Ex-Insurance Employee, Others Charged in 10-year Check-Cashing Scheme

Lisa Kline, 42, of Albany; April Martin, 37, of Colonie; and Harry Mercado, 36, of Albany, were arraigned in Town of Colonie Court after being arrested by police for stealing approximately $122,000 from Progressive Insurance Co. and $352,000 from Mercury Insurance Co.

The New York State Insurance Department reports that scheme was carried out while Kline was employed as a claims examiner by Progressive between 2000 and 2006, and later when she worked for Mercury. She was fired December 2009. A joint investigation by the department’s frauds bureau and Colonie police revealed that Kline enlisted Martin and Mercado to cash checks made out to legitimate claimants who were unaware the checks had been issued.

According to investigators, the scheme went undetected because legitimate claims were paid to policyholders before Kline would issue insurance company checks for supplemental payments to the policyholders. She used fake claims numbers, or in some cases, no claims numbers on the checks. She would then forge claimants’ signatures and countersign checks, making them payable to herself, or hand the checks over to Martin or Mercado to do the same.

The scheme was uncovered when a bank clerk noticed an unusual number of checks bearing different claimants’ names being countersigned and cashed by Kline for deposit into her personal bank account.

Insurance company audits found that most of the checks cashed were in the neighborhood of around $1,800.

The money stolen from Mercury led to the following felony charges against the three:

Kline: second-degree grand larceny and first-degree falsifying business records.

Martin: fourth-degree grand larceny and second-degree criminal possession of a forged instrument.

Mercado: fourth-degree grand larceny and second-degree criminal possession of a forged instrument.

Charges for the money stolen from Progressive are still pending.