If CSI Miami ever decides to film an episode about insurance fraud, the show’s writers will probably draw upon this case for inspiration.
Allstate Insurance Company has filed a lawsuit against Wells Fargo, alleging that its employees helped criminals conduct systemic auto insurance fraud by “welcoming” suspicious accounts and not being sufficiently vigilant with unusual withdrawals, according to the South Florida Sun Sentinel.
As a result, Allstate contends, the insurer lost millions of dollars, a big portion of which has been smuggled to Cuba and cannot be recovered.
The case, known as “Operation Sledgehammer” due to the manner in which its participants replicated auto collision damages, involved a “vast criminal conspiracy” of clinicians, chiropractors, patient recruiters and staged auto accident victims.
Allstate contends that Wells Fargo provided “essential banking services” to 35 medical clinics and 19 other entities within that ring, and intentionally neglected to alert authorities of its fraudulent practices. It claims that employees benefited from the bonuses they received whenever they opened a new account, and the bank itself stood to gain from the criminals’ “substantial deposits.”
Moreover, the auto insurer asserts that one Wells Fargo personal banker even partook in a staged collision and filed its subsequent claim with Allstate. The company says that the same employee knowingly opened an account for a “sham” clinic while working at the bank.
Finally, Allstate puts forth that a Wells Fargo supervisor in one of the bank’s West Palm Beach branches was rattled when “unsophisticated looking people” regularly cashed $8,000 – slightly below the $10,000 threshold which requires banks to report the transaction to the U.S. Treasury Department – from a medical clinic.
That branch manager visited the clinic with a colleague, and failed to see a single patient on the premises. They notified a regional manager and the bank’s security team, but the accounts remained open for another two years.
While most of the fraudsters are now in prison, some managed to escape to Cuba with the money, and court papers from the criminal case claim that the Cuban government accepted $200,000 from one of the fugitives.
Wells Fargo vehemently denies the accusations, and has asked the judge to dismiss the suit, arguing that Allstate can’t demonstrate that the bank was aware of any fraud.
"Withdrawing cash or cashing checks is not unusual or illegal," Wells Fargo said in its legal documents.
