Miami man charged in fraud scheme against Citizens insurance

Dec. 23--A Miami man has been charged with bilking South Florida's largest insurer out of nearly $100,000 with the type of water damage claims fraud that officials warn will spur years of rate hikes without new state laws.

According to a news release from the state Department of Financial Services, Julian Garcia-Selleck acted as an unlicensed public insurance adjuster between March 2012 and January 2016 when he met with homeowners seeking help in handling their insurance claims against state-run Citizens Property Insurance Corp.

Garcia-Selleck promised homeowners that he would relieve them from the stress of the claims process by filing claims on their behalf.

"He would then solicit the services of a local artist to use a caffeine-based liquid to paint what looked like water stains on the ceilings, walls, and floors of homes to either inflate the cost of existing water damage claims or in order to generate a fraudulent water damage claim," the release said.

He also enlisted public notaries to forge homeowner signatures and notarize fraudulent claims documents he later submitted to insurance companies, often without homeowners' knowledge. He cashed and kept at least $99,000 in claims checks issued by insurance companies, the release said.

Garcia-Selleck was arrested and charged with one count each of scheme to defraud and acting as an unlicensed public adjuster and nine counts each of insurance fraud and grand theft. He faces 30 years in prison.

The local artist was arrested in 2013 and four public notaries were arrested in 2015, all in connection with the case, a department spokesman said in an email Friday. The artist and three of the notaries confessed to their roles and cooperated in the investigation, the spokesman added. None of the homeowners were involved in or profited from the fraud scheme, he said.

Citizens officials have been warning for several years about water damage-related claims fraud originating and over the past two years have approved hefty premium increases they said would not have been necessary if fraud wasn't occurring.

They and other insurers want the state legislature to pass laws restricting the ability of third parties to pursue insurance benefits on behalf of policyholders. The ability to secure assignments of policy benefits gives contractors -- often serving illegally in the role of unlicensed public adjuster -- incentive to inflate and falsify insurance claims, causing millions of dollars in unnecessary payouts and legal costs, they say.

After 10-percent rate hikes were approved in September for Citizens customers in South Florida, Citizens CEO Barry Gilway warned of similar increases "for years to come" if the legislature fails to act.

However, plaintiffs' attorneys counter that outright fraud is far less common than the insurance industry contends. Unwarranted restrictions would hurt all policyholders by making it easier for insurance companies to underpay or deny payment for legitimate claims, they say.

Meanwhile, the Florida Association of Public Insurance Adjusters released a statement on Friday calling the report of Garcia-Selleck's arrest "disturbing" and warning the public about allowing anyone not trained, bonded or licensed as a public insurance adjuster to represent them in claims.

"There has been a proliferation of unlicensed activity in recent years, including companies or persons calling themselves 'loss consultants,'" the statement said. "These are often former or current insurance company adjusters, contractors or remediation companies who advertise about how they can 'handle claims.'"

Public insurance adjusters [and not insurance adjusters who work for insurance companies] are the only types of adjusters permitted to represent policyholders in the claims process, the statement said, adding that policyholders can verify the license of anyone assisting them with an insurance claim at http://www.fldfs.com/data/aar_alis1/

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