Contractor Fraud Awareness Week 2025: Strengthening Consumer Protection Against Post-Disaster Scams
June 3, 2025 | JacobiJournal.com – When storms hit and communities are rebuilding, not all who show up to help have good intentions. Indeed, disaster-stricken areas often attract opportunists disguised as helpers. Contractor Fraud Awareness Week 2025 puts a spotlight on a growing crisis: post-disaster fraud carried out under the guise of reconstruction. From unlicensed repairs to inflated invoices, bad actors exploit chaos to line their pockets. For legal professionals and fraud investigators, the week serves as a renewed call for vigilance, enforcement, and education. Fraud by Hammer and Nail: How Scammers Operate Fraudulent contractors use urgency and emotional pressure to their advantage. They often mask their methods as kindness—offering quick repairs, skipping permit requirements, or demanding cash-only payments under the pretense of helping homeowners get back on their feet. Key warning signs include: In many cases, these scammers disappear after partial or substandard work, leaving property owners in worse condition—financially and structurally—than before. Legal Systems Respond: More Than Just Fines To address this, state attorney generals, licensing boards, and fraud units are shifting strategies—viewing contractor fraud not as an ethical lapse but a prosecutable crime. Efforts underway include: Legal experts emphasize pairing consumer protection with strong deterrents. Civil suits may not be enough—criminal charges send a clearer message. What This Means for Investigators and Attorneys Contractor fraud is not a series of isolated incidents — it’s a systemic vulnerability that often emerges in the aftermath of chaos. For legal professionals and investigators, this underscores the need for a proactive, coordinated approach that goes beyond surface-level enforcement. The real challenge lies in bridging jurisdictional gaps and streamlining inter-agency collaboration. Investigators now adopt a pattern-recognition mindset—identifying trends, networks, and behaviors that signal organized fraud instead of merely reacting to individual complaints. Attorneys working on these cases are also navigating evolving legislation aimed at strengthening penalties and tightening licensure requirements. As regulatory frameworks shift, staying informed and agile becomes essential—not only to prosecute, but to prevent. Ultimately, effective fraud prevention in post-disaster scenarios demands more than awareness. It calls for legal readiness, community education, and policy-level support that can close the cracks where opportunists thrive. Consumer Awareness Is the First Line of Defense Contractor Fraud Awareness Week emphasizes this key message: informed homeowners reduce their risk of becoming fraud victims. But awareness is only part of the equation. The legal system must take swift and decisive action when fraud occurs. 🔎 Read More from JacobiJournal.com:
Ex-Westminster Police Officer Charged with Insurance Fraud After Partying on Disability Leave
Former Westminster police officer charged with workers’ compensation fraud after being spotted partying and traveling during medical leave. Tracey Leong reports for NBC4 News at 11 p.m., May 20, 2025. Credit: NBC Los Angeles — https://www.nbclosangeles.com/ Former Officer Charged with Multiple Felonies May 21, 2025 | JacobiJournal.com – A former Westminster police officer faces felony charges for allegedly committing workers’ compensation fraud during her disability leave, the Orange County District Attorney’s Office announced. Nicole Brown, 39, from Riverside, faces nine felony counts for making false statements to receive compensation. She also faces six counts of fraudulent insurance claims. Prosecutors added a sentencing enhancement for aggravated white-collar crime involving over $100,000. Her stepfather, attorney Peter Gregory Schuman, 57, from Buena Park, also faces felony charges for filing fraudulent insurance claims and conspiring to commit illegal acts. Injury and Disability Claim Brown injured her forehead while arresting a suspect in March 2022. An emergency room doctor treated her and cleared her to return to work. However, she later claimed a severe concussion and went on temporary disability leave. Evidence of Contradictory Activities During this time, Brown reportedly attended the Stagecoach Music Festival in April 2023 and was seen traveling and partying. Witnesses reported her dancing