Ringleader Of Largest No-Fault Auto Insurance Scam Gets 15 Years In Prison

One of the ringleaders of the largest no-fault auto insurance frauds ever recorded was sentenced last week to 15 years in prison, the U.S. Attorney’s Office announced.

Prosecutors alleged that Mikhail Zemlyansky oversaw a sprawling criminal conspiracy that cheated auto insurers out of hundreds of millions of dollars. He also engaged in two investment frauds that swindled nearly 300 victims out of $17 million while engaging in a massive money laundering operation and profiting from illegal gambling, according to authorities.

As part of the sentence, Zemlyansky was ordered to pay a $50,000 fine and restitution of more than $29 million to the victims of his schemes. He will also serve three years of supervised release after his prison time.

“Driven by an insatiable greed, Mikhail Zemlyansky operated a sophisticated criminal enterprise that, during a five-year span, preyed on hundreds of innocent victims, reaping tens of millions of dollars in illicit proceeds,” U.S. Attorney Preet Bharara said in a press release.

Zemlyansky’s partner, Michael Danilovich was convicted in November for the same crimes. He will be sentenced in March, according to the U.S. Attorney. The massive criminal network overseen by the two men was uncovered by authorities in 2012 and had led to the conviction of 36 people, including local doctor Tatyana Gabinskaya. Prosecutors said Zemlyansky and Danilovich paid kickbacks to Gabinskaya for her to perform procedures that were not medically necessary in order to defraud insurers.

Prosecutors asked for a 25-year sentence for Zemlyansky, who beat authorities in 2013 through a mistrial. Zemlyansky’s lawyer, who described his client as a youth soccer coach and Sandy aid worker, told the judge that prosecutors were seeking “revenge” and said his client had become the U.S. Attorney’s “white whale,” according to Newsday.

Zemlyansky, known as “Russian Mike” at the high-stakes poker games he held in Mill Basin, is said to have run the insurance scam from  2007 through 2012. New York State law requires all vehicles to have no-fault auto insurance, which provides benefits of up to $50,000 to passengers and drivers injured in a crash, regardless of fault.

The scam involved recruiting people involved in car accidents and funneling them through medical centers owned by Zemlyansky and Danilovich, where they would be given unnecessary medical procedures.

Zemlyansky was also convicted of running two investment fraud schemes. Both scams involved workers operating out of boiler rooms cold-calling victims and asking them to invest in lawsuits in return for a portion of the future settlements, according to the U.S. Attorney’s Office.  In reality, there was no investment fund at all and the stolen money was laundered through shell companies in Eastern Europe, authorities say.