Consumer eViews

Volume 3, Number 44, October 30, 2006

Late last week, the National Council on Compensation Insurance filed for a decrease of 15.7 percent in the state’s workers’ compensation insurance rates, representing $600 million in savings for Florida employers.

This year’s decrease marks the fourth annual drop in rates since reforms to the state’s workers’ compensation system were approved in 2003, bringing the cumulative savings for Florida’s businesses to nearly $2 billion. And despite the criticism of those reforms at that time, the results were worth the effort. We have been able to significantly lower costs for Florida employers, and boost job creation for Florida’s working families.

We now also need additional reforms in property insurance to help homeowners and employers obtain affordable property coverage and those reforms must happen at both the state and federal level. At the state level, Governor Bush has responded by creating the Property and Casualty Insurance Reform Committee which is expected to soon recommend solutions for state lawmakers to consider in an upcoming special session. At the federal level, legislation is being championed by Congresswoman Ginny Brown-Waite and Congressman Clay Shaw to create a national catastrophe plan.

As with any complex issue facing our state, we need to work together to solve it.
 -- Tom Gallagher


Tom Gallagher, Florida’s chief financial officer, announced that free home inspections will soon begin in Hillsborough, Manatee, Pinellas and Sarasota counties for nearly 3,300 homeowners who applied through the My Safe Florida Home program. The program, funded with $250 million by the Florida Legislature, was created to better protect Floridians by strengthening their homes against hurricanes and to reduce the state’s exposure to hurricane damage.

“Before this hurricane season ends, my goal is to provide 12,000 free home inspections across the state to help Floridians strengthen their homes and better protect their families against catastrophic storms,” said Gallagher, who oversees the Department of Financial Services which administers the My Safe Florida Home program.

Gallagher said that 3,300 homeowners in Hillsborough, Manatee, Pinellas and Sarasota counties who have submitted completed applications will soon be contacted by a department-approved inspector to schedule an inspection. Gallagher is encouraging these homeowners to verify that they are dealing with a department-approved inspector by referring to the Service Request number on the front page of their completed application. Remaining and future applicants will be served with additional funding of the My Safe Florida Home program.

Following an inspection, homeowners will receive a report that outlines up to seven areas that could be improved to better protect the home against hurricanes, an estimate of how much improvements would cost, the expected insurance savings the homeowner would receive if improvements were made, and a rating of the home’s current ability to withstand hurricanes and its future ability to withstand hurricanes with improvements.

Gallagher said that the expansion into Hillsborough, Manatee, Pinellas and Sarasota counties is possible thanks to a partnership with the Federal Alliance for Safe Homes (FLASH) to screen and train an additional 350 inspectors.

Applying and obtaining a free home inspection is just the first step of the program. Homeowners who undergo the My Safe Florida Home inspection may also qualify for matching grants of up to $5,000 to fortify their homes. As directed by the new law to reduce hurricane exposure and property losses in Florida, grants will be prioritized and awarded to homeowners who live in high-risk, hurricane-vulnerable areas of the state.

Since the My Safe Florida Home program launched in late August, approximately 7,500 inspections have been completed or scheduled in seven counties including Broward, Indian River, Lee, Martin, Miami-Dade, Palm Beach and St. Lucie.

To ensure each county receives a fair share of free home inspections, the My Safe Florida Home program is limiting the number of inspections in each county based upon population. Applicants who do not receive a free home inspection before this limit is met will have their applications held for future phases of the program. Of the 6,240 completed applications received from Hillsborough, Manatee, Pinellas and Sarasota counties, 3,300 homeowners will be served.

Eligible Floridians must live in a single-family, site-built home with an insured value of $500,000 or less and have a valid homestead exemption. Documents verifying this information must be submitted with a completed application. Floridians can apply on-line at or by calling 1-800-342-2762 to get an application packet.


Tom Gallagher, Florida’s chief financial officer, announced the arrests of 33 individuals suspected of setting up or participating in more than a dozen staged accidents and fraudulently billing 11 auto insurance companies nearly $1 million for treatment of non-existing injuries and auto damage claims. 