and drinking, contradicting her claims of severe symptoms. Investigators also found that Brown took part in two 5K races, snowboarded, skied, attended several soccer conferences, went to baseball games, played golf, and visited Disneyland. She also enrolled in online courses, despite complaining about screen sensitivity. Defense Statement Brown’s lawyer, Brian Gurwitz, said, “Ms. Brown suffered a debilitating head injury while on duty. She plans to vigorously challenge these allegations.” Legal Consequences and Next Steps The charges highlight increased scrutiny of workers’ compensation claims when claimants’ activities conflict with their reported injuries. Brown and Schuman face serious legal consequences if convicted. Stay updated with local crime and legal news from Orange County. 🔎 Read More from JacobiJournal.com:
San Jose Security Company Owner Faces Sentence for $3.4M Insurance Fraud
May 21, 2025 | JacobiJournal.com — The California Department of Insurance (CDI) announced on May 19, 2025, that investigators uncovered a large-scale insurance fraud scheme involving Raul Chavez, 40, the owner of Tactical Operations Protective Services. Chavez has been sentenced after pleading guilty to felony premium fraud for underreporting over $3.4 million in payroll to avoid paying required workers’ compensation insurance premiums. Six-Year Scheme to Evade Insurance Payments From 2017 to 2023, Chavez systematically underreported his company’s payroll. He falsely claimed to the State Compensation Insurance Fund (State Fund) that he had no employees for five consecutive years. In the 2022–2023 policy year, he reported only $40,000 in payroll related to one injured employee, even though his business continued to operate in Santa Clara County. However, a detailed audit by the Department of Insurance revealed that Chavez had concealed $3,431,903 in payroll, resulting in $205,565 in unpaid workers’ compensation premiums. “Hiding true payroll amounts to reduce workers’ comp premiums puts workers at risk and gives offending companies an unfair advantage over law-abiding companies in that they can bid lower for jobs.”— Alan Barcelona, President, California Statewide Law Enforcement Association (CSLEA) Legal Consequences and Restitution Chavez accepted responsibility and pleaded guilty to felony insurance fraud. The court sentenced him to: These penalties reflect the severity of his actions and the financial damage caused to the insurance system. Case Triggered by Workplace Injury Report The investigation began in September 2023, when State Fund filed a fraud referral. They reported that Chavez failed to disclose a workplace injury from June 2022. Although he transported the injured employee to an emergency room, he did not report the incident to State Fund, as required by law. The referral also alleged long-term payroll underreporting. CDI investigators confirmed that Chavez failed to report accurate payroll for multiple employees over six years, intentionally violating workers’ compensation requirements. Prosecutors Pursue Justice The Santa Clara County District Attorney’s Office prosecuted the case. Their efforts, in coordination with CDI’s audit and investigation, led to Chavez being held accountable for his fraudulent conduct. His actions not only violated insurance fraud laws but also jeopardized worker safety and disrupted fair business competition in the security services industry. 🔎 Read More from JacobiJournal.com:
Asbestos Clinic Closure Ordered to Pay BNSF Jury Award
May 16, 2025 | JacobiJournal.com – Asbestos Clinic Closure: Authorities abruptly closed a longtime asbestos screening clinic in Libby, Montana, this week to satisfy a $3.1 million debt owed to the BNSF Railway, following a controversial court judgment. The move has left a vulnerable population without vital medical support and reignited tensions over accountability for the region’s asbestos disaster. Clinic Closure Sparks Public Health Concerns On Wednesday, the Lincoln County Sheriff’s Office seized and shut down the Center for Asbestos Related Disease (CARD). Located in a town of just 3,000 people, the clinic has operated for over two decades near a now-defunct vermiculite mine that emitted toxic asbestos dust. Thousands of residents have suffered health consequences, and CARD had become a cornerstone of their medical care. Despite its long-standing role in treating asbestos-related illnesses, the clinic now faces closure because of a $6 million fraud judgment awarded in 