Three Members Of Trip-And-Fall Scheme Sentenced To Prison For A $31.7 Million Scheme To Defraud New York City-Area Businesses And Their Insurance Companies
New York January 11 2020
PRESS RELEASE
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that BRYAN DUNCAN, ROBERT LOCUST, and RYAN RAINFORD were sentenced yesterday by U.S. District Judge Sidney H. Stein to prison in connection with their participation in a multimillion-dollar trip-and-fall fraud scheme. DUNCAN was sentenced to 80 months in prison; RAINFORD was sentenced to 68 months in prison; and LOCUST was sentenced to 60 months in prison.
On May 28, 2019, DUNCAN, LOCUST, and RAINFORD were each convicted for their participation in a conspiracy to commit mail and wire fraud following a three-week trial before Judge Stein. The jury also convicted DUNCAN of a second count of conspiracy to commit mail and wire fraud, along with one count of mail fraud and one count of wire fraud. Co-conspirators Peter Kalkanis, a former chiropractor, and Kerry Gordon previously pled guilty before Judge Stein to conspiracy to commit mail and wire fraud, mail fraud, and wire fraud. Kalkanis also pled guilty to aggravated identity theft. Kalkanis and Gordon have yet to be sentenced.
Manhattan U.S. Attorney Geoffrey S. Berman said: “Bryan Duncan, Robert Locust, and Ryan Rainford were each sentenced to lengthy prison terms for their roles in an age-old fraud scheme that was callous and exploitive. They honed the slip-and-fall ‘accident’ to an efficient operation, recruiting people to stage accidents, filing fraudulent lawsuits against property owners, steering ‘accident victims’ to particular crooked medical clinics, and often even directing them to have unnecessary surgeries. Now they will spend years in prison for their crimes.”
Judge Stein said during LOCUST’s sentencing: “The whole essence of this conspiracy is find the down-and-out, find the desperate, find the homeless. No person who has a job and education and can support his or her family even minimally is going to say, ‘Oh, I’ll undergo unnecessary back surgery for a thousand dollars.’ These people were vulnerable and desperate.”
According to the evidence introduced at trial, other proceedings in this case, and documents previously filed in Manhattan federal court:
Between in or about 2013 through 2018, DUNCAN, LOCUST, and RAINFORD, the defendants, engaged in a widespread 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. Fraud scheme participants, including the defendants, recruited hundreds of individuals to stage trip-and-fall accidents at particular locations throughout New York City and to claim that they injured themselves as a result of their accidents. Common accident sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks, and purported “pot holes.” The defendants instructed the recruited patients to claim that they sustained injuries to particular areas of their bodies, including the knees, shoulders, and/or back – body parts that, if injured, would reap high recoveries in personal injury lawsuits.
After the staged trip-and-fall accidents, recruited patients were referred to specific attorneys who would file lawsuits against the owners of the accident sites and/or insurance companies of the owners of the accident sites (the “Victims”). The lawsuits did not disclose that the recruited 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 at least $31,791,000.
The recruited patients were also instructed to receive ongoing medical treatment from certain chiropractors and doctors. The fraud scheme participants advised the recruited patients that if they intended to continue with their lawsuits, they were required to undergo surgery to increase the value of their fraudulent lawsuits. The medical procedures included discectomies, spinal fusions, non-surgical epidural injections, and knee and shoulder surgeries. As an incentive to getting surgery, the recruited patients were offered payments after they completed surgery as well as a percentage of any settlement payments from their lawsuits. Patients generally had two surgeries and received between $1,000 and $1,500 after each surgery.
The defendants recruited low-income individuals as patients – individuals desperate enough to undergo surgeries in exchange for these small post-surgery payments. In some instances, the defendants even recruited patients from homeless shelters in New York City. Over the course of the trial, more than 20 witnesses testified, including 11 patients who admitted to staging trip-and-fall accidents at the direction of DUNCAN, LOCUST, RAINFORD, or other co-conspirators.
DUNCAN was one of the organizers and leaders of the scheme. DUNCAN recruited patients into the scheme, organized the recruited patients’ legal and medical appointments, and assisted in procuring the funding for the recruited patients’ medical treatment and lawsuits. DUNCAN and his partner Kerry Gordon, who started their own case management and legal funding companies, made over $1.5 million in profit from the fraud scheme.
LOCUST and RAINFORD helped recruit patients into the fraud scheme, transported patients to medical and legal appointments, identified potential accident sites, made payments to recruited patients, and coached recruited patients on faking their injuries.
Peter Kalkanis, was another organizer and leader of the scheme. Kalkanis paid his co-defendants to recruit patients into the scheme and transport the patients to medical and attorney appointments.
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In addition to the prison terms, DUNCAN, RAINFORD, and LOCUST, were each sentenced to three years of supervised release.
Mr. Berman praised the outstanding investigative work of the New York Field Office of the Federal Bureau of Investigation and the New York City Police Department. Mr. Berman also thanked the National Insurance Crime Bureau for their assistance in the investigation.
The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Nicholas Folly, Alexandra Rothman, and Nicholas Chiuchiolo are in charge of the prosecution.
