Did Duane Morris help Michael Robertson defraud Chubb Insurance
out of $100,000? Read the documents, and YOU be the judge.
NOTE: As with any personal blog, the opinions expressed here are my own. Each reader should come to their own conclusion, based on the factual documents linked to from this blog.
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I think everyone would agree that those who defraud insurance companies should be held accountable and criminally liable. When criminals defraud insurance companies, we all pay for it through higher premiums. Each of us should do our part by reporting insurance fraud, anytime we become aware of it.
It is my opinion that Michael Robertson may have possibly committed insurance fraud against the Chubb insurance company, and that Ed Cramp and the law firm he works for, Duane Morris, aided and assisted Robertson in that possible fraud. Only through a criminal investigation and trial would my belief be validated, but in the meantime, I'll present facts and documents and let you, the reader, decide for yourself how ethical the actions of Robertson, Ed Cramp, and the Duane Morris law firm were. Is it fraud? Unethical? Poor judgement? Or just business as usual?
As came out in depositions with Robertson, his company Linspire was paid $100,000 in damages by Chubb Insurance for, what I believe, was quite possibly a fraudulent claim. Presented here are links to the pertinent documents. Read them, then you can decide for yourself if you feel that actions were taken to intentionally defraud the Chubb Insurance company out of $100,000, and that these actions warrant a criminal investigation.
I Believe Michael Robertson, Ed Cramp and Duane Morris Filed a Deceptive Insurance Claim
As many of you know, Michael Robertson has been trying to use the US court system to attack and bully former Linspire employees. Fortunately, the truth continues to come out, Robertson keeps losing in the courts, and the former employees continue to be vindicated, all be it saddled with huge legal bills (a subject I'll discuss in a future blog).
A few weeks back, when I was going through some of the discovery provided by Michael Robertson in his lawsuit against the former employees, I came across one document that made me fall out of my chair. I couldn't believe what I was reading. It was an insurance claim that Ed Cramp (a lawyer with Duane Morris) had filed on behalf of Michael Robertson with the Chubb insurance company. I believe many of the statements in the claim were false and were soundly shown as such in recent court proceedings. (I've attached a signed declaration from Linspire's former IT Director, giving just one of several examples of the false statements I believe Duane Morris alleged in the claim.)
Most shocking, however, was that pertinent information about the situation had been left out of the claim, information that presumably Robertson and Duane Morris would have known about. I can only believe they intentionally left out this critical information to mislead Chubb to get their claim paid. Ed Cramp used the weight of his nationally-known law firm, Duane Morris, to give the claim credibility, so Chubb would likely have assumed that the claim was accurate, truthful and contained all the pertinent information. I'm sure seeing the Duane Morris letterhead on the claim letter gave Chubb a sense of security in believing what was presented in the application. I can't help but wonder if Chubb would be shocked to learn of what was left out, and may very well not have paid Robertson the $100,000 claim, had they been provided with the full story.
What is Insurance Fraud?
Insurance fraud is defined as, "...when someone intentionally deceives another about an insurance matter to receive money or other benefits not rightfully theirs." In other words, when you file a claim with an insurance company, you can't intentionally misrepresent what happened or leave out relevant information in order to intentionally deceive the insurance company so that they are more likely to pay your claim.
For example...suppose you and a friend were at your house, and you both got into a heated argument, and you threw a book at your friend, but instead it hit and broke your TV. Suppose you can't afford to replace the TV, so you decide to file a claim with your insurance company to have it replaced. However, you're not sure if you policy would cover any damage from you throwing a book through your TV, but you are quite confident you are covered for "theft." So, when you file your claim with the insurance company, instead of telling them about the disagreement you had with your friend and tossing the book, you say that a thief broke into your house in the middle of the night and stole the TV. The insurance company, based on your report of "theft," pays you cash to replace the damaged TV. By misrepresenting the facts to the insurance company, you likely have committed insurance fraud.
I believe you'll see from the documents provided below, that this seems to be exactly what Michael Robertson, Ed Cramp and the Duane Morris law firm did.