2023 to BNSF Railway. After legal fees and interest, BNSF claims it is owed $3.1 million. Allegations of Fraud and Fallout from Court Case The legal dispute began when BNSF, a Texas-based railway, sued CARD under the False Claims Act. The suit alleged that the clinic fraudulently diagnosed patients with asbestos-related illnesses to qualify them for federal Medicare benefits. According to court findings, 337 out of over 2,000 diagnoses were ruled invalid. BNSF transported contaminated material through Libby for decades, and it continues to face lawsuits from local victims of asbestos exposure. Nonetheless, the company prevailed in this case by claiming that CARD manipulated patient data, thereby defrauding the government. As a whistleblower under federal law, BNSF was entitled to a portion of the government’s recovery from the judgment. BNSF spokesperson Kendall Kirkham Sloan defended the closure, stating: “The judge determined the amount of damages to be repaid, and the process for recovery is set by law.” Bankruptcy Complicates the Enforcement However, the situation is far from resolved. After the judgment, CARD filed for bankruptcy and reached a court-approved settlement with the federal government, which included BNSF. According to James “Andy” Patten, the clinic’s bankruptcy attorney, the railway’s recent actions violated that agreement. “This seizure undermines a settlement that was approved by a federal court,” Patten argued. When asked about the bankruptcy terms, Sloan declined to comment. Community Faces Growing Health Risks Tracy McNew, Executive Director of CARD, expressed deep concern for the community. “CARD remains committed to its patients and the Libby community and will fight to reopen as soon as possible,” she stated. Until the closure, CARD served as the only local medical facility offering asbestos-related health screenings, monitoring, and treatment. Many in Libby fear that without this specialized care, health conditions will go undiagnosed and untreated—especially among the town’s aging population, which faces elevated risks from long-term asbestos exposure. 🔎 Read More from JacobiJournal.com:
Deliveries Scam Plea Entered by California DoorDash Driver
May 16, 2025 | JacobiJournal.com – Deliveries Scam Plea: A former DoorDash driver admitted in federal court this week to orchestrating a scheme that defrauded the company of more than $2.5 million. The case sheds light on how gig economy platforms remain vulnerable to insider exploitation and software manipulation. Driver Used Insider Access to Steal Millions Sayee Chaitanya Reddy Devagiri, 30, of Newport Beach, California, entered a guilty plea on Tuesday in San Jose federal court to one count of conspiracy to commit wire fraud. Prosecutors said Devagiri conspired with three others between 2020 and 2021 to exploit DoorDash’s internal systems for personal gain. Specifically, Devagiri used customer accounts to place expensive orders. He then accessed DoorDash’s backend software using credentials from a cooperating employee. After that, he reassigned the orders to fraudulent driver accounts he and his co-conspirators controlled. Orders Marked as Delivered—But Never Were Once the orders were rerouted, Devagiri falsely marked them as delivered. This action triggered automatic payments from DoorDash to the fake driver accounts. To repeat the fraud, he reset the order status from “delivered” to “in process” and rerouted the same orders back to those accounts. Notably, the scam relied heavily on insider access, allowing Devagiri and others to bypass typical safeguards. As a result, the group repeatedly collected payments for services they never provided. Deliveries Scam Plea Additional Guilty Pleas Reveal Coordinated Plot The now-former DoorDash employee who supplied system access pleaded guilty in November 2023 to conspiracy to commit wire fraud. He admitted to helping execute the fraud scheme. Devagiri is now the third person convicted in this wide-reaching conspiracy. Sentencing Scheduled for September Devagiri faces up to 20 years in federal prison and a $250,000 fine. His sentencing is set for September 16. The case raises urgent questions about how delivery platforms can better protect internal systems from misuse. 🔎 Read More from JacobiJournal.com: 💡 Tip for Insurers & Platforms: Internal access audits and cross-account monitoring are critical in detecting fraud involving insider credentials. 📬 Stay informed with the latest fraud updates at JacobiJournal.com.
