Chiropractor, Attorney and Methuen Man Convicted in Connection with Staged Motor Vehicle Accident Scheme
Charges stem from joint investigation with Lawrence Police and Insurance Fraud Bureau
Omar Castillo, age 38, of Methuen; James C. Hyde, age 59, of Boxford; and Michael H. Kaplan, age 49, of Hampstead, NH, were all found guilty yesterday by a jury after a six week trial on charges of Motor Vehicle Insurance Fraud, Larceny Over $250, and Attempted Larceny Over $250. The defendants still have pending additional charges against them of Conspiracy to Commit Motor Vehicle Insurance Fraud, and Conspiracy to Commit Larceny, that will be scheduled for trial.
After the verdict, Essex Superior Court Judge Howard Whitehead sentenced James Hyde and Michael Kaplan to serve two and one half years in the Essex County House of Correction, followed by a five year probationary period, which will start upon the completion of their jail sentences. Castillo was also sentenced to two and a half years in the House of Correction, nine months to serve, with the balance suspended for a probationary period of five years.
"In the midst of rising insurance costs, these men used their knowledge of the auto insurance system to knowingly defraud companies and make some fast cash," AG Coakley said. "This is a serious crime that not only defrauded insurance companies, but it also hurts consumers financially by contributing to an increase in premiums."
Following the September 2003 death of a woman in a staged accident, both the Lawrence Police Department and the Insurance Fraud Bureau of Massachusetts joined together to create the Lawrence Task Force to investigate and prosecute staged accidents in the Lawrence area. After several successful prosecutions by District Attorney Jonathan Blodgett's Office in Essex County, several of the pending investigations were referred to the AG's Office given their size and scope. These convictions, in connection with two staged accidents in October 2002 and one in December 2002, stem from the work of the Lawrence Task Force with assistance from the Massachusetts State Police assigned to the Attorney General's Office.
In September 2006, Leo Lopez was arrested by authorities in Georgia in connection with this case. He was subsequently indicted on multiple counts of motor vehicle insurance fraud, larceny and attempted larceny charges in connection with a wide ranging scheme to defraud insurance companies. On January 22, 2009, Lopez pled guilty to the indictments and was sentenced to nine months in the Essex County House of Correction.
Lopez recruited individuals to participate in staged motor vehicle accidents in the Lawrence area. Investigators determined that these accidents never actually occurred, but were reported to insurance companies for the sole purpose of filing fraudulent bodily injury and/or property damage claims. The recruited participants would give their vehicles to Lopez, who would then damage the vehicles, making them appear to have been involved in motor vehicle accidents. As part of the scheme, Lopez sent these participants to specific chiropractors and attorneys who would then bill or seek reimbursement from the insurance companies.
Kaplan, a chiropractor with offices in North Andover, participated in the scheme by treating individuals involved in these staged accidents and then submitting fraudulent insurance claims. Hyde, an attorney who practiced in Andover, was also involved in the scheme. Kaplan and Hyde knowingly employed Lopez and Castillo to recruit claimants for these staged accidents. Lopez and Castillo then directed the recruits to Kaplan and Hyde for unnecessary medical treatment and legal representation for accidents that never occurred. Kaplan and Hyde submitted fraudulent injury claims and letters to the claimants' insurance companies seeking payment for injuries they allegedly received in the staged accidents.
An Essex County Grand Jury returned indictments against all of the men on April 4, 2008. The men were arraigned on April 17, 2008, in Essex Superior Court where they pled not guilty and were released on personal recognizance. The trial of Hyde, Kaplan and Castillo began on April 11, 2011, and lasted six weeks. The jury deliberated for approximately three days before returning with a guilty verdict yesterday on all charges.
The case was being prosecuted by Assistant Attorney General William R. Freeman, of AG Coakley's Insurance and Unemployment Fraud Division. The case was investigated with the assistance of by the Lawrence Police Department, and investigators from the IFB.