Manhattan U.S. Attorney Announces Charges Against Livery Fleet Owner In $10 Million Insurance Fraud Scheme

Preet Bharara, the United States Attorney for the Southern District of New York and Ronald J. Verrochio, the Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced today the unsealing of an Indictment charging SCOTT SANDERS, an owner of fleets of commercial vehicles, with participating in a nine-year automobile insurance fraud scheme to obtain substantially lower premiums for commercial vehicles he owned and controlled. SANDERS was arrested earlier this morning and was arraigned before U.S. Magistrate Judge Michael H. Dolinger this afternoon.

Manhattan U.S. Attorney Preet Bharara said: “As alleged, for nearly a decade, Scott Sanders engaged in a scheme to defraud a host of insurance companies to the tune of at least $10 million. He will now be held to account for his conduct.”
USPIS Inspector-in-Charge Ronald J. Verrochio said: “When the defendant utilized the U.S. Mails in a scheme to defraud insurance companies, Postal Inspectors were there to bring him to justice for his illegal activities.”
According to the allegations in the Indictment unsealed today in Manhattan federal court:
Since 2003, New York State has required owners of fleets of commercial vehicles, including livery cars and ambulettes, to obtain commercial automobile liability and physical damage insurance coverage. The premiums typically charged in connection with such coverage are based, in part, on where the vehicles were garaged or operated. Companies charge substantially higher premiums for automobiles principally garaged or operated in New York City. Owners of livery fleets typically obtain automobile insurance through the voluntary insurance market or, if that is not an option, through the New York Automobile Insurance Plan (“NYAIP”). The NYAIP assigns policy applications to insurance carriers doing business in New York State, who are then required to provide insurance coverage to the applicant.

From 2003 through 2012, SANDERS controlled fleets of commercial vehicles that were garaged and operated in New York City. During that time period, SANDERS submitted fraudulent insurance applications to automobile insurance companies, through both NYAIP and the open market, that claimed that his vehicles were garaged and operated outside of New York City. Based on these misrepresentations, the insurance companies issued insurance policies for the vehicles at lower premiums than the vehicles would have been eligible for if the true location of the vehicles’ garaging and operation had been provided. SANDERS also helped other commercial fleet owners whose vehicles operated in New York City obtain insurance at lower premiums using the same misrepresentations about garaging and operation locations. As a result of his scheme, insurance companies were defrauded of over $10 million in premiums.

* * *
SANDERS, 43, of Saddle River, New Jersey, is charged with one count of conspiracy to commit wire and mail fraud, which carries a maximum penalty of 20 years in prison, five counts of mail fraud, each of which carries a maximum penalty of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory minimum, and consecutive sentence, of 2 years in prison.
Mr. Bharara praised the United States Postal Inspection Service for its outstanding work in the investigation. Mr. Bharara also thanked the New York Automobile Insurance Plan and the National Insurance Crime Bureau for their assistance.
This matter is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Lee Renzin and Nicholas L. McQuaid are in charge of the prosecution.
The charges contained in the Indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty.