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Case Number: 1:21-cr-00530
Judge: Sidney H. Stein
Court: United States District Court for the Southern District of New York (Manhattan County)
Plaintiff's Attorney: United States Attorney’s Office in New York City
Description: New York City, New York criminal defense lawyer lawyer represented Defendant charged for his participation in a scheme to obtain large insurance settlements and lawsuit recoveries from fraudulent trip-and-fall accidents.
Adrian Alexander, a New York litigation funder, among others, was involved in an extensive fraud scheme through which fraud scheme participants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents.
The fraud scheme participants recruited individuals (the “Patients”) to stage or falsely claim to have suffered trip-and-fall accidents at particular locations throughout the New York City area (the “Accident Sites”). In the course of the fraud scheme, scheme participants recruited more than 400 Patients. Members of the fraud scheme often recruited Patients who were extremely poor. For example, it was common for Patients to ask for food when they would appear for their intake meetings with the lawyers. Many of the Patients did not have sufficient clothing to keep them warm during the winter and had poor-quality shoes. Members of the fraud scheme also recruited Patients who were drug addicts, and it was common for scheme participants to recruit Patients from homeless shelters in New York City.
U.S. Attorney Damian Williams said: “Adrian Alexander knowingly exploited some of the most vulnerable members of society – many of whom were poor, drug addicts, or homeless – in order to enrich himself and his investors. Today’s sentence should serve as a warning to unscrupulous litigation funders that, together with our law enforcement partners, we will hold accountable those who engage in unlawful practices and prey on litigants without the means to avail themselves of the judicial process.”
In the beginning, scheme participants would instruct Patients to claim they had tripped and fallen at a particular location, when in fact, the Patients had suffered no such accidents. Eventually, at the direction of the lawyers who filed fraudulent lawsuits on behalf of the Patients, scheme participants began to instruct Patients to stage trip-and-fall accidents, i.e., to go to a location and deliberately fall. Common Accident Sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks, and purported “potholes.”
After the staged trip-and-fall accidents, Patients were referred to specific attorneys who would file personal injury lawsuits (the “Fraudulent Lawsuits”) against the owners of the Accident Sites and/or insurance companies of the owners of the accident sites (the “Victims”). The Fraudulent Lawsuits did not disclose that the Patients had deliberately fallen at the Accident Sites or, in some cases, had not fallen at all. During the course of the fraud scheme, the defendants, together with others known and unknown, attempted to defraud the Victims of more than $31,000,000.
The Patients were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors, including Ribeiro. The fraud scheme participants advised the Patients that if they intended to continue with their lawsuits, they were required to undergo surgery, which was critical to boosting the value of any potential settlement. Fraud scheme participants, including ALEXANDER, looked for doctors who were willing to perform surgeries, even when others would not. For example, in a May 2015 email, after one doctor informed ALEXANDER that a particular patient was “not . . . a surgical candidate,” ALEXANDER directed a Patient recruiter and case manager to “[t]ake him to [another doctor]—Nothing is done until its done.”
As an incentive to getting surgery, the recruited Patients were offered a payment, in the form of loans, typically between $1,000 and $1,500 after they completed surgery (“Post-Surgery Loans”). Patients generally were told to undergo two surgeries.
The Patients’ legal and medical fees were usually paid for by litigation funding companies (the “Funding Companies”), including a funding company owned by ALEXANDER, even if the Patient maintained medical coverage through an insurance company or a government-subsidized program. The Funding Companies also paid the fraud scheme organizers and participants referral fees, typically $1,000 to $2,500, for each Patient who signed a funding agreement. In an April 2015 email about a particular Patient’s staged accident, Alexander wrote to two of the recruiters and case managers, “I am sure you realize I want to do these deals; I am just trying to see how we can, without getting in trouble.”
In exchange for funding Patients’ medical and legal costs, the Funding Companies charged the Patients high interest rates, sometimes up to 50% on medical loans and up to 100% on personal loans. The interest rates were so high that oftentimes the majority of the proceeds that were awarded in the Fraudulent Lawsuits were paid to the Funding Companies, lawyers, doctors, and others, with the Patients receiving a much smaller percentage of the remaining recovery.
In addition to the high-interest rates charged by the Funding Companies, ALEXANDER also profited from the Fraud Scheme through an MRI facility that he owned and operated (“MRI Facility-1”). ALEXANDER pushed the case managers to send Patients to MRI Facility-1, which routinely prepared MRI reports that were “positive” for medical conditions justifying surgery, even though the Patients had not sustained any injuries. ALEXANDER received $1,000 per MRI that MRI Facility-1 prepared as part of the scheme.
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In addition to the prison term, ALEXANDER, 76, of New York, New York, was sentenced to three years of supervised release. ALEXANDER was further ordered to pay $659,011 in forfeiture. Restitution will be determined by the Court within 90 days.
Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation. Mr. Williams also thanked the National Insurance Crime Bureau for their assistance in the investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Nicholas Chiuchiolo, Nicholas Folly, Danielle Kudla, and Alexandra Rothman are in charge of the prosecution.
18:1349.F ATTEMPT AND CONSPIRACY TO COMMIT MAIL AND WIRE FRAUD
18:371.F CONSPIRACY TO COMMIT WIRE FRAUD
18:1341.F FRAUDS AND SWINDLES
18:1343.F FRAUD BY WIRE, RADIO, OR TELEVISION
Outcome: Defendant was sentenced to 36 months in prison.