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Crime Racketeering Statute To Charge Attorneys

The Division of Criminal Justice - Office of Insurance Fraud Prosecutor has filed racketeering and conspiracy charges against two Essex County lawyers, their law firm, and 28 other individuals as part of an ongoing insurance fraud investigation targeting the illegal use of “runners.” The racketeering and conspiracy charges represent the first time the Division of Criminal Justice - Office of Insurance Fraud Prosecutor has used New Jersey’s Racketeering Influenced & Corrupt Organization (RICO) statute to prosecute an attorney and a law firm for the criminal use of “runners” and related insurance fraud crimes.

“This case represents an aggressive approach by the Insurance Fraud Prosecutor to go after allegedly corrupt attorney’s, their law firm, and the individuals involved in manufacturing fake accidents to collect tens of thousands of dollars in illegal insurance claims and settlements,” said Attorney General Harvey. “It is through cases such as this that the Office of Insurance Fraud Prosecutor continues to lead the nation in insurance fraud prosecutions.”

According to Vaughn L. McKoy, Director, Division of Criminal Justice, and Greta Gooden Brown, Insurance Fraud Prosecutor, a 20-Count superseding State Grand Jury indictment charged two attorneys, their Essex County law firm, five “runners,” and 23 phony accident “victims” with criminal racketeering, conspiracy to commit racketeering, auto insurance Health Care Claims fraud, criminal use of runners, theft by deception, and tax fraud.

Director McKoy noted that the State Grand Jury indictment alleges that the lawyers and their law firm engaged in a scheme of paying “runners” to solicit and obtain automobile accident clients for the law firm in order to substantially increase the amount of money obtained through insurance claims, lawsuits, and other legal actions. (A list of the defendants and specific charges is attached.)

The superseding State Grand Jury indictment alleges that between Oct. 30, 1993 and Sept. 15, 2005, Irwin B. Seligsohn, 69, Kinnelon, Morris County, Allen S. Goldberger, 72, Livingston, Essex County, and the law firm of Seligsohn, Goldberger & Shinrod, 735 Northfield Ave., W. Orange, Essex County, conspired to pay “runners” to solicit other individuals to participate in staged automobile accidents so that automobile insurance Personal Injury Protection (PIP) and other insurance claims could be submitted to various insurance companies. Additionally, the indictment alleges that Seligsohn improperly accounted for the payments made to the runners and, as a result, it is charged that Seligsohn, Goldberger and the law firm violated various New Jersey tax statutes.

The indictment charges the “runners” with illegally receiving payments for acting as “runners,” violations of State income tax laws, and with assisting in the submission of phony insurance claims knowing that the accidents were staged and that no one was injured. The other defendants named in the State Grand Jury indictment, alleged to be insurance claimants, were charged with Health Care Claims Fraud for assisting in the submission of the phony insurance claims.

The indictment also seeks the forfeiture of an estimated five million dollars in financial assets obtained by the law firm of Goldberger, Seligsohn and Shinrod, PA., as a result of the alleged illegal insurance fraud scheme. The indictment seeks proceeds such as investments, bank accounts, office equipment, real estate, and other assets obtained as proceeds from engaging in theft by deception, health care claims fraud, use of runners, and tax fraud.

The indictment supersedes four previous indictments returned as part of the Office of the Insurance Fraud Prosecutor’s continuing investigation. The first indictment, returned on April 11, 2005, alleged that between January, 1998 and May, 2002, Seligsohn conspired with and paid “runners” more than $65,000 to solicit individuals to claim that they were injured in non-existent automobile accidents. Through the solicitations, the purported accident victims would retain Seligsohn as their lawyer and, in turn, Seligsohn and his law firm would file insurance claims and legal actions to substantially increase the amount of money earned through the illegal scheme.

On July 18, 2005, three Essex County indictments charged 12 individuals with participating in the alleged fake accident scheme. The charges included allegations that several of the “runners” conspired to set up fraudulent automobile accidents with undercover State Investigators assigned to the Division of Criminal Justice - Office of the Insurance Fraud Prosecutor and undercover Newark police officers. Specifically, the Essex County indictments charged that “runners” arranged a meeting with Seligsohn and undercover law enforcement officers to submit fraudulent auto insurance claims for PIP and related claims in connection with automobile insurance coverage to Allstate Insurance Company and Prudential Insurance Company.

The superseding State Grand Jury indictment was handed up to Mercer County Superior Court Judge Maria Marinari Sypek. The case is assigned to the Essex County Superior Court where the defendants will be ordered to appear for arraignment and bail.

The ongoing investigation was conducted by the Division of Criminal Justice - Office of the Insurance Fraud Prosecutor which investigates and prosecutes civil and criminal insurance fraud cases. State Investigator Ned Shaw, Civil Investigator Dana Skaflestad, Analyst Kathy Ratliff, and Deputy Attorney General Andrew C. Fried were assigned to the investigation.

“The use of runners has a domino effect on the insurance industry - runners are paid to procure patients and clients. Runners, in turn, stage accidents and urge people who are not injured to be treated for injuries. They submit false police auto accident reports and engage in other fraudulent conduct which drives up the cost of auto insurance in this State,” said Insurance Fraud Prosecutor Brown.

An indictment is merely an accusation. The defendants are presumed to be innocent of the charges unless and until the State proves them guilty beyond a reasonable doubt.

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