The arrests follow a two-year investigation that is part of a major crackdown by the Department of Financial Services’ Division of Insurance Fraud working together with the National Insurance Crime Bureau (NICB) and representatives of the insurance industry in fighting a problem that costs consumers millions of dollars a year.  One estimate indicates auto insurance fraud costs the average Florida family nearly $250 a year in higher premiums and higher costs for goods and services.

Staged accidents extract a toll on all of us as consumers and taxpayers, and both time and dollars are wasted by police and emergency services when they respond to a fake accident scene,” Gallagher said.  “We are committed to continuing this fight against auto insurance fraud and protecting our citizens from this abuse.”

In staged accidents, the planners and organizers, usually in connection with unscrupulous clinic owners, target the personal injury protection (PIP) insurance of drivers, and bill as much as $10,000 to insurance companies for each patient.  Florida law requires drivers to carry at least $10,000 in PIP coverage and $10,000 in property damage liability coverage. 

The department’s aggressive efforts along with tougher enforcement measures passed by the Legislature have been credited with lowering auto insurance rates in recent years.  The department’s Division of Insurance Fraud has made more than 1,100 PIP fraud arrests associated with $36 million in PIP fraud since 2001, and consistently has been recognized as leading the nation’s fraud bureaus in insurance fraud arrests and convictions.

Also, in an effort to combat this type of insurance fraud, the Legislature authorized the department to partner with the Florida Automobile Joint Underwriting Association and the Miami-Dade State Attorney’s office to hire two dedicated PIP prosecutors, Nina Vivenzio and Erika Isidron.  Together, they have overseen more than 500 PIP arrests in the past two years, significantly increasing the number of convictions.

The Division of Insurance Fraud was assisted with these arrests by Hialeah Police Department and the Florida Department of Corrections.  The insurance companies defrauded in this investigation include Allstate, Dairyland, FAJUA, Geico, Inscorp, Mercury, Ocean Harbor, Progressive, Reliant, Southern Group and State Farm.  Fourteen of the suspects face a minimum two-year prison term if convicted, and more arrests are anticipated. 

The case, dubbed “Totaled Recall,” involved suspects who purchased used vehicles, many with previous damage, for use in staged accidents.  Investigators said on several occasions tow truck drivers would transport an inoperable vehicle to a crash site and then wait for the police to finish their report so they could tow the same vehicle away.  Several body shops were also allegedly involved in creating additional damage to some vehicles to make the claims for property damage higher. 

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 Fighters Hotline at 1-800-378-0445.  A reward of up to $25,000 may be offered for information leading to a conviction.

Attached is a list of those arrested so far as part of this operation.

Arrests Made in Operation ‘Totaled Recall’

Staged Accident 08/30/02 – Fraudulent claims in excess of $143,000
Francisco Martin, 48, Miami

Staged Accident 11/20/02 - Fraudulent claims in excess of 70,000
Bairo Oliva, 47, Miami
Idas Oliva, 39, Miami
Giovanny Sierra, Miami
Juan Sierra, 29, Miami  

Staged Accident 01/16/03 - Fraudulent claims in excess of $182,000
Rosa Fernandez, 35, Miami
Alain Garcia, 36, Hialeah
Roxy Lohuis, 34, Miami
Miguel Plaza, 32, Miami

Staged Accident 02/20/03 - Fraudulent claims in excess of $39,000
Roberto Alvarez, 66, Miami
Osmani Cruz, 39, Miami

Staged accident 02/22/03 - Fraudulent claims in excess of $57,000
Pedro Olivera, 39, Miami

Staged Accident 04/27/03 - Fraudulent claims in excess of $74,000
Vila Castro, 40, Miami           

Staged Accident 07/14/03 - Fraudulent claims in excess of $73,000
Rolando Anton, 46, Miami
Iraida Enriquez, 29, Miami          

Staged Accident 09/20/03 - Fraudulent claims in excess of $52,000
Claudia Bermudez, 35, Miami
Maria Garcia, 49, Miami
Yolanda Ramos, 72, Miami
Berta Garcia, 52, Miami 

* Staged Accident 11/01/03 - Fraudulent claims in excess of $52,000
Pedro Benavides, 26, Miami
Ricardo Carrillo, 47, Boca Raton
Nidia Velez, 61, Pembroke Pines 

* Staged Accident 01/09/04 - Fraudulent claims in excess of $44,000
Caren Garcia, 36, Miami
Edgar Ibarra, 45, Miami           

