Recovery of Digital Evidence Leads to $6 Million Judgement Against Fraudster
An alert claims manager at a well-known national insurance company noticed a common denominator in a number of insurance claims filed against the carrier. The common denominator? A Miami-based chiropractor that had billed the insurance company for several million dollars in services to hundreds of patients over a period of several years. All of the patients were “victims” of minor car accidents. The chiropractor was getting rich. The suspicious claims manager did some preliminary digging and yes, many of the claims looked fishy, and the volume of claims paid to the single payee (the chiropractor) was the clue phone ringing.
It looked like a classic case of insurance fraud. Traditional investigative work uncovered elements of the crime in relatively short order. The defendant, (we’ll call him Mr. Gleason) was charged. The case lingered in criminal courts, and the insurance company sued Gleason. Complicating matters, Mr. Gleason, (who on the surface appeared quite wealthy) promptly filed for bankruptcy protection shortly after the civil case was filed.
4Discovery Technology experts were hired by the insurance company’s attorneys to locate digital evidence. The attorneys successfully motioned the court to gain access to the defendant’s
personal computers, and the objective was to identify any Electronically Stored Information (ESI) that would provide clues to help collection attorneys “follow the money”.
The Gleasons were not happy to see us. Our two computer forensics examiners arrived at the Gleason’s multi-million dollar home outside Miami to perform the court-order imaging of three computers. Gleasons, having no way out at that point, turned-over the computers for imaging, but made a statement about their displeasure of the process by making our examiners stand in a hot, enclosed garage to perform the imaging on an 80 degree day. (note: it is never a good idea to make a computer forensics examiner unhappy…he just becomes more motivated to find the “smoking gun”)
Gleason had completely “wiped” one of the computers using a downloaded computer drive erasure software. In addition, he had deleted a number of files from one of the computers, and physically damaged the third computer. Sufficient ESI existed on two of the computers, however, to provide clear evidence for the following…
- Recovered financial statements indicating Gleason had used the same residential property multiple times as collateral for several loans.
- Electronic evidence showing Gleason had transferred ownership of some expensive real estate to a third party.
- Assets that Gleason had not disclosed in his bankruptcy filings.
- Remnants of the drive erasure activities that clearly demonstrated Gleason tried to destroy ESI after a judge had ordered him to preserve all documents related to the matter.
The recovered digital evidence with a related expert report was presented in federal court in Texas. The judge ruled in our client’s favor, and a $6 Million judgement was awarded. Court proceedings this summer are likely to settle the collection issues.
- Fraud Cases are particularly well-suited for the application of Forensic technology. Individuals involved in complex fraud will often lose track of all of the details of their scheme, and will inadvertently leave remnants of their misdeeds on a computer. (Example: the fraudster may do a good job of “deleting” incriminating financial documents, but they may fail to remove a “cookie” in their web browser that links to an on-line bank account web site that they moved money into).
- Trying to collect on a judgement? Motion the court for access to personal computers. The evidence on those machines will often provide indications of asset movement, undisclosed assets, or the destruction of ESI. That evidence of destruction can provide leverage for a fraud charge or related spoliation sanctions that can be very troubling for the fraudster. This leverage can bring the defendant to the settlement negotiating table in a hurry, when potential criminal penalties are looming.
- Never make a computer forensics examiner unhappy!