Robertson's Claim
I've attached a copy of the actual claim letter given to Chubb, signed on Duane Morris letterhead by Ed Cramp. (I've redacted the former employee's names, as Robertson has dragged their names through the mud enough already with his false allegations.)
As you can see, in the insurance claim letter (viewable here), Duane Morris references this as an "Employee Theft Claim," and makes all sorts of claims as to criminal activities such as "theft" and "embezzlement." Duane Morris also references a "Police Report" which Robertson had filed with the San Diego Police Department. The reason I was so shocked when I found the insurance claim, was that the ultimate findings of the San Diego Police Department's investigation were left out of the claim. You see, Linspire had been told the results of the San Diego Police Department's investigation, approximately THREE MONTHS PRIOR to them having filed this claim. Linspire was told at that time that "no crime had been committed and the issues...were civil in nature."
Viewable here is a declaration, signed under penalty of perjury, by Michael McEwen, a Detective with the San Diego Police Department's Financial Crimes Group. It's only two pages long, and I'd encourage everyone to read it. Here is one portion of Detective McEwen's statement:
"Based on my review of the facts of the case, I determined no crime had been committed and the issues discussed in Mr. Robertson's letter and case submission were civil in nature. My conclusion was that the case involved a disagreement between the Chairman and the CEO of the company, which CEO was an officer and agent of the company. This disagreement did not constitute a crime. I relayed my findings on to Mr. Robertson's representative and to Comerica Bank. I specifically told them 'no crime report was taken and no case number issued.'"
So, according to the detective, Linspire knew that the San Diego Police Department had said that no crime had been committed, and had known this for around three months prior to filing their claim, yet they still filed a claim to Chubb alleging criminal "theft" and "embezzlement." I have to doubt that Linspire's policy with Chubb covered, as Detective McEwen put it, "a disagreement between the Chairman and the CEO, " so I believe they probably decided to tell Chubb it was "theft," something for which they would more likely be covered. In my opinion, such misrepresentations could quite possibly constitute criminal insurance fraud and should be investigated further.
Did Duane Morris Participated in Fraud?
Do you think Chubb would have paid out $100,000 to Robertson had they known of the San Diego Police Department's findings? If Duane Morris had included the findings from the police investigation (as I believe they certainly should have), and let Chubb know that Linspire was told "no crime had been committed," would Chubb have paid the claim? Not having a copy of the insurance policy to review, I can't know for sure, but I do believe it's likely that Robertson and Duane Morris may have felt their chances were better if Chubb considered the claim "theft" and a "crime." I think that is likely why they left out the results of the police investigation, so that the insurance company would not find out what the results were so Linspire's claim of "theft" would more likely be covered. Regardless of what the policy would or would not have covered, leaving out such pertinent information is possible grounds for insurance fraud.
How could the law firm of Duane Morris not have known the results of the police investigation were pertinent? They went to great lengths in their claim to list out all the details of their allegations of "theft" to the police department, even attaching a copy of their "police report," and yet they didn't think to let Chubb know the outcome of that investigation three months after those results had been given to Linspire? Does Duane Morris expect us to believe that Ed Cramp didn't know the outcome? Would Ed Cramp be that incompetent to include the "police report," and yet not take a minute to find out what the results to that report were? In his deposition, Robertson was asked, "Who was the person who liaised with the police department about the police report; in other words, communicated with the police department?" For which Robertson replied, "Michael Umansky." At that time, Michael Umansky was another attorney at Duane Morris who, along with Ed Cramp, worked on the Linspire matter. Robertson also testified that Umansky helped create the "police report" document, and yet Ed Cramp didn't bother to find out how it turned out? It just isn't believable to me. I have to believe Ed Cramp, Michael Umanskey and Duane Morris absolutely knew the outcome of the police investigation, and yet, it appears that THEY FAILED TO DISCLOSE THOSE RESULTS to Chubb. That is by definition insurance fraud, in my opinion, and I have to wonder if Chubb would agree.
A pattern of fraud? Did Robertson and Duane Morris also try to defraud Linspire's bank Comerica in a similar fashion?
Another extremely interesting document that came to light in discovery was a letter from Linspire's bank, Comerica, to Duane Morris. In December of 2008, I blogged about how Robertson lost in summary judgement a case against Comerica. (You can read the details of that outcome here.)
