Bay Area man sentenced to two years in prison for $250,000 insurance fraud scheme
News: 2019 Press Release
SAN FRANCISCO, Calif. — A joint investigation by the Department of Insurance, Employment Development Department and U.S. Department of State, Diplomatic Security Service (DSS) that exposed a complex unemployment insurance fraud scheme has now led to prison time on federal charges for the man who committed the crimes. Kenneth X. Huang, 41, was sentenced last week to two years in federal prison, three years supervised release, and ordered to pay $259,594 in restitution.
The restitution order included $128,753 to Great American Insurance Company doing business as IncomeAssure and $130,841 to the California Employment Development Department. Huang was ordered to self-surrender by November 8, 2019, to begin his federal prison term.
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.”
“The Diplomatic Security Service is pleased with the success of this case. This shows the positive outcome when federal and state agencies work together to investigate and prosecute all allegations of criminal activity related to passport and visa fraud,” said Matthew Perlman, Special Agent in Charge of DSS's San Francisco Field Office. “We're committed to deterring, detecting, and investigating passport and visa fraud and bringing those who defraud U.S. businesses with fraudulent U.S. travel documents to justice.”
A consumer can purchase supplemental unemployment insurance to replace a portion of the income lost due to unemployment. These policies typically require the policyholder to be employed by a company for at least six months before purchasing the policy, and the individual must 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 where he never worked.
Huang fled to Georgia after being indicted on federal charges in January. DSS special agents tracked and apprehended him there.
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. Huang's probation will be supervised by the United States Probation Office. The United States Attorney’s Office prosecuted the case.
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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. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.