that she was the only corporate officer of the company. The owner, Krista Martinez, admitted that she currently did not have workers’ compensation insurance coverage. Martinez was arrested for failure to secure workers’ compensation insurance coverage.
Domenick Pucillo, one of the ringleaders in the fraud schemes targeted as part of continuing enforcement efforts under Operation Dirty Money, was arrested on February 26, 2013. Pucillo filed false documentation with the Florida Office of Financial Regulation seeking to become a principal of I&T Financial Services, LLC, a business that was allegedly set up to execute a large-scale check cashing scheme for the purposes of evading the cost of workers’ compensation coverage. During this investigation approximately $1 million was seized by the Workers’ Compensation Fraud Task Force.
The Task Force investigation revealed that Pucillo became business partners with Evelio Suarez in January of 2012 to form I&T Financial Services, LLC. Suarez, a convicted felon, could not legally obtain a license to run a money service business; and therefore, Pucillo allegedly knowingly concealed the true identity of his business partner and instead listed a straw owner as the licensee of the business to obtain a license. Suarez was arrested in October 2012 on multiple charges including conspiracy to commit workers’ compensation fraud and grand theft.
Pucillo was arrested by agents from the New Jersey Attorney General’s Office at his home in New Jersey on February 26, 2013 and will be prosecuted by the office of Miami-Dade County State Attorney Katherine Fernandez-Rundle. Pucillo is charged with filing a false and fraudulent document, forgery, uttering a forged instrument and operating an unlicensed money service business. If convicted on all charges, he faces up to 45 years in prison.
The Workers’ Compensation Fraud Task Force was jointly created by CFO Jeff Atwater’s Division of Insurance Fraud and the Broward County Sheriff’s Office in August of 2011. The Palm Beach County Sheriff’s Office is now a partner in the task force as well. Through joint efforts, the task force has been able to successfully shut down 27 shell companies and identify $300 million in fraudulent transactions associated with these companies.
Since its inception in the Fall of 2011,
• Thirty-one shell companies (actively investigated) through which $290 million worth of fraudulent transactions were identified and criminally charged.
• Eleven targeted MSB’s, 10 of which were the subject of search warrants, from which $3.6 million has been seized for forfeiture, of which nearly $2 million has been awarded to the participating agencies (DIF, BSO, and PBSO). Much more of this seized money is also pending forfeiture and distribution.
• There is approximately another $200 thousand pending forfeiture which was seized from other sources.
• Nine MSB owners have been criminally charged.
• Ten facilitators have been criminally charged for controlling the above mentioned shell companies.
• Fifteen shell company owners have been criminally charged.
The Division of Insurance Fraud recieved multiple complaints regarding fradulent activities of Neil Seth Smalbach. It was alleged that Mr. Smalbach during the course of conducting business, misrepresented the factual details of investment products to senior citizens in order to make sales. Some of the alleged activity consists of twisting annuities.
Multiple Florida State Statutes had been violated and Neal Seth Smalbach was the person who violated these statute(s), thus committing crimes in the confines of Pasco, Hernando, Citrus, Marion, Sumter, Highlands and Levy Counties.
Mr. Smalbach is a 50 years old and has been a series 7 licensed broker since 1986 and originally worked for major wire house (large financial institution) firms between 1986 and 1995 including E F Hutton, Shearson Lehman, Prudential, and Dean Witter. By 1996, his reputation had significantly deteriorated due to numerous customer complaints. His employment with GunnAllen Financial terminated in June of 2008; allegedly he impersonated a Schwab client and forged a client’s signature on a new account form. In April of 2009, his license was suspended for six months and he was fined $10 thousand.
During the time frame of the following complaints, Mr. Smalbach worked for Gunn Allen Financial until June 2008, and Summit Financial Group/Summit Brokerage Services, Inc. After June 9, 2008, Mr. Smalbach was no longer registered to sell securities in Florida and obtained employment with Transfer Technologies International, Inc.
A disciplinary proceeding was initiated on July 18, 2011, in connection with the numerous complaints received. In summary, Mr. Smalbach fraudulently misrepresented the risks and omitted material facts, sold unsuitable investments and falsified firm records in connection with the sale of an oil and gas private placement investment to retired, senior citizen customers. Some of the investors were elderly when they invested in this highly risky investment and they lost all or most of their investment. On December 7, 2011, it was ordered that Mr. Smalbach be subject to a permanent bar.
During the course of this investigation, 36 complainants/couples were interviewed (only 33 were included as victims due to statute of limitations). The majority of the complainants were senior citizens and contained common factors. Mr. Smalbach concealed the true facts and risks to the investors with the various investment products. A majority of the investments required the investors to meet the suitability requirements of an accredited investor to qualify to participate in the investment. However, the majority of complainants did not meet the investor suitability requirements. The majority of the complaints involved high risk investments such as Provident Shale Royalties, Royale Energy, AXA Equitable-Variable Annunity, Jackson National-Variable Annuity, and Transfer Technologies International- Stock Certificates and Promissory Notes.
