A man from Ambler, Pennsylvania, has been charged with using phony documents to collect $252,734 in Federal Emergency Management Agency-backed disaster benefits and insurance payments that were supposed to be used to cover Superstorm Sandy damages to his mother’s property in Ocean City, New Jersey.
Fraud, theft of government funds
Nicholas Ochs, 54, was charged by indictment with one count of disaster benefits fraud, five counts of mail fraud, and one count of theft of government funds. He appeared before U.S. Magistrate Judge Karen M. Williams and was released on $100,000 unsecured bond.
According to the indictment, in October 2012, various counties of southern New Jersey, including Cape May County, suffered significant damage due to wind, rain, and flooding as a result of Superstorm Sandy. During that time, Mr. Ochs’ mother lived in a house in Ocean City. Prosecutors said that, in January 2013, Mr. Ochs, on behalf of his mother, filed an application with FEMA seeking federal rental assistance and assistance for personal property damage, claiming that the property was unfit for occupancy as a result of the storm.
As alleged, an inspector working on behalf of FEMA inspected the property and determined that the property was uninhabitable and that repairs were required. During the inspection, Mr. Ochs, acting as power of attorney, signed the application on behalf of his mother attesting that all the information on the application was true and correct, according to the government.
By signing the application, Mr. Ochs also acknowledged that any disaster relief money awarded would be returned if his mother received insurance benefits for the same loss. FEMA initially denied Mr. Ochs’ claim, citing the fact that the property was covered by flood insurance.
The government asserted that Mr. Ochs submitted fraudulent documents to FEMA indicating that the insurance provider had denied his mother’s claim. In addition, when applying for the federal assistance, Mr. Ochs allegedly submitted false documents claiming that, as a result of being displaced, his mother was renting another property on the same block in Ocean City.
According to the government, from January 2013 through December 2013, Mr. Ochs faxed fraudulent lease agreements and rental receipts and failed to disclose that the property his mother was renting was owned by his mother and that no rent was ever paid. In addition, in February 2013, Mr. Ochs allegedly contacted FEMA and made a claim for transportation assistance based on his false claim that his mother’s 1985 Mercedes Benz was damaged by Superstorm Sandy.
The government charged that, as a result of the false documents, between February 2013 and December 2013, FEMA paid Mr. Ochs’ mother $17,229 for rental assistance and $4,345 for home repairs and that Mr. Ochs used the money for his own personal expenses. The total amount of FEMA benefits for rental assistance and home repair that Mr. Ochs collected to which he was not entitled was $21,574, according to prosecutors.
Insurance claim for damages
In addition, the government asserted, after Mr. Ochs made an insurance claim for damages related to the storm, his mother’s insurance provider ultimately paid her $231,160, $169,518 of which was held in escrow by the mortgage holder, Wells Fargo. To entice Wells Fargo to release the funds, Mr. Ochs allegedly presented fraudulent invoices and forms that over-inflated the value of the work that was actually performed.
The government asserted that, based on the false invoices, Wells Fargo mailed numerous checks totaling $169,518 to the house in Ocean City, which Mr. Ochs deposited into bank accounts that he controlled and spent on personal expenses. These funds ultimately were paid for by FEMA pursuant to its National Flood Insurance Program, which backed insurance payments for disaster-related expenses. Altogether, Ochs allegedly defrauded FEMA of $252,734.
Up to 70 years in prison
The count of disaster benefits fraud carries a potential penalty of 30 years in prison and a $250,000 fine. The mail fraud counts each carry a potential penalty of 30 years in prison and $1 million fine. The count of theft of government funds carries a potential penalty of 10 years in prison and a $250,000 fine.
Steven A. Meyerowitz, Esq., (firstname.lastname@example.org) is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. This story is reprinted with permission from FC&S Legal, the industry’s only comprehensive digital resource designed for insurance coverage law.