NY lawyer pleads guilty to participating in trip-and-fall fraud scheme

ELEFANT is the third defendant to plead guilty this year. Two other defendants - ADRIAN ALEXANDER, the owner of a litigation funding company, and SADY RIBEIRO, a New York-licensed pain management doctor and surgeon - pled guilty earlier this year. ALEXANDER pled guilty to one count of conspiracy to commit wire fraud on August 30, 2022. RIBEIRO pled guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit mail fraud on September 29, 2022. All defendants pled guilty before U.S. District Judge Sidney H. Stein.

U.S. Attorney Damian Williams said: "We expect lawyers to follow the rules and act ethically on behalf of their clients, but attorney Marc Elefant acted only for himself, abusing his professional license and position of trust to steal over a million dollars from New York City businesses and their insurance companies through a massive trip-and-fall fraud scheme. Elefant and his co-conspirators preyed upon the most vulnerable members of society in order to enrich themselves. Elefant now awaits sentencing for his reprehensible crime."

According to the Indictment, the Superseding Information filed against ELEFANT, other documents filed in this case, and statements made in court:

MARC ELEFANT, 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. 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 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 $31,000,000.

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. 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 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 company owned by ALEXANDER. Funding Companies were used 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, including ELEFANT, doctors, and others, with the Patients receiving a much smaller percentage of the remaining recovery.

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ELEFANT, 51, of Long Island, New York, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison. As part of his plea agreement, ELEFANT agreed to forfeit $955,281 to the United States and to make restitution in the amount of $1,486,000.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. ELEFANT is scheduled to be sentenced on January 25, 2023, by U.S. District Judge Sidney H. Stein.

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 United States Attorneys Nicholas Chiuchiolo, Nicholas Folly, Danielle Kudla, and Alexandra Rothman are in charge of the prosecution.

Contact:

Nicholas Biase (212) 637-2600

Press Release Number:

22-332

Updated October 24, 2022