This investigation revealed a systematic, ongoing course of conduct perpetrated by Mr. Smalbach relating to his solicitation and sale of securities to his clients/victims. On all of the listed transactions, Mr. Smalbach never provided complete prospectus materials to the victims and most were unaware of the details of the documents they were signing. Mr. Smalbach presented forms to be filled out and directed them where to sign and place their initials. These forms were never fully completed during Mr. Smalbach’s visit with them. Mr. Smalbach would inform them that the forms would be completed later.
Mr. Smalbach fraudulently induced the victims to sign blank documents, which he completed himself, for the purpose of qualifying the victims for investments that were unsuitable for them. He intentionally failed to provide them with a prospectus knowing that if he did, the information contained therein would directly contradict the representations he had already falsely made about these investments.
As a result of Mr. Smalbach’s misrepresentations, the estimated total financial loss to all of the known victims (33 were included) is over $2 million. On May 15, 2012, Mr. Smalbach was arrested on multiple counts of grand theft from persons 65 or older and exploitation of an elderly person. Smalbach was subsequently booked into the Hillsborough County Jail.
On April 8, 2013, Mr. Smalbach was sentenced to seven years in prison, followed by 10 years of probation. He will be ordered to pay $2,074,846.19 in restitution to the victims.
The Workers’ Compensation Bureau made the arrests of John Diaz, 45, for money laundering, organized scheme to defraud (first-degree felonies), multiple money service business violations (second-degree felonies), and two counts of workers’ compensation fraud (both third-degree felonies) and Mercedes Avila-Diaz, 44, for two counts of workers’ compensation fraud (both third-degree felonies). A Workers’ Compensation Fraud Task Force investigation revealed that a total of $35 million in fraudulent transactions occurred at Diaz Supermarkets, a licensed money service business, owned and operated by Diaz since 2006. As a result of the search warrants executed in Miami-Dade County at four Diaz Supermarkets locations and one administrative office, a total of $640 thousand was seized in forfeiture along with three vehicles.
The investigation also revealed that Diaz and Avila-Diaz jointly owned and operated Diavila Enterprises, Inc., which was advertised as a tax preparation company, since 2003. This company had been operating for nearly 10 years without the required workers’ compensation coverage, a third-degree felony.
Diaz and Avila-Diaz collectively face up to 95 years in prison if convicted on all counts. The Miami-Dade County State Attorney’s office will be prosecuting this case. The Office of Financial Regulation assisted the task force by providing financial data support and licensure information and has played an integral part in helping the task force put these criminals behind bars. The Miami-Dade County Police Department also assisted with arrests. The Workers’ Compensation Fraud Task Force, the Division of Insurance Fraud, the Broward Sheriff’s Office and the Palm Beach County Sheriff’s Office, through joint efforts, has been able to successfully shut down more than 30 shell companies and identify $335 million in fraudulent transactions associated with these companies.
This investigative case was initiated based upon information received regarding unusual business practices being conducted by Mazzeo Check Cashing Inc. DIF initiated a joint investigation with Homeland Security Investigations (HSI). DIF and HSI have been investigating the check cashing activities of Bernard Peter Mosco, Jr, who had been operating Mazzeo Check Cashing, Inc. out of his residence in Orlando. The investigation determined that Bernard Peter Mosco, Jr is in violation of Florida Statute 817.034, organized scheme to defraud.
During the investigation, Mosco Jr. participated in a consensual interview with representatives of DIF and HSI. During that interview, Mosco Jr. outlined that he was the sole owner of Mazzeo Check Cashing Inc. and had no employees. Mosco Jr. estimated that he cashes approximately $1-2 million in corporate checks per month. Mosco Jr. admitted in the interview that his customer base is partially made up of what he referred to as unbanked, individuals who cannot secure bank accounts. He further admitted that his corporate clients issues, such as tax leins and/or civil judgments, and used his services in an effort to hide assets from the courts and/or creditors. Mosco Jr. conducted most of his business through text messages with customers and cashed most of the checks at his residence, not the office where the money is delivered.
A search warrant was executed during which a substantial amount of documents and electronic media was seized. As a result of the information seized, it was discovered that Mr. Mosco's check cashing business, with the knowledge and cooperation of both he and his step-daughter, was used by several shell companies to avoid proper payment of the workers’ compensation insurance and other payroll burdens.
The case was presented to the Orange County State Attorney's Office and a capias was issued for the arrest of Mosco Jr. He was taken into custody and charged with organized scheme to fraud.