Bay area man pleads guilty to federal charges for $250,000 insurance fraud scheme
News: 2019 Press Release
SAN FRANCISCO, Calif. — A Department of Insurance, Employment Development Department and U.S. Department of State, Diplomatic Security Service (DSS) investigation that uncovered a complex unemployment insurance fraud scheme has now led to prison time on federal charges for the man who perpetrated the crimes. Kenneth X. Huang, 41, was federally indicted on six federal charges related to his insurance fraud schemes and pleaded guilty to one federal charge of wire fraud. Huang is facing two years in federal prison, three years supervised release, and as part of his plea agreement agreed to pay $259,594 in restitution for his crimes.
The investigation revealed that Huang used a false passport, Social Security card and fabricated proof of employment documents in order to obtain multiple insurance policies, each under a different name—then bided his time before submitting fraudulent claims in order to meet the eligibility requirements of the policies and to escape detection. In total, he received $128,753 from his fraudulent insurance policies.
“Partnering with insurance companies, state departments and the Diplomatic Security Service, allowed us to stop a complex fraud scheme in its tracks,” said Insurance Commissioner Ricardo Lara. “Without our detectives’ actions in unraveling this fraud, the costs could have been much higher. Financial crimes can have a significant impact on consumers’ premiums, and this case serves as a warning that if you commit insurance fraud be prepared to do the prison time.”
Supplemental unemployment insurance can be purchased to replace a portion of a person’s income in the event that they lose their job. These policies typically require the policyholder to be employed by a company for at least six months before purchasing the policy and the individual is required to maintain their employment during the first six months that they own the policy before they can collect any benefits.
According to Department of Insurance Detectives, Huang lied about material information in order to secure multiple different IncomeAssure policies, under multiple different identities. Examples of Huang’s deception include providing false names, altering notarized documents, misrepresenting the times of employment, and submitting completely forged documents from companies he was never employed by.
“This joint investigation with our law enforcement partners uncovered a fraudulent scheme that defrauded U.S. businesses,” said Matthew Perlman, Special Agent in Charge of DSS’s San Francisco Field Office. “The Diplomatic Security Service is committed to protecting the integrity of all U.S. passports, and stopping criminals from earning illegal income by exploiting U.S. travel documents.”
Huang fled to Georgia after being indicted on federal charges in January. He was tracked and apprehended in Georgia by DSS special agents, and booked into Gwinnett County Jail before being extradited back to California.
This case was investigated by the California Department of Insurance Enforcement Branch, with assistance from the Employment Development Department and the U.S. Department of State’s Diplomatic Security Service. The United States Attorney’s Office prosecuted the case.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.