Criminal probe follows a $2 million fine from state insurance regulator
The Louisiana State Police (LSP) have launched a criminal probe into a Texas law firm and an Alabama construction contractor over alleged fraud involving hundreds of hurricane-related claims.
The two companies – law firm McClenny Moseley & Associates (MMA) and contractor Apex Roofing & Restoration – are at the center of what Louisiana officials say is the largest home insurance fraud in the state’s history, according to a report by local news affiliate WWL-TV. The alleged fraud involved at least 850 Louisiana homeowners and policyholders.
The LSP says its Insurance Fraud/Auto Theft Unit is heading up the investigation, based on an earlier investigation by the Louisiana Department of Insurance, WWL-TV reported. The state police said they interviewed 25 Apex customers who said that MMA collected their insurance proceeds even though they never hired MMA to represent them.
The LSP said it was considering criminal charges for insurance fraud, forgery, bank fraud and unlawful solicitation by attorneys, WWL-TV reported.
The investigation comes on the heels of action against MMA by the Louisiana Department of Insurance. In May, the department levied a record $2 million fine against MMA, founding partners James McClenny and Zach Moseley, and former partner William Huye for what Louisiana Insurance Commissioner Jim Donelon called an “illegal insurance scheme.”
Huye, who had served as the firm’s Louisiana partner, was disbarred in the state and moved to Texas. With no other licensed Louisiana attorneys, MMA shuttered its New Orleans office and is now teetering on the brink of insolvency in the wake of a tsunami of lawsuits brought by its financiers, WWL-TV reported.
However, Apex – which hired MMA to represent it when it expanded into Louisiana in 2021 – is still operating there, as well as in several other states.
Contractor denies involvement
LSP’s investigation of Apex comes on the heels of a March court order from US Magistrate Judge Michael North, who said Apex assisted MMA as its “agent” in a scheme to defraud homeowners of their insurance money, WWL-TV reported.
However, Apex has filed a malpractice suit against MMA and has denied complicity in the alleged scam. The contractor said it had received nothing of value to help MMA sign up clients.
In a secret recording obtained by WWL-TV, Mosely was heard telling his New Orleans staff that MMA used an assignment of benefits that Apex customers had signed in order to get the homeowners’ insurance money.
“If we tell the insurance company we represent the roofing company, they’re going to tell us to [expletive] off and they’re not going to ever negotiate with us,” Mosely says on the recording. “But since we have the rights of the homeowner, let’s tell the insurance company we are the homeowner and … they’ll negotiate with us quicker, and they will pay us faster.”
Peter Butler, attorney for Apex, said that MMA had misled the contractor about how it handled Apex customers’ insurance claims.
“Apex is disappointed that it was mentioned in an opinion recently rendered when it never had a chance to give its side of the story to the court,” Butler said, as reported by WWL-TV. “Apex’s position is that it was not the agent for MMA, ever. To the contrary, by law, as Apex’s attorney, MMA became Apex’s agent.”
In its lawsuit against the law firm, Apex claimed that MMA had misled it by directing an Apex employee to sign contracts on behalf of customers so they would officially hire MMA, WWL-TV reported.
However, a WWL-TV review of court filings produced a contract signed by the employee on a homeowner’s behalf a month before MMA allegedly directed her to do so.
Two former Apex employees also told the news channel that they had been roped into MMA’s scam to bilk storm victims of their insurance money.
Dan Shaw, who trained Apex salespeople, said those sales employees were supposed to convince homeowners to sign forms to “onboard MMA.”
“It makes me sick that the homeowners were preyed on,” Shaw told WWL-TV. “They thought they were in good faith doing the right thing. They were not being told the whole story from Apex.”
Another former Apex employee, Shelby Lacey, told WWL-TV that she and other salespeople were told that MMA served as the contractor’s “in-house lawyers” to make sure insurance companies paid quickly. However, she said she grew suspicious when she was told that her compensation depended on not only how many deals she made for Apex, but also how many customers she convinced to sign contracts for MMA.
Lacey said her compensation was often charged back if a property owner didn’t sign a representation agreement with the law firm.
“We would not be paid for that particular claim if they did not sign the document,” she told WWL-TV.
Lacey, who was fired by Apex and has since started her own roofing company, is suing the contractor for breach of contract and unfair trade practices.
In a statement to WWL-TV, Butler said that Apex denies the allegations made by Shaw and Lacey and would defend itself against Lacey’s suit.
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