* Staged Accident 01/18/04 - Fraudulent claims in excess of $33,000
Maria Dagostino, 27, Hialeah
Alejandro Madrigal, 30, Hialeah 

* Staged Accident 01/27/04 - Fraudulent claims in excess of $40,000
Miguel Diaz, 29, Miami
Zuleika Osorio, 25, Miramar
Pedro Puente, 41, Hialeah
Max Ricardo, 24, Miramar

* Staged Accident 02/27/04 - Fraudulent claims in excess of $27,000
Martha Gonzalez, 36, Miami
Gisela Medrano, 28, Miami
Ruben Salgado, 38, Miami 

(* = alleged offenses occurred after a new law took effect in October 2003 requiring a minimum mandatory two-year sentence for anyone convicted of participating in the staging of an accident) 

These participants were previously arrested in July 2004 for a staged accident on 02/10/04 with fraudulent claims in excess of $34,000:
Adriana Diaz
Mario Diaz
Miudis Diaz 

The clinics where participants were “treated” are:
Clinic Center – 3800 West 12 Ave, Hialeah
Healthright – 1414 NW 107 Ave, Suite 310, Miami (closed)
Injuries Rehab Center – 7801 Coral Way, Suite 132, Miami
JMC Medical Care – 7821 Coral Way, Suite 101, Miami (closed)
Physical Therapy & Medical Center – 285 NW 27 Ave, Suite 15, Miami (closed)
S L Medical Center – 4230 West 16 Ave, Hialeah (closed)


Tom Gallagher, Florida’s chief financial officer, announced that the Department of Financial Services has uncovered another scam seeking to lure Floridians into buying potentially inappropriate financial products.  As a result, Gallagher is again warning consumers to “Verify Before You Buy.”

Earlier this month, Gallagher ordered Ohio-based Investors Union, LLC and its managing member, Peter J. Bonnell III of Medina, Ohio, to immediately stop sending misleading postcards to Florida seniors bearing the word “NOTICE” and advising consumers that they “may have an annuity that has reached the end of its surrender period.”  When recipients call a toll-free number listed on the postcard, they are not given any information regarding their own investment accounts, but are instead asked for personal financial information and advised they should set an appointment to review their existing annuities and other investments.   

“These deceptive practices against our seniors in attempts to manipulate them out of their hard-earned savings will not be tolerated”, said Gallagher, who oversees the Florida Department of Financial Services.  “I commend the investigators who discovered these activities early on before too many seniors were scammed.”

An annuity is a contract in which an insurance company makes a series of payments that provide primary or supplemental retirement income while the annuity holder is alive. Most annuities have a surrender period during which the holder would pay an extra service charge for withdrawing money beyond a set amount.

Gallagher ordered Investors Union, LLC and Bonnell to stop engaging in unfair trade practices and said both now face formal administrative charges that could lead to revocation of their Florida licenses.  Investors Union, LLC also does business as Annuity Service Center, Insurance Service Center, Information Service Center, and Cold Solutions.  Eight other states have now taken similar action against Investors Union and Bonnell.

Florida is currently home to more than 2.9 million Floridians over the age of 65, and Gallagher said the state’s senior population is projected to grow by as much as 30 percent over the next several years. 

As CFO, Gallagher implemented a “Verify Before You Buy” campaign using websites, billboards, radio ads and various news shows and publications urging Floridians to protect themselves in financial transactions.  He also created a Senior Resource Center website, at, to help seniors with the diverse questions and financial challenges they may face.

Also, in response to calls and letters from hundreds of seniors robbed of access to their savings because they were convinced to liquidate CDs, stocks and savings accounts to fund annuities, Gallagher pushed for legislation that passed in 2004 requiring agents to document the basis for selling annuities to seniors and also gave the department authority to take corrective action if a company or agent violates the law.

Gallagher is again urging Floridians and especially seniors to take the following precautions  to avoid becoming a victim of a financial scam:


  • Do an assessment of your financial means and investment objectives.

  • Understand that all investments involve risk: generally, the higher the return, the higher the risk.

  • Ask the sales agent (broker) about commissions, fees, penalties, sales charges and any other costs.

  • Ask as many questions as you want and take notes.  Walk away if they avoid your questions.

