Three Indicted, Arrested on Federal Charges Involving Scheme to Defraud Insurance Lenders
|U.S. Attorney’s Office September 19, 2012|
Three people were arrested today on federal charges alleging they operated a scheme to defraud insurance finance companies, announced André Birotte, Jr., the United States Attorney in Los Angeles; Timothy Delaney, the Special Agent in Charge of the FBI’s Los Angeles Field Office; and Insurance Commissioner Dave Jones, on behalf of the CDI Investigations Division-Criminal Operations Point of Sale (COPS) Team-Los Angeles Regional Office.
Lee Anthony Corlette, 64, of Redondo Beach, was arrested at his residence this morning. Sherman Franklin Hulsey, 60, of Santa Barbara; and Jane Graves, 61, of Astoria, Oregon, were also arrested this morning. The defendants will have an initial appearance in U.S. District Court this afternoon.
A federal grand jury returned an indictment in United States District Court in Los Angeles on September 5, charging Corlette with seven counts of mail fraud, nine counts of wire fraud, and 16 counts of aiding and abetting in connection with a scheme to submit numerous fraudulent insurance premiums to insurance finance companies. Hulsey and Graves were charged with one count of mail fraud, three counts of wire fraud, and four counts of aiding and abetting. The indictment alleges that Corlette, while CEO of Insurance Works Inc., and doing business as Star Alliance Insurance Services in Long Beach, California, obtained over $4 million in fraudulent loans from victim finance companies who believed the money would be provided to the insurance carriers identified in the agreements submitted by Corlette.
Defendants Hulsey and Graves allegedly assisted Corlette in the fraud by providing information about their businesses in order for Corlette to submit the agreements to the victim finance companies and fraudulently obtain the loans. Hulsey is the owner of Liberty Paradise LLC, located in Santa Barbara, and Global Consulting Services Inc, doing business as Vanguard Benefits. Graves was the secretary/treasurer of Global Consulting Services and the owner of Steward Holdings LLC, a company located in Astoria, Oregon.
“Insurance fraud is not a victimless crime,” said United States Attorney André Birotte, Jr. “The allegations in this case describe a wide-ranging fraud scheme and my office is working with our partners at the federal, state, and local levels of law enforcement to protect consumers and remedy serious fraud like that alleged here.”
“The FBI is committed to investigating cases of alleged fraud involving the insurance industry and to our partnership with CDI investigators and the United States Attorney’s Office,” said Timothy Delaney, the Acting Assistant Director In Charge of the FBI’s Los Angeles Field Office.
“Fighting insurance fraud is one of my top priorities as insurance commissioner,” said Commissioner Dave Jones. “It negatively impacts both consumers and insurers, and we are committed to investigating and rooting it out in California.”
Earlier this year, a former bookkeeper charged in connection with the scheme pleaded guilty to conspiracy and is awaiting sentencing.
If convicted, the defendants face a statutory maximum penalty of 20 years in federal prison for each count of mail and wire fraud.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
This investigation was conducted by agents with the FBI and investigators with the CDI Investigations Division-Criminal Operations Point of Sale (COPS) Team-Los Angeles Regional Office. The defendants are being prosecuted by the United States Attorney’s Office.