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FLORIDA CHIEF FINANCIAL OFFICER TOM GALLAGHER'S WEEKLY NEWSLETTER

Volume 1, Number 48, November 29, 2004     
 

While you are out shopping this holiday season, remember to check your list twice – be careful with your personal financial information and how much you are spending. 

It’s the time of year when the holiday spirit can lead us to give too much.  There are people out there looking to take advantage of that giving spirit.  Bogus solicitations can come over the phone, in the mailbox or through the Internet.  See the story below for more details.

But also be careful not to victimize yourself.  Don’t strain your budget.  The department has launched a public education campaign, Your Money Your Life, that can help you manage your finances so that you can enjoy the real reason for the holiday. 

My best,

                       -- Tom Gallagher

BEYOND THE CALL OF DUTY DUE TO BAD WEATHER

Before taking off to join family for turkey, dressing and pumpkin pie, several members of the Department of Financial Services’ staff went out of their way to save the holiday for many state employees. 

The Division of Accounting and Auditing produces bi-weekly payroll checks for universities that do not yet run their own payroll.  On Monday, those checks were shipped via Federal Express.  The bi-weekly payday was on Wednesday.   

But on Tuesday, Federal Express reported that bad weather had grounded the airplane at its Memphis hub.  The University of North Florida, University of West Florida and Florida International University requested assistance in getting replacement paychecks.   

The staff from the divisions of Accounting and Auditing and Information Systems re-issued checks, and two employees -- Hal Foy, financial administrator in the Bureau of Accounting, and Allen Reams, chief of the Bureau of Accounting, delivered the checks. 

Also helping in the holiday spirit were Marvin Naiman, Bureau of State Payrolls, Ron Ricks, Division of Information Systems, Sally Martin, Division of Information Systems, Freida Ritter, Division of Information Systems and Tommy Lawhon, Division of Information Systems.

Many thanks to these dedicated workers and to all employees who go beyond the call of duty.

GALLAGHER TO CONSUMERS: BEWARE OF FINANCIAL SCAMS THIS HOLIDAY SEASON

The holiday season is the time of year when the spirit of joy and giving is in the air.  Unfortunately, it’s also the time of year when scam artists often take advantage of the giving spirit.  Florida’s Chief Financial Officer Tom Gallagher is urging consumers to be extra cautious with their money to avoid financial scams.

“Take steps to protect your personal and financial information from identity theft this holiday season, especially if you are making purchases online or over the phone,” Gallagher said.  “Scam artists who get ahold of your sensitive information can wreak havoc with your finances.” 

Consumers shopping online should also take extra precautions to avoid identity theft, the nation’s fastest growing crime.  Deal only with reputable companies and take steps to secure your personal and financial information.  Gallagher said consumers often contact the state reporting they have been unable to find physical addresses or phone numbers for online businesses.  Some reported scams have resulted from transactions with overseas businesses.  “Remember, a company based outside the country is outside of our laws,” Gallagher said. 

Other ways to prevent identity theft include shredding junk mail credit card offers, reviewing all bank and credit card records and checking credit reports at least once a year.  The Department of Financial Services has available an online resource on identity theft with links to more tips and information on avoiding this costly scam.  Consumers can log on to www.MyFloridaCFO.com and click the “ID Theft” banner to visit the site.

Other types of scams that often find victims this time of year are phony charitable organizations and bogus income tax scams.  An individual posing as a local charity may solicit consumers over the phone.  Potential donors should ask questions, including what the organization plans to do with the gift, and be wary of appeals that are long on emotion and short on details.  A reputable organization will never demand cash, and all checks should be made payable to the organization, never to an individual.  Florida law also requires that charitable organizations provide a copy of their annual financial report upon request.   

In addition, don’t fall victim to an income tax avoidance scheme this holiday season.  Resist the urge to file for nonexistent refunds, such as social security advances and slavery reparations.  Attempting to collect on an illegal claim can result in a $500 federal penalty.  Decline to talk with anyone offering to file a claim on your behalf for an upfront “fee.”  These individuals will cash your check and move on to the next victim.  