  • Take your time. High-pressure sales tactics will rush you into an unwise decision. A sound investment will be just as good tomorrow or next week.

  • Document all transactions.

  • Carefully read and understand documents before you sign them.

  • Ignore “inside information,” “hot tips” and “rumors.”

  • Hang up on “cold calls” from strangers.

  • Beware of "bonus" interest rates as they are usually limited in duration and have strings attached.

  • Be cautious of sales pitches that claim you will "recoup" all penalties with the higher returns of a new policy.

  • Remember:  if it sounds too good to be true, it probably is.

Anyone who believes they may be a victim should call the department’s Consumer Helpline at 1-800-342-2762 or log on to to file a complaint.


Tom Gallagher, Florida’s chief financial officer, announced that a former insurance agent whose license was revoked in March for luring senior citizens into buying inappropriate annuities is now facing felony charges for continuing to transact such deals.

Bijan Razdar, 52, of Port Richey, was arrested on Oct. 18 at his home in Pasco County and is charged with knowingly transacting insurance and/or otherwise engaging in insurance activities without a license, a third-degree felony.  The Department of Financial Services, Division of Insurance Fraud, determined Razdar had continued the illegal activity for six months following his license revocation.  Detective Steve Firestone was the case investigator.

“We have zero tolerance for anyone who seeks to cheat our seniors out of their hard-earned retirement funds,” Gallagher said.  “We will continue to bring the full force of the law against scam artists and aggressively educate our seniors against these scams.”

Razdar’s license revocation followed a lengthy investigation by the department’s Division of Agent and Agency Services, Bureau of Investigations.  As Florida’s CFO, Gallagher oversees the department and has taken action against several dozen agents and individuals for theft and fraud involving the elderly.  

An annuity is an insurance contract that offers a guaranteed series of payments over a period of time.  While he was still licensed, Razdar operated American Independent Financial Services located at 10633 U.S. Highway 19 in Port Richey and produced radio advertisements and seminars that sounded like a financial advice show and drew seniors looking for guidance on how to protect their retirement funds. 

An elderly Clearwater woman who explained she needed to maintain access to her assets to meet daily living expenses, invested the bulk of her retirement nest egg, accumulated from 43 years of work at Sears, Roebuck & Co., in a deferred equity indexed annuity.  She later learned she could not collect a monthly income until age 92.

Anyone who believes they may have been a victim should call 1-800-342-2762 or log on to to file a complaint.


This week Governor Bush announced that Florida will receive more than $100 million from the U.S. Department of Housing and Urban Development to harden homes in the state to protect against future disasters. The Community Development Block Grant disaster relief funds are a portion of the additional $5.2 billion allocated nationwide by the federal government following the destructive Hurricanes of Dennis, Katrina, Rita and Wilma.

Fortifying Florida is essential for instilling a 'culture of preparedness.' Hardening homes is an investment that can save Floridians money on their annual insurance premiums and spare them the anguish of losing their homes during a natural disaster.

Florida is currently finalizing a plan to use these funds to complement the "My Safe Florida Home" program. Through the program, homeowners can apply for a free inspection and a grant up to $5,000 from the Florida Department of Financial Services to help protect their homes. The final plan must be approved by the U.S. Department of Housing and Urban Development.

Visit to find out more about the free home inspection and matching grant program.

For information on creating a Family Disaster Preparedness Plan, please visit

Investors Urged to Carefully Monitor Online Trading Accounts

The North American Securities Administrators Association warned investors to carefully monitor their online trading accounts in the wake of “hack attacks” in which predators have broken into customer accounts at online brokerages in the United States and Canada and made unauthorized trades worth millions of dollars.

Federal and industry authorities are investigating recent cases in which hackers gained access to customer accounts at several large online brokers and used the customers’ funds to buy certain thinly traded microcap securities, also known as penny stocks. The hackers appeared to be running a “pump and dump” scheme, trying to drive up share prices so they could sell the stocks at a profit.

These scams typically begin with a hacker obtaining customer passwords and user names, then liquefying that person’s existing stock holding and using the proceeds to buy shares in the microcap. They then wire the money to either an offshore account or through a series of straw men or dummy corporations.

For details, please see:

Consumer Services HelpLine (800) 342-2762

Consumer eViews