As you can see in this letter from Comerica to Duane Morris in January of 2008, Comerica felt that Robertson and Duane Morris had made "false claims" in trying to have Comerica pay for wire transfers to employees for severance. (Keep in mind this letter came to Duane Morris two weeks BEFORE they filed their claim with Chubb.) Robertson and Duane Morris did the exact same thing to Comerica that they did to Chubb Insurance, using their "police report" to imply they were the victim of "theft," and yet failed to tell Comerica the no-crime-was-committed results of that investigation. Comerica had to track down and interview Detective McEwen themselves, since Linspire did not disclose Detective McEwen's findings to Comerica. As you can tell from the stern tone in Comerica's letter, they felt very much deceived, and called into question not only Linspire's credibility, but that of Duane Morris as well:
"Not only does this undermine Linspire's credibility, it also undermines yours. The motivation underlying Linspire's decision to refrain from signing the Fraud Affidavit under oath is so obvious it strains credulity to suggest it is either accurate or legitimate."
The letter points out that Duane Morris knew of the outcome of the police report BEFORE they gave a copy of it to Comerica:
"Detective McCewen advised Comerica that no case number was assigned to the Draft Police Report because--as he said he informed you prior to your delivery of the Statement and the Draft Police Report to Comerica--the District Attorney determined that no crime was committed and that this was a civil dispute between Linspire and the Employees. He pointed to the employment contracts provided by Linspire to the SDPD, which indicate that the respective amounts of the Employee Wires were less than the amounts legally owed by Linspire to the Employees for contractual severance."
Comerica's letter ends in pointing out that defrauding a financial institution is a crime:
"See, 18 USC 1344 (federal crime to knowingly execute or attempt to execute shceme to obtain money of financial institution by means of false or fraudulent pretenses, representations, or promises)."
These are just a few excerpts from the letter. I would encourage everyone to read the entire letter here. You'll see that the Comerica bank shares many of my beliefs about Robertson and his lawyers. It's hard to imagine that after Duane Morris received this stern letter from Comerica, warning them of possible criminal charges for fraud, that Duane Morris would, just two weeks later, make the same allegations to Chubb. This is evidence that Duane Morris likely knew full well what it was choosing to include, and leave out, when they sent their claim to Chubb.
One might wonder why a nationally-known law firm would put itself at risk by seemingly participating in insurance fraud. Consider what happened in 2002 with one of the Big Five accounting firms, Arthur Andersen. After being found guilty of criminal charges relating to the firm's handling of auditing of the failed Enron corporation, Arthur Anderson voluntarily surrendered their licenses to practice as Certified Public Accountants in the US. Firms can become so addicted to collecting hundreds of thousands of dollars of easy client fees, that they just don't have the courage or willpower to stop and drop a questionable client who pressures them to participate in an activity that finally crosses the line.
I've always had a low opinion of Michael Robertson's ethics (see www.freespire.com), and why I feel he needs a strong, ethical law firm to keep him in check. It's very disappointing that such a large, seemingly respectable firm such as Duane Morris would let Robertson pull them down into what I believe are fraudulent activities. Is this the standard Duane Morris holds itself up to? I have to wonder if filing such a claim was something only Ed Cramp was comfortable doing, or is this the culture at all of Duane Morris?
I find it quite ironic that Robertson falsely accuses former employees of criminal activities, and yet he may be the one who attempted the real crimes of bank and insurance fraud. Robertson tried to have former employees arrested and thrown in jail. They have been vindicated of any criminal wrong-doing. I think the facts now show that it's Robertson and Ed Cramp who need to be investigated and perhaps belong in jail and disbarred. Hopefully Chubb will investigate, along with the appropriate government insurance fraud investigation units.
I have forwarded a copy of this blog to Chubb, who claim they prosecute insurance fraud vigorously, stating "We will not pay a fraudulent claim. In fact, we will spare no expense when fighting fraud." I have also filed a police report on this matter with the San Diego Police Department, as well as filed a report with the Department of Insurance for the State of California.
Kevin
PS: Follow the outcome of any investigation on this matter at Freespire.com.
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