Fifth Member Of $31M Trip-And-Fall Fraud Scheme Charged In Manhattan

ALEXANDER was arrested yesterday and will be presented today before United States Magistrate Judge Robert W. Lehrburger.

A prior Indictment in the case charged New York lawyers George Constantine and Marc Elefant and New York doctors Sady Ribeiro and Andrew Dowd for their participation in the fraud scheme. The Superseding Indictment adds ALEXANDER, who allegedly funded fraudulent lawsuits in furtherance of the trip-and-fall scheme, as the fifth individual charged in the case. The case is assigned to United States District Judge Sidney H. Stein.

U.S. Attorney Damian Williams said: "As alleged, a New York litigation financier has been implicated in this massive trip-and-fall fraud scheme, along with lawyers and doctors who were previously charged. The defendant is alleged to have knowingly financed scores of fraudulent lawsuits, preying upon the desperation of others for his own financial gain. Thanks to the efforts of the FBI, the defendant faces federal charges."

According to the allegations in the Superseding Indictment[1]:

From in or about January 2013, up to and including in or about April 2018, ALEXANDER and his codefendants engaged in an extensive 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 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. 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, including George Constantine and Marc Elefant, 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 million.

The Patients were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors, including Andrew Dowd and Sady Ribeiro. The fraud scheme participants advised the Patients that if they intended to continue with their lawsuits, they were required to undergo surgery. As an incentive to getting surgery, the recruited Patients were offered a payment of typically between $1,000 and $1,500 after they completed surgery ("Post-Surgery Payments"). Patients generally were told to undergo two surgeries. Doctors in the fraud scheme, including Dowd and Ribeiro, were expected to, and in fact did, conduct these surgeries regardless of the legitimate medical needs of the Patients.

Members of the fraud scheme often recruited individuals who were extremely poor as Patients -- individuals desperate enough to submit to surgeries in exchange for the small Post-Surgery Payments. 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 wintertime and had poor-quality shoes. Members of the fraud scheme also recruited Patients who were drug addicts. It was also common for scheme participants to recruit Patients from homeless shelters in New York City.

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 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 (if not all) 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.

ALEXANDER's participation in the fraud scheme, which included funding Fraudulent Lawsuits and unnecessary medical procedures at high interest rates, was extremely lucrative. For example, ALEXANDER had boasted to investors that his funding company had annual returns in excess of 30%.

In addition to owning one of the primary Funding Companies used in the fraud scheme, ALEXANDER owned an MRI facility that performed MRIs on many of the Patients.

ALEXANDER, 75, of New York, New York, is charged with conspiracy to commit mail and wire fraud, which carries a maximum sentence of 20 years in prison, mail fraud, which carries a maximum sentence of 20 years in prison, and wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

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Mr. Williams praised the outstanding investigative work of the New York FBI. 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 United States Attorneys Nicholas Chiuchiolo, Nicholas Folly, and Alexandra Rothman are in charge of the prosecution.

The charges contained in the Superseding Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the entirety of the text of the Superseding Indictment, and the description of the Superseding Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Contact:

[email protected] [email protected] (212) 637-2600

Press Release Number:

21-292

Updated October 20, 2021