Summary Judgment Motion Renewal Denied for Carrier
May 15, 2025 | JacobiJournal.com – Summary Judgment Motion: A California appellate court recently held that an insurance carrier could not revive a previously denied summary judgment motion by simply re-filing it without significant new evidence or legal developments. The decision underscores judicial expectations for diligence and finality in motion practice, particularly within workers’ compensation and insurance litigation. Court Rejects Second Bite at the Apple In the case, the insurance carrier initially sought summary judgment, arguing there was no triable issue of material fact regarding its liability in a complex coverage dispute. The trial court denied that motion. Later, the carrier attempted to reassert the same motion, citing no substantial change in law or facts. The court ruled that such renewed motions are improper without materially different circumstances. The appellate court agreed. It stated that courts must discourage repetitive filings that waste judicial resources and delay proceedings. “A motion denied cannot be repackaged and re-presented in hopes of a different outcome,” the court noted. Legal Standards and Implications California law allows for renewed motions for summary judgment only if the party shows: In this instance, none of those criteria were met. The decision reinforces that parties cannot bypass procedural finality merely because they disagree with an earlier ruling. Why This Matters This ruling has broad implications for insurance defense teams and third-party administrators. It highlights the importance of making the strongest case possible in the initial motion, knowing that courts frown upon do-overs. Carriers must approach summary judgment strategically—gathering solid evidence and anticipating potential defenses—because a second chance is not guaranteed. The decision also signals to plaintiffs’ counsel that courts will protect the integrity of the litigation process by rejecting duplicative tactics from insurers. 📚 Read More from JacobiJournal.com: 🔔 Stay Ahead. Subscribe to JacobiJournal.com for expert coverage on insurance litigation, fraud developments, and carrier liability trends.
Wildfire Alert Glitch Triggers Accidental Warning to Millions in LA County
May 15, 2025 | JacobiJournal.com – Wildfire Alert Glitch: A serious glitch in Los Angeles County’s emergency alert system triggered widespread panic on January 9, when a wildfire warning meant for a small region was mistakenly sent to millions of residents across the entire county. The error occurred just two days after wildfires tore through hillsides, leaving residents anxious and on edge. Although the alert targeted individuals in the San Fernando Valley under evacuation warning for the Kenneth Fire, a system failure caused it to reach more than 10 million people countywide. What Went Wrong? Vendor’s Glitch Disrupts Targeted Alert According to a report from Rep. Robert Garcia (D-Long Beach), Los Angeles County officials correctly configured the message to notify only affected neighborhoods. However, Genasys—the county’s emergency alert vendor—failed to properly transmit the location data into the Integrated Public Alert and Warning System (IPAWS). The report indicates that a network disruption likely prevented the location coding from being saved. As a result, the alert went out without geographic targeting, leading to widespread confusion. “The initial false alert resulted from technology issues with third-party vendor Genasys,” the report explained. Delays and Failures Across Multiple Wildfires The January incident highlights larger issues in how Los Angeles County manages wildfire alerts and evacuation notices. During the Eaton Fire in Altadena, officials sent evacuation orders long after homes had already caught fire. In another case—the Palisades Fire—many residents saw flames approaching and evacuated before receiving any official warnings. To address these failures, LA County commissioned a third-party review of its emergency response policies. Officials have already interviewed dozens of first responders, and the next progress report is scheduled for July 27. Legal Exposure and Insurance Fallout Beyond public confusion, the mistaken alert raises serious liability concerns for both government agencies and private contractors. Errors like this could: Consequently, state and local governments may soon reevaluate their contracts with alert system vendors and adopt tighter safeguards. Federal Report Calls for Urgent Reforms In his report, Rep. Garcia urged authorities to make several key improvements: “The lessons from the Kenneth Fire should not only inform reforms but drive modernization of our national alerting infrastructure,” Garcia said. Given the increasing threat of wildfires across California, local and federal governments must prioritize accuracy and reliability in emergency communications. Source 📚 Read More from JacobiJournal.com: 🛡️ Stay informed. Subscribe to JacobiJournal.com for expert analysis of public risk, emergency systems, litigation, and insurance coverage.
