On Feb. 4, 1981, Raymond Simpson and Ronald Lewis were walking through a parking lot of a McDonald`s restaurant at 550 E. 103d St. when a car backed out of a parking stall. Both men fell to the pavement, writhing in what seemed to be pain.
It appeared to be a typical auto-pedestrian accident, one of hundreds each year in Chicago. But, according to a federal indictment, that accident and more than a dozen others that followed were part of a well-orchestrated insurance fraud that eventually involved 29 people, including former Ald. Perry Hutchinson (9th), a physician, two insurance agents and a lawyer.
New details of the alleged scheme have emerged in a government document filed with the court charging that the fraud, which began more than seven years ago, ultimately bilked 16 insurance companies out of nearly $250,000.
The scheme involved inflated and phony doctor bills, bogus insurance applications, fraudulent employment verification forms and false insurance claims, the government says.
Hutchinson, insurance agent Forest Bailey and attorney Patrick McClurkin split more than half of the fraudulently obtained insurance settlements, and a ”substantial portion” was funneled into Hutchinson`s aldermanic campaign war chest, say Assistant U.S. Attorneys James Ferguson, Mark Pollack and Alan Grossman, who are prosecuting the case.
Another key figure in the scheme, the document says, was Robert Rasmussen, then manager of the Illinois Automobile Insurance Plan, a quasipublic body formed by the General Assembly in the late 1940s to administer the underwriting of insurance for high-risk motorists. Rasmussen, convicted in 1985 of taking bribes to place motorists in the program, is cooperating with the government.
Hutchinson, through his attorney, Donald Bertucci, has denied the charges, as have Bailey and seven others. Twenty of those charged, including Dr. Aaron Long and McClurkin, have admitted their roles in the scheme. They have pleaded guilty, and many are expected to testify at the trial of Hutchinson and the others, scheduled March 7.
On that February day nearly seven years ago, as Simpson and Lewis lay on the ground, Larry Lake, driver of the car, jumped out and began shouting for help. Police and an ambulance were summoned. Lake told police he had dropped a burning cigarette in his lap and lost control of his vehicle.
The incident had been planned days before, the government alleges, in a meeting attended by Lake, Lewis and Simpson. Lake had driven both ”victims” to the parking lot, given them last-minute instructions on the mechanics of the accident and reminded them to visit Long for treatment, the government document says.
Later, Simpson and Lewis paid a visit to Long`s office for medical treatment. McClurkin filed claims on behalf of Lewis and Simpson, seeking damages from Lake, who had obtained insurance through Bailey, the charges say. In July, 1981, Lewis received a check for $9,000; Simpson received a check for $8,000 in September. Most of the settlement money went to Bailey, Hutchinson and McClurkin, the government says.
Long received his payment from the insurance company for medical services, and the government says Hutchinson received 10 percent of the fee.
Other settlements in the scheme ranged from $600 to $40,000, according to the government, and the victims usually kept about one-third. Lake and other drivers were paid $750 to $1,000 for each incident.
According to government documents, the scheme was hatched in December, 1980, among Lake, Bailey, Hutchinson and Long, who recently had graduated from medical school and had opened his own medical practice. In return for his agreement to pay kickbacks to Hutchinson, Long extracted a promise that he could choose three individuals who would pose as accident victims and receive compensation, according to the government.
Among those who the government says participated as ”victims” were Long`s father, Long`s girlfriend, another woman whom Long later married, and McClurkin`s brother, identified as Ben Israel.
Joyce Jones, who became intimately familiar with the scheme while working as Bailey`s secretary and typing up Lake`s insurance applications, was allowed to be a victim after she pestered Lake continually, asking when she would
”get her turn,” Lake has told prosecutors.
The paper trail began in Bailey`s South Side office, the government said, where he wrote numerous policy applications for Lake and forwarded the papers to Rasmussen.
Rasmussen then placed Lake with several different insurance companies that participated in the high-risk motorist program. In almost every case, the policies were canceled for nonpayment of premiums, the government says, but by then the accidents already had occurred.
The government says Bailey supplied Lake with all the necessary information before the accidents: the names of victims and ways to contact them; the insurance company that would be involved; information relating to phony jobs used by victims to apply for reimbursement for lost wages; how the insurance settlements would be divided; and how much Lake would be paid for each ”victim” he hit with his car.
Lake has told the government he followed the same plan each time. First he would contact one or two individuals referred by either Hutchinson or Bailey, and discuss where, when and how to stage an accident.
During the accident, Lake would drive toward one or two pedestrians walking either in front or behind his auto and bump them, the government says. The victims would then fall to the ground, feigning pain.
All but two of the accidents occurred in private parking lots throughout the Chicago area. One occurred in an alley, and another occurred at an intersection. Lake told the government the conspirators believed that by restricting the accidents to private parking lots, the participants would avoid being cited for traffic violations.
After the accidents, the victims visited Long, who verified their
”injuries” and submitted phony or inflated medical bills. To recover wages lost during recovery from injuries, Nolan Harrison, another insurance agent and a friend of Bailey`s, allowed accident victims to report to insurance companies that they worked for Harrison`s car-wash business, the government says.
The cases were then turned over to McClurkin, who negotiated settlements with the insurance companies, the government says. When checks were mailed, the victims kicked back a portion to McClurkin and Bailey, who then delivered money to Hutchinson, who kept a ledger of the cases to make sure he received his full share, according to McClurkin.
Some of the ”victims” have told prosecutors that they were recruited into the scheme by Hutchinson on the condition that they kick back a portion of their settlement directly to him. Curtis Thompson, involved in two separate accidents, has admitted that on one claim he received a $10,000 settlement and paid $4,000 to Hutchinson, the government says.
Two other ”victims,” McPherson Davis and Verdell Alston, also said they paid portions of their settlements, which totaled $8,000, to Hutchinson, prosecutors say.
In September, 1985, Hutchinson, McClurkin, Bailey and Long learned about a federal investigation of the scheme, and, according to the government, passed $5,000 to Lake with a suggestion that he leave the country. Other participants also were contacted and advised to keep quiet or lie about their involvement if called before a grand jury, say the charges.
Hutchinson, who is facing separate charges of accepting $42,500 in bribes in the Operation Incubator investigation of City Hall corruption, was covertly tape-recorded during some of those conversations, the government says.
