Fraud Rampant,” Grand Jury Concludes
‘Aids Scandal’ Story Goes National
February 4, 2000...On the heels of a front page story in last week’s Express,
revealing ongoing viatical fraud in Florida, the Office of the Statewide
Prosecutor announced on Friday that “fraud and corruption are rampant in
the viatical industry.”
Statewide Prosecutor Melanie
Ann Hines published the findings of the first report of the Statewide Grand
Jury which was impaneled last summer to review a variety of financial crimes
including insurance fraud.
The report concluded that
if the fraud continues unabated, the entire industry may become jeopardized.
In its report, the
Grand Jury found that a large number of terminally ill patients were applying
for and receiving life insurance policies by not reporting their illnesses,
a policy known as cleansheeting. These fraudulently obtained policies were
eventually sold to investors with the knowledge and complicity of, and
sometimes even encouragement from some life insurance agents, viatical
brokers, and viatical settlement providers.
The Grand Jury also issued
indictments charging five individuals and one corporation in the viatical
industry with multiple counts of Grand Theft and Dealing in Stolen Property.
The policies viaticated had a face value of almost $7 million. This
follows sealed indictments charging two South Florida viatical settlement
providers with Grand Theft and filing false claims last October.
To date, the Office of the
Statewide Prosecutor has returned three Indictments charging seven individuals
and one corporation with 155 felony counts relating to criminal fraud in
the viatication of life insurance policies belonging to the terminally
ill. The face value of these policies is approximately $12.7 million.
The state investigation revealed
what law enforcement officials, insurance regulators, and industry observers
have been saying for some time. Fraud in the viatical settlement industry
is rampant; as much as 40-50% of the life insurance policies viaticated
by viatical settlement providers may have been procured by fraud.
In censuring the industry,
the Grand Jury declared that “As a result, one of the most vulnerable groups
in society, the terminally ill, will lose a vital option to mitigate their
financial burdens. The victims of this fraud are not just insurance companies
and their legitimate customers who end up paying as a result of this fraud
through reduced profits and higher premiums. Victims also include investors,
who stand to lose their investment when policies are canceled or lapse.”
The panel will continue to
meet throughout the year, and “numerous more criminal charges are likely
to follow”, according to one attorney defending a number of AIDS patients.
It was only last week that Circuit Court Judge Cohn allowe the Statewide
Prosecutor access to patient medical records here in South Florida.
The story was broken exclusively by the Express.
Read the Article from Issue 1... AIDS
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