PFAS Settlement Agreement: New Jersey, 3M Settle for $450M
May 14, 2025 | JacobiJournal.com – PFAS Settlement Agreement: In a pivotal legal and environmental development, New Jersey has secured a $450 million settlement from 3M Company, marking the state’s largest recovery to date involving PFAS contamination. The agreement resolves 3M’s liability for polluting New Jersey’s water and natural resources with per- and polyfluoroalkyl substances, commonly known as “forever chemicals.” Landmark Deal Averts Trial The settlement, announced by Attorney General Matthew J. Platkin and DEP Commissioner Shawn M. LaTourette, comes just days before a high-stakes trial scheduled for May 19, 2025, in federal court. The trial would have been the first in the nation where a state pursued PFAS contamination claims against manufacturers. This deal ends litigation involving: Payment Timeline and Financial Breakdown PFAS Settlement Agreement: 3M will pay between $275 million and $325 million between 2026 and 2034, followed by $125 million from 2035 to 2050, subject to certain credits. Key provisions include: The agreement is subject to court approval and public comment. 3M Avoids Trial, But Not Accountability “This is one of the first statewide PFAS settlements 3M has agreed to nationwide,” said AG Platkin. “For decades, they knew the dangers but continued contaminating our water. That ends now.” Notably, the settlement does not shield 3M from private lawsuits, and the company must continue cleanup efforts at its former facilities in New Jersey. 3M, headquartered in Minnesota, was once a major PFAS producer. The company has announced plans to exit PFAS production by the end of 2025. Remaining Defendants Head to Trial While 3M exits the case, other major chemical firms remain. Defendants in the upcoming May 2025 trial include: These companies are accused of contributing to widespread PFAS contamination through their production and distribution of AFFF and other PFAS-laden products. Environmental Insurance Fallout: PFAS and Risk Exclusions As PFAS litigation and regulation escalate, insurers are growing cautious. Underwriters are increasingly: The EPA has set strict limits on PFAS levels in drinking water, while ISO has introduced endorsements that broadly exclude PFAS-related claims. These moves signal a broader tightening of coverage in environmental risk markets. Larger Context: A National Reckoning Over PFAS New Jersey is also set to receive $300 to $500 million from 3M’s $10+ billion national water system settlement announced in 2023. Combined with other settlements—including Solvay’s $175 million agreement in 2023—the state has now secured approximately $840 million for PFAS-related damages. Funds will be used to remediate contaminated water supplies, restore natural resources, and protect public health statewide. 📚 Read More from JacobiJournal.com: 🛡️ Subscribe to JacobiJournal.com for legal case coverage, environmental liability updates, and evolving trends in insurance defense and fraud litigation.
State Farm Rate Hike Recommendation: 17% Increase a Wake-Up Call for Insurers
May 13, 2025 | JacobiJournal.com – State Farm Rate Hike: California’s largest homeowners insurance provider, State Farm, could soon face higher premiums following billions in losses from recent wildfires. The insurer, which has struggled with significant financial stress, received a recommendation for a 17% rate hike from Administrative Law Judge Karl Seligman. California’s Insurance Commissioner Ricardo Lara must now decide whether to approve the rate hike. Rate Hike Details and Insurer’s Commitment State Farm’s proposed rate increases would affect: In return, State Farm has agreed not to issue additional nonrenewals until the end of 2025 and to infuse $400 million into the company from parent company State Farm Mutual. Though these rates are temporary and subject to full hearings, this decision highlights a critical moment for both insurers and policyholders. Financial Concerns: S&P Downgrades State Farm’s Credit Rating On Tuesday, S&P Global Ratings lowered its rating on State Farm General Insurance Co. (SFGI) from ‘AA’ to ‘A+’. The move was driven by concerns over weak underwriting performance and the company’s declining capital levels, primarily caused by the California wildfires. State Farm’s struggles mirror a broader issue for insurers in the state, which face mounting financial pressures. Despite recent losses, State Farm has yet to receive direct capital support from its parent company, State Farm Mutual, further exacerbating concerns. Consumer Watchdog Challenges the Hike Consumer Watchdog, a consumer advocacy group, expressed strong opposition to the proposed rate hike. “State Farm is asking consumers to pay now while delaying any justification for the increase,” said