A Louisiana State Police unit has opened a criminal investigation against Houston-based law firm McClenny, Moseley & Associates for alleged property insurance fraud practices in the state over the past three years.
The opening of an active investigation was described in an Oct. 17 LSP complaint report. The probe was set in motion after Louisiana Department of Insurance officials met with the police agency’s insurance fraud/auto theft unit and provided information on 43 cases involving MMA and Alabama-based Apex Roofing and Restoration.
Among these cases, 25 people told Department of Insurance officials they never hired MMA to represent them in litigated claims, according to the complaint report. In addition, in many of these cases, policyholders never received funds for home repairs that they were entitled to, the report says.
The police probe is looking into possible violations of state law regarding insurance fraud, forgery, bank fraud, monetary instrument abuse, unlawful payments to attorneys and unlawful solicitation of employment for legal practitioners, according to the complaint.
In May, the Department of Insurance issued fines totaling $2 million against MMA, its founding partners – James McClenny and John Zachary Moseley – and MMA’s former Louisiana managing partner, William Huye III. The fines were based on suspected deception and not paying out insurance claim settlement funds, the complaint states.
“Per LDI, allegations were brought to them by attorney Matthew Monson of the Monson Law Firm,” the LSP complaint says. “Through assisting a customer, Monson discovered irregularities in MMA’s practices and determined they were deceiving individuals and stealing insurance claim settlement funds.”
The Department of Insurance expressed support for the criminal probe and the need to compensate victims.
“We were glad to see Louisiana State Police take this step in a relatively short period of time considering the enormity of the actions that led to the largest fine our department has ever issued,” John Ford, the department’s spokesman, said in an email to the Louisiana Record. “While there is no direct correlation between the outcome in the criminal system and the judicial system’s determination of compensation for criminal activity, crime victims generally have the right to recover damages such activity caused them. To date, MMA has not paid the ($2 million) fine.”
A Louisiana State Police spokeswoman said the agency could not provide information beyond the complaint report since the investigation is ongoing.
The MMA law firm has faced discipline proceedings in both state and federal courts in Louisiana. MMA was identified by federal Judge Michael North as an “agent” for the roofing firm, but Apex is now suing MMA and alleging the construction company was not aware of the law firm’s alleged scams.
MMA also was reported to have received tens of millions of dollars from a Florida-based hedge fund to finance its mass filings of property insurance claims. A bill that would have imposed more transparency in such third-party litigation financing agreements was vetoed this year by Gov. John Bel Edwards.
Edwards, however, did sign into law a measure that ended the practice of insurance policyholders signing away their rights through assignment-of-benefits (AOB) contracts. That practice was in play when Apex Roofing gained clients who needed home repairs resulting from hurricane damage.