The scheme involved over 24 life insurance policies totaling $11.6 million in total coverage
The United States Attorneys Office for the District of Massachusetts has charged a Boston man in connection with a large-scale insurance fraud involving multiple life insurance companies. Kellerman Jason Zheng, 33, of Boston, was arrested last week and charged with one count of mail fraud as well as one count of wire fraud. Mr. Zheng is a naturalized U.S. citizen, originally from China.
Mr. Zheng made his initial appearance in federal court in Boston on December 13th and was held pending further proceedings.
Under federal law, mail and wire fraud each carry a sentence of up to 20 years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss from the offense. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
The scheme involved defrauding numerous life insurance companies
From December 20, 2016, until March 20, 2018, Mr. Zheng allegedly filed policy applications and took out life insurance policies in the name of his brother, Ming Fei. All in all, it is alleged that Mr. Zheng took out at least 24 different life insurance carriers totaling more than $11,650,000 in combined coverage limits.
In an affidavit filed by a U.S. Postal Inspector who took part in a separate investigation of one of the insurance claims made by the defendant, he stated that Mr. Zheng “…submitted online or by telephone to at least 20 U.S.-based insurance companies…” with many applications withdrawn “…or policy coverage amounts reduced, due to the applicant refusing in-person interviews, medical exams, or failing to provide medical documentation.” In each and every policy, both Mr. Zheng and his parents were listed as the beneficiaries.
In 2018, the defendant began filing claims on these insurance policies after submitting a death certificate showing that his brother had passed away in 2018, in China. The claims Mr. Zheng submitted claiming his brother died in 2018 though were fraudulent. Investigators determined that his brother, Ming Fei, had died three years earlier on April 4, 2015. While his brother did die while visiting China, his death actually occurred over a year “…prior to the inception of the insurance policies,” and almost three years earlier than Mr. Zheng stated in his insurance claims.
The Defendant goes to great lengths to make it look like his dead brother was alive until 2018
A review of the materials relating to the postal service’s investigation shows the great length Mr. Zheng went to in creating an appearance that his dead brother was alive while taking out the numerous life insurance policies in his name. For example, the defendant opened various bank accounts in his brother’s name and regularly used them to make it look like his brother was using them. He also listed a commercial mail receiving agent as his brother’s “purported residence.” In 2017, he even made sure to renew his brother’s Massachusetts driver’s license.
After maintaining this ruse for more than two years, Mr. Zheng eventually obtained a false death certificate from his hometown in China, stating that his brother died in August of 2018.
After procuring the false death certificate from China, Mr. Zheng then began to submit insurance claims on the life insurance policies taken out in his brother’s name. The U.S. Postal Inspector stated in his affidavit that the defendant had filed at least 12 different claims on various life insurance policies for a total value of $5.3 million since September 24, 2018.
A suspicious insurer sends investigators to China to get the true story of the brother’s death
Apparently, it was the “numerous material misrepresentations” that Mr. Zheng made on many of the various life insurance policy applications, which first triggered a red flag to various life insurance companies.
Among the material misrepresentations made during the policy application process, was the failure to disclose the existence of other in-force life insurance policies, as well as a failure to disclose prior tobacco use and other existing health conditions. The U.S. Postal Inspector involved in the case stated that investigations into Mr. Zheng and his scheme to defraud various life insurance companies have been ongoing since January 2019.
The Sagicor Life Insurance Company was notified by another life insurer of Ming Fei’s death. In response, Sagicor got in touch with the defendant, Mr. Zheng, who told them in a recorded telephone conversation that his brother had accidentally drowned on August 4, 2018, while in China. After confirming the details, Sagicor them mailed a USPS letter with forms and instructions on how the process of filing a claim. The same letter and forms also were emailed to Mr. Zheng. In June of 2019, Mr. Zheng emailed Sagicor with the completed documents related to the claim he was filing along with the fraudulent death certificate listing his brother’s death as of August 4, 2018.
While Sagicor was simultaneously processing Mr. Zheng’s claim, the life insurer had hired Diligence Investigators, a Texas Company, to investigate Ming Fei’s death in China.
The company’s investigators traveled to China to investigate Ming Fei’s death and were able to speak with the doctor in Mr. Zheng’s brother’s hometown of Dabeitou Village, Guangdong Province who signed the brother’s death certificate stating his date of death as August 4, 2018. During that meeting with investigators, the doctor acknowledged to never having officially examined Mr. Zheng’s brother, relying instead on what family members had told him about Ming Fei’s death as well as the date it occurred. The same investigators also confirmed with the funeral home where Ming Fei was cremated that Ming Fei had passed away on April 4, 2015.
Posing as a claim manager, undercover agent gets Mr. Zheng’s confession
After obtaining this information, an undercover agent posing as a Sagicor claims manager made contact with Mr. Zheng on September 9, 2019. In that conversation, he told Mr. Zheng that he was traveling to Boston and would like to meet with him in person. On September 11th, the two met at the Westin Hotel in Boston. During a recorded meeting, the undercover agent disclosed that his company had been investigating Mr. Zheng’s claim and had traveled to China to verify his brother’s death.
Over subsequent meetings in which the undercover agent offered to help Mr. Zheng with is insurance fraud scheme in return for a cut of the policy payout, the undercover agent was able to gain Mr. Zheng’s trust in order to obtain a recorded confession in which Mr. Zheng admitted having his brother’s death certificate faked with a later date.