Carmen Balber, Executive Director of Consumer Watchdog. “Under Proposition 103, insurers must provide rate justifications before implementing hikes—not after. We urge Commissioner Lara to reject this decision to prevent overcharging policyholders.” The group’s concerns raise questions about California’s regulatory process and its balance between ensuring market stability and protecting consumers. The California Insurance Department Responds Lara’s office issued a statement emphasizing the importance of fairness and transparency in the rate-setting process. “Californians deserve a process grounded in fairness and integrity,” Lara said. “I requested an independent review of the evidence by an administrative law judge, and I will carefully consider all the facts before making my final decision.” The Bigger Picture: Wildfires and Market Instability State Farm Rate Hike: The Los Angeles wildfires, which caused over $2.5 billion in damages for State Farm, represent a significant financial blow. The California Department of Insurance reported 37,749 wildfire-related claims with payouts totaling $12.1 billion by March 2025. These catastrophic events underscore the vulnerability of insurers in California, where companies like State Farm struggle to match premium income with escalating risks. The California FAIR Plan, the state’s last-resort insurer, is already under stress, with $1 billion assessments levied on other insurers to cover losses. Legal Challenges: Antitrust Allegations Against Insurers State Farm also faces two lawsuits in Los Angeles, accusing it of collusion with other insurers to restrict coverage in high-risk wildfire areas. These lawsuits could further complicate the company’s financial and reputational recovery. The plaintiffs claim that State Farm and 24 other insurers violated California’s antitrust laws by forcing homeowners into the more limited California FAIR Plan. If successful, these cases could lead to major repercussions for the industry. The Road Ahead: Will Rate Hike Pass? State Farm’s proposal for rate increases underscores the ongoing instability in California’s insurance market. While wildfire losses and financial challenges drive the need for higher premiums, policyholders face a tense waiting game. The final decision from Insurance Commissioner Lara will play a crucial role in shaping the future of California’s insurance landscape and ensuring that policyholders aren’t burdened with unfair rates. Source 📚 Read More from JacobiJournal.com: 🛡️ Stay informed. Subscribe to JacobiJournal.com for expert insights on cyber threats, insurance litigation, and fraud prevention.
Coalition Reports Surge in Business Email Compromise Costs for 2024
May 12, 2025 | JacobiJournal.com – Business Email Compromise: Cyber insurer Coalition has released its 2025 Cyber Claims Report, revealing a sharp rise in costs related to business email compromise (BEC). The insurer found that BEC accounted for nearly 60% of all cyber insurance claims it handled in 2024. Funds Transfer Fraud Drives Costly Losses Among BEC-related claims, nearly 30% involved funds transfer fraud (FTF)—a costly form of cybercrime. On average, each FTF incident led to initial losses of $185,000. Fortunately, Coalition and its partners were able to recover $31 million, benefiting about one in four policyholders. The report emphasized that faster reporting leads to higher recovery rates. Claim Severity Increases, Especially in the U.S. The average cost of a BEC claim jumped 23% in 2024 to $35,000, with U.S.-based claims coming in higher at $36,000. In comparison, the average BEC claim cost was $22,000 in Canada and the UK. Coalition attributed the rising severity to growing expenses associated with legal services, incident response teams, data mining, and notification requirements. Ransomware Threats Decline—But Still Costly Despite the rise in BEC claims, ransomware incidents slightly declined, with a 3% drop in frequency and a 7% decrease in severity. Coalition also reported a 22% year-over-year reduction in ransom demands and successfully negotiated a 60% cut in ransom payments on average. Even so, 44% of policyholders impacted by ransomware chose to pay. The report stressed that ransom payments are not the only cost drivers—business interruption, asset recovery, and forensic investigations also contribute heavily to claim totals. Source 📌 Key Takeaway:The data reinforces the growing risk of email-based attacks, especially when combined with fraudulent fund transfers. Insurers and businesses alike must remain vigilant, invest in preventive tools, and ensure rapid incident reporting to minimize losses. 📚 Read More from JacobiJournal.com: 🛡️ Stay informed. Subscribe to JacobiJournal.com for expert insights on cyber threats, insurance litigation, and fraud prevention.