3 Members Of Trip-And-Fall Scheme Convicted Of Defrauding New York City-Area Businesses And Their Insurance Companies Of More Than $31.7 Million - Insurance News | InsuranceNewsNet

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May 28, 2019 Newswires
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3 Members Of Trip-And-Fall Scheme Convicted Of Defrauding New York City-Area Businesses And Their Insurance Companies Of More Than $31.7 Million

Justice Department Documents & Publications

U.S. Attorney's Office

Southern District of New York

FOR IMMEDIATE RELEASE

Tuesday, May 28, 2019

3 Members Of Trip-And-Fall Scheme Convicted Of Defrauding New York City-Area Businesses And Their Insurance Companies Of More Than $31.7 Million

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the conviction in Manhattan federal court of BRYAN DUNCAN, ROBERT LOCUST, and RYAN RAINFORD. The jury convicted DUNCAN, LOCUST, and RAINFORD today for their participation in a conspiracy to commit mail and wire fraud following a three-week trial before U.S. District Judge Sidney H. Stein. The jury also convicted DUNCAN of a second count of conspiracy to commit mail and wire fraud, along with one count of mail fraud and one count of wire fraud. Co-conspirators Peter Kalkanis, a former chiropractor, and Kerry Gordon previously pled guilty before Judge Stein to conspiracy to commit mail and wire fraud, mail fraud, and wire fraud. Kalkanis also pled guilty to aggravated identity theft.

Manhattan U.S. Attorney Geoffrey S. Berman said: "Bryan Duncan, Robert Locust, and Ryan Rainford carried out a blatantly corrupt scheme, recruiting 'patients,' coaching them on how to stage trip-and-fall 'accidents' that were not accidents at all, and steering them to complicit lawyers, chiropractors, and doctors. They recruited indigent people, including from homeless shelters -- people they thought would be most willing to undergo unneeded surgeries for the minimal cut of the proceeds the defendants would share. Duncan, Locust, and Rainford were tripped up by the justice system and have met their downfall."

According to the allegations contained in the Indictment and Superseding Indictment, and the evidence presented in Court during the trial:

Between in or about 2013 through 2018, DUNCAN, LOCUST, and RAINFORD, the defendants, engaged in a widespread fraud scheme through which the defendants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents. Fraud scheme participants, including the defendants, recruited hundreds of individuals to stage trip-and-fall accidents at particular locations throughout New York City and to claim that they injured themselves as a result of their accidents. Common accident sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks, and purported "potholes." The defendants instructed the recruited patients to claim that they sustained injuries to particular areas of their bodies, including the knees, shoulders, and/or back -- body parts that, if injured, would reap high recoveries in personal injury lawsuits.

After the staged trip-and-fall accidents, recruited patients were referred to specific attorneys who would file lawsuits against the owners of the accident sites and/or insurance companies of the owners of the accident sites (the "Victims"). The lawsuits did not disclose that the recruited 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 at least $31,791,000.

The recruited patients were also instructed to receive ongoing medical treatment from certain chiropractors and doctors. The fraud scheme participants advised the recruited patients that if they intended to continue with their lawsuits, they were required to undergo surgery to increase the value of their fraudulent lawsuits. The medical procedures included discectomies, spinal fusions, non-surgical epidural injections, and knee and shoulder surgeries. As an incentive to getting surgery, the recruited patients were offered a payment after they completed surgery as well as a percentage of any settlement payment from their lawsuit. Patients generally had two surgeries and received between $1,000 and $1,500 after each surgery.

The defendants recruited low-income individuals as patients -- individuals desperate enough to undergo surgeries in exchange for these small post-surgery payments. In some instances, the defendants even recruited patients from homeless shelters in New York City. Over the course of the trial, more than 20 witnesses testified, including 11 patients who admitted to staging trip-and-fall accidents at the direction of DUNCAN, LOCUST, RAINFORD, or other co-conspirators.

DUNCAN was one of the organizers and leaders of the scheme. DUNCAN recruited patients into the scheme, organized the recruited patients' legal and medical appointments, and assisted in procuring the funding for the recruited patients' medical treatment and lawsuits. DUNCAN, and his partner Kerry Gordon, made over $1 million in profit from the fraud scheme.

LOCUST and RAINFORD helped recruit patients into the fraud scheme, transported patients to medical and legal appointments, identified potential accident sites, made payments to recruited patients, and coached recruited patients on faking their injuries.

Peter Kalkanis was another organizer and leader of the scheme. Kalkanis paid his co-defendants to recruit patients into the scheme and transport the patients to medical and attorney appointments.

DUNCAN was found guilty of two counts of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of wire fraud, each of which carries a maximum term of 20 years in prison. LOCUST and RAINFORD were each found guilty of one count of conspiracy to commit mail and wire fraud, which carries a maximum term of 20 years in prison.

The jury failed to reach a verdict as to DUNCAN, LOCUST, and RAINFORD on one count of mail fraud and one count of wire fraud.

Kalkanis pled guilty to one count of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of wire fraud, each of which carries a maximum term of 20 years in prison. Kalkanis also pled guilty to aggravated identity theft, which carries a mandatory term of imprisonment of two years.

Gordon pled guilty to two counts of conspiracy to commit mail and wire fraud, two counts of mail fraud, and two counts of wire fraud, each of which carries a maximum term of 20 years in prison.

The maximum potential sentences and minimum sentence in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.

* * *

Mr. Berman praised the outstanding investigative work of the New York Field Office of the Federal Bureau of Investigation and the New York City Police Department. Mr. Berman also thanked the National Insurance Crime Bureau for their assistance in the investigation.

The prosecution of this case is being handled by the Office's Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Nicholas Folly, Alexandra Rothman, and Nicholas Chiuchiolo are in charge of the prosecution.

Press Release Number:

19-169

Updated May 28, 2019

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