Dallas County Man Arrested and Charged in $3.5 Million Staged Accident Fraud Scheme
|U.S. Attorney’s Office April 29, 2013|
DALLAS—Leroy Nelson, 61, of Duncanville, Texas, was arrested this morning by federal agents on felony charges, outlined in an indictment returned by a federal grand jury in Dallas last week and unsealed today, stemming from his alleged role in a multi-million-dollar staged accident fraud scheme. Nelson made his initial appearance this afternoon before U.S. Magistrate Judge Irma C. Ramirez, who ordered him detained pending a detention hearing set for Wednesday at 2:00 p.m. Today’s announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Specifically, the indictment charges Nelson with six counts of mail fraud and six counts of engaging in illegal monetary transactions.
The indictment alleges that from at least 2005, Nelson, aided and abetted by others, devised a scheme to defraud multiple insurance companies by submitting false claims for fictitious automobile accidents. As part of the scheme, Nelson promised cash payments to individuals he recruited for them to falsely report to their automobile insurance company that, while driving, they damaged a piece of equipment that was on the road or that was being hauled by a trailer. Nelson provided scripts to these individuals that instructed them on how to report the damage to their insurance company.
Nelson fabricated the written claims and submitted them to insurance companies. The damaged equipment was described as very technical in nature, such as a “Remote Aircraft Landing Marker,” a “chemical Pipeline Examiner,” or a “Seismographic Probe.” The claims would include a fictitious repair estimate and a photograph of the equipment. The claimed repair expenses would usually be from $16,000 to $19,000.
When insurance companies paid the claims, checks would be mailed to an address that Nelson provided. He directed the insurance companies’ checks to either warehouses he owned in Duncanville or to private mail boxes he had opened in Minnesota, Missouri, Mississippi, Washington, Arizona, Connecticut, and Louisiana. After establishing the mail boxes, Nelson directed that the mail be forwarded to his address on Explorer Street in Duncanville.
A federal indictment is an accusation by a grand jury, and a defendant is entitled to the presumption of innocence unless proven guilty. If convicted, however, each of the mail fraud counts carries a maximum statutory penalty of 20 years in federal prison and a $250,000 fine; each of the engaging in an illegal monetary transaction counts carries a maximum statutory penalty of 10 years in federal prison and a $250,000 fine. In addition, restitution could be ordered. The indictment also includes a forfeiture allegation, which would require Nelson, upon conviction, to forfeit to the government proceeds traceable to the property as well as seven vehicles, including two Mercedes, a motor home, a boat, and his residence on Explorer Road in Duncanville.
The investigation is being conducted by the FBI, Internal Revenue Service-Criminal Investigation, and the U.S. Postal Inspection Service. Assistant U.S. Attorney Christopher Stokes is in charge of the prosecution.