Singapore Resident Pleads Guilty In Manhattan Federal Court To Soliciting Millions Of Dollars In Pre-IPO Stock Scheme
Audrey Strauss, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging GEORGE CONSTANTINE, MARC ELEFANT, ANDREW DOWD, and SADY RIBEIRO with conspiracy to commit mail and wire fraud, mail fraud, and wire fraud in connection with a scheme to obtain fraudulent insurance reimbursements and other compensation for fraudulent trip-and-fall accidents. ELEFANT, DOWD, and RIBEIRO were arrested earlier this morning and will be presented today before United States Magistrate Kevin Nathaniel Fox in Manhattan federal court. CONSTANTINE is expected to surrender and be presented in Manhattan federal court tomorrow. The case has been assigned to United States District Judge Loretta A. Preska.
Manhattan U.S. Attorney Audrey Strauss said: “As alleged, the defendants abused their professional licenses and positions of trust to steal millions of dollars from New York City businesses and their insurance companies through a massive trip-and-fall fraud scheme. In carrying out the scheme, the defendants allegedly preyed upon the most vulnerable members of society. Now, thanks to the FBI, the defendants are in custody and facing federal charges.”
FBI Assistant Director-in-Charge Michael J. Driscoll said: “The scheme allegedly carried about by the defendants charged today highlights the extent to which some are willing to go in the name of money. Licensed attorneys are well aware of their obligation to uphold the law. As we allege today, they did just the opposite, stealing from business owners and preying upon other vulnerable victims who were coerced into risking their own personal health and safety. This alleged conduct is beyond reprehensible, and something we won’t let people get away with.”
As alleged in the Indictment unsealed today in Manhattan federal court:
From in or about January 2013, up to and including in or about April 2018, the defendants engaged in an extensive fraud scheme through which the defendants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents. In or about 2015, certain members of the fraud scheme split from the original conspiracy and formed a separate conspiracy that operated in substantially the same manner. GEORGE CONSTANTINE was the primary attorney who filed fraudulent lawsuits in the original conspiracy starting in 2013. MARC ELEFANT was the primary attorney who filed fraudulent lawsuits in the separate conspiracy, formed in or about 2015.
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 GEORGE CONSTANTINE and MARC 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 ANDREW DOWD and SADY 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, including DOWD and RIBEIRO, were expected to, and in fact did, conduct these surgeries regardless of the legitimate medical needs of the Patients. For example, in a March 2016 email, before DOWD examined the shoulder of a particular Patient who had staged a trip-and-fall accident (“Patient-2”), one of the scheme organizers asked DOWD to “write us an additional report today stating that [Patient-2’s] Lt. shoulder has worsened [so that I can] book this surgery for you.” DOWD provided the requested report and recommended that Patient-2 undergo arthroscopic surgery.
Likewise, in an August 2015 email from RIBEIRO to the owner of a litigation funding company, in which RIBEIRO described the services that he performed, RIBEIRO wrote, “I will play very honest ‘game’ with you . . . I see the patient and I generate a very good dictation that justifies the treatment-there is a cost for that and I hope a profit.”
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”), 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, CONSTANTINE, ELEFANT, DOWD, RIBEIRO, and others, with the Patients receiving a much smaller percentage of the remaining recovery.
GEORGE CONSTANTINE, 58, and MARC ELEFANT, 49, are New York-licensed attorneys who represented hundreds of Patients and filed Fraudulent Lawsuits on their behalf as part of the fraud scheme.
ANDREW DOWD, 45, is a New York-licensed orthopedic surgeon who performed hundreds of knee and shoulder surgeries on Patients as part of the fraud scheme, earning approximately $9,500 per surgery.
SADY RIBEIRO, 51, is a New York-licensed pain management doctor and surgeon who performed back surgeries, among other medical procedures, on Patients. RIBEIRO paid participants cash kickbacks in exchange for patient referrals and treated nearly 200 Patients during the fraud scheme.
GEORGE CONSTANTINE, MARC ELEFANT, ANDREW DOWD, and SADY RIBEIRO are each charged with conspiracy to commit mail and wire fraud, which carries a maximum sentence of 20 years in prison, mail fraud, which carries a maximum sentence of 20 years in prison, and wire fraud, which carries a maximum sentence of 20 years in prison. DOWD and RIBEIRO are also charged with one additional count each of conspiracy to commit mail and wire fraud, mail fraud, and wire fraud. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.
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Ms. Strauss praised the outstanding investigative work of the New York FBI. Ms. Strauss 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, and Alexandra Rothman are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
 As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.