Gallagher also provided some advice that’s good year-round.  He advised consumers who are purchasing homes, automobiles, investments or insurance to take the time necessary to read each document or contract carefully and verify that they are dealing with a licensed company.   He urged consumers to talk with their agents or brokers about their rights and responsibilities under the law before signing any agreement.   

For questions or to file complaints, consumers may call the Department of Financial Services toll-free at 1-800-342-2762 or log on to www.MyFloridaCFO.com.

MORATORIUM ON INSURANCE CANCELLATIONS EXTENDED TO DEC. 31ST FOR HOMES NOT YET REPAIRED

Action by Gov., Cabinet anticipates additional legislation

TALLAHASSEE-Governor Jeb Bush and members of Florida’s Cabinet approved an emergency rule banning insurance companies from canceling or nonrenewing insurance policies for hurricane victims whose homes have yet to be repaired. State Chief Financial Officer Tom Gallagher recommended the rule to protect thousands of Floridians still waiting for storm repairs who would be uninsurable if they lost their insurance coverage.

“We recognize that many homeowners are being told there is a substantial waiting list for repairs, due to a shortage of contractors,” Gallagher said. “Without this protection, homeowners who lost their insurance coverage would be uninsurable. I applaud the governor and my fellow Cabinet members for making sure that storm victims have property protection.”

The emergency rule, developed by the Office of Insurance Regulation, is effective until Dec. 31st. It applies to all residential and commercial residential properties and prohibits insurance companies from canceling insurance policies until 60 days after repairs are complete.

“This is a very necessary measure to protect Floridians from becoming uninsurable and the attendant problems that could follow such a situation,” said Florida Insurance Commissioner Kevin McCarty, who heads ups the Office of Insurance Regulation.

Gallagher said he will ask the legislature to address this issue in next month’s special session by giving insurance regulators the authority to protect homeowners from losing coverage until storm repairs are complete.

Gallagher will also ask lawmakers to take steps to prevent consumers from being charged large multiple hurricane deductibles when more than one storm strikes Florida in a single season. The Office of Insurance Regulation reported that to date, more than 29,000 Floridians have paid more than $50 million in second, third and fourth deductibles.

A copy of the emergency rule is available at http://www.MyFloridaCFO.com/companies/pdf/69OER04-06.pdf.

ARREST MADE IN ATTEMPTED MURDER BY FIREBOMBING

After a four-month investigation, investigators with the State Fire Marshal’s Office, Bureau of Fire and Arson Investigations, arrested Shawn David Miller 26, for his involvement in the apparent attempted murder in July of seven people by firebombing at an occupied residence located at 811 Neuse Ave. All of the occupants escaped uninjured.

The investigation found that Miller and several of his friends threw several Molotov cocktails at the residence when they knew or should have known it would be occupied by seven people, including a 10-month-old baby. Part of the crime was captured by a video camera a neighbor had installed. The video showed several firebombs being thrown at the front porch of the residence and a vehicle parked in front of the residence being set on fire and pushed toward the house.

The people inside awoke to the commotion and escaped the burning residence. The wood-framed house sustained irreparable fire damage and their vehicle was totaled.

Miller is charged with seven counts of attempted murder, firebombing, and first-degree arson. He was taken to the Orange County Jail where he is being held without bond. More arrests in the case are pending.

The Bureau of Fire and Arson Investigations is the law enforcement branch of Florida’s Division of State Fire Marshal, investigating possible criminal activities related to fires and explosions. This bureau conducts approximately 7,000 investigations each year statewide involving major fires, explosions, and arson-related incidents. The mission of the bureau is to effectively prevent, discourage, investigate, and prosecute arson and arson related crimes for the protection of Florida’s citizens and their property. The Bureau is responsible for about 500 criminal arrests each year.

EMPLOYER OF WORKERS KILLED AT JULY CONSTRUCTION-SITE ACCIDENT CHARGED WITH FRAUD

The employer of two workers killed in a July construction accident on a Hobe Sound work site has been arrested and charged with workers’ compensation fraud, Florida’s Chief Financial Officer Tom Gallagher has announced.

According to investigators with the Department of Financial Services’ Division of Insurance Fraud, Richard Meccariello, Jr., 39, of 3934 Sherwood Blvd. in Delray Beach was accused of failing to provide workers’ compensation coverage, a third-degree felony. 

“When workers show up to perform a job, they deserve to be protected in case they get injured.  This terrible accident is a perfect example of why workers’ compensation is so important,” said Gallagher, who oversees DFS.  “Employers who don’t protect their workers will be held accountable.”

The department’s Division of Workers’ Compensation previously ordered two companies owned by Meccariello, Mac’s Construction and Concrete, Inc., 848 Glouchester St. in Boca Raton, and Mac’s Custom Construction, Inc., to stop work and cease all business operations in Florida due to workers’ compensation violations.  The companies were also fined a total of $2.4 million.  Under Florida law, construction industry employers with one or more employees must provide workers’ compensation coverage for their employees.  At the time of the accident in July, Meccariello employed at least seven workers without coverage.   

Meccariello was booked into the Palm Beach County Jail with bond set at $25,000.  If convicted, Meccariello faces up to five years in prison. 

CLINIC OWNER, ‘PATIENTS’ FACE  INSURANCE FRAUD CHARGES
A dozen individuals suspected of organizing or participating in staged crashes and filing false insurance claims were arrested by insurance fraud investigators with the Department of Financial Services on insurance fraud charges. 

These individuals were charged under a new law that took effect October 1, 2003, that made organizing or participating in a staged crash punishable by a statutory minimum sentence of two years and as many as 15 years in prison.  In a staged crash, organizers and unscrupulous clinic owners target the personal injury protection (PIP) insurance of drivers, and bill on average up to the maximum $10,000 benefit per insured. 

 “PIP fraud dramatically drives up the cost of automobile insurance, making it harder for Floridians to afford the coverage Florida law requires them to carry,” said Florida’s Chief Financial Officer Tom Gallagher, who oversees the Department of Financial Services.  “The law targeting staged crash organizers has helped our investigators and prosecutors successfully pursue these scam artists.” 

So far, 25 arrests have been made under the new law.  In addition, in March the department partnered with the Automobile Joint Underwriting Association and the Miami-Dade State Attorney’s office to hire a dedicated PIP fraud prosecutor.  Just this year, the department has made193 arrests, up from 155 in 2003, and dedicated prosecutor Nina Vivenzio has overseen more than 160 of this year’s arrests. 

“We intend to file racketeering charges in some of these organized fraud clinic cases in the future,” Vivenzio said.  “It is a tremendous problem, and we need to take tougher action against these criminals.” 

Investigators with the department’s Division of Insurance Fraud said most of those arrested today were patients at Miami Health & Life Medical Management, Corp, a clinic located at 300 SW 107 Ave., Suite 206, Miami.   

Clinic owner Rolando Martinez, 35, has been charged with 51 counts of insurance fraud, 51 counts of grand theft and one count of organized scheme to defraud in the first degree, for false claims filed by the clinic in a 10-month period totaling over $450,000.  Martinez opened the clinic in late 2003. 

Other arrests today included participants from two staged crashes accused of filing more than $65,000 in fraudulent claims filed against two insurance companies. 

Fausto Guerra, the alleged recruiter, Alina Mecias and Kenia Lopez are accused of filing more than $38,000 in fraudulent claims stemming from an alleged staged crash on May 12. 

Guerra was previously arrested on October 21, 2004, for organizing another staged crash on June 13.  Carlos Ilarraza and Daryelis Olivares were arrested on charges stemming from filing more than $27,000 in fraudulent claims in that staged crash.  Investigators said clinic owner Martinez knew the crash was staged and instructed at least one of the patients on what to tell the doctor.  

Division investigators also arrested several “patients” who allegedly signed for treatment they never received.    Investigators determined that fraudulent claims were filed with their insurance companies in excess of $65,500.  Those charged are Alexander Arencibia, Juan Garcia, Esterlina Reyes, Magaly Rodriguez, Zoraida Rosado, and Jose Tamayo.   

The Department of Financial Services, Division of Insurance Fraud, investigates various forms of fraud in insurance, including health, life, auto, property and workers' compensation insurance.  Anyone with information about this case or another possible fraud scheme should call the department's Fraud Busters Hotline at 1-800-378-0445.  A reward of up to $25,000 may be offered for information leading to an arrest and conviction.


Consumer Services HelpLine (800) 342-2762.