Who is Arthur Bogoraz and why did his case reach the Court of Appeals this summer for a decision on New York Insurance Law § 6801(a)(1)?

Arthur Bogoraz was indicted in 2011 for No-Fault Fraud. Two days before he was set to surrender, he fled to the Ukraine. In September 2011 he piloted his own plane from St. Maarten to Puerto Rico where he was apprehended waiting to board a commercial flight to Texas.

New York Attorney General Eric Schneiderman in his announcement of the conviction stated: “In a detailed allocution in June of 2013 before Justice Danny Chun in Kings County Supreme Court, Bogoraz admitted that between July 2006 and December 2010, in Kings County and elsewhere, he defrauded no-fault insurance companies of millions of dollars through a complex scheme involving stolen identities from medical doctors. Bogoraz admitted that as part of his scheme he persuaded radiologists to work with him and promised payment for each MRI they reviewed, interpreted and reported to the insurance companies as a no-fault insurance claim.

Bogoraz admitted that once the doctors agreed to work with him, he exploited his access to their personal information and set up separate radiology corporations without their knowledge or consent. He forged the doctors’ signatures on incorporation documents, leases, and bank documents. Using their stolen identities, Bogoraz opened and operated multiple radiology corporations, including Sharp Radiology, P.C., Vital Radiology, P.C., Essential Radiology, P.C., Aurora Radiology, P.C., and Oracle Radiology of NY, P.C. Bogoraz then filed no-fault insurance claims and collected the money in bank accounts he established using the doctors’ names and personal information, diverting the money to himself. Bogoraz further admitted that in addition to managing the radiology corporations and accounts, he controlled a collections law firm, Greater NY Legal Services, so that he could launder insurance monies. Mr. Bogoraz admitted that through his scheme, over a five-year period, he stole more than $8 million from insurance companies. He then laundered the proceeds, cashing $1 million at check cashing stores and withdrawing more than $500,000 in cash directly from the corporations’ bank accounts.”

Karine Gevorkyan, the spouse of Arthur Bogoraz, filed suit against Ira Judelson, the bail bondsman, in Federal Court for the return of the $121,000 bail bond premium. When the case reached the Second Circuit, the following question was certified to the Court of Appeals of the State of New York pursuant to 2d Cir. Local R. 27.2 and § 500.27(a) of the New York Rules of Court: “Whether an entity engaged in the “bail business,” as defined in NYIL § 6801(a)(1), may retain its “premium or compensation,” as described in NYIL § 6804(a), where a bond posted pursuant to NYCPL § 520.20 is denied at a bail-sufficiency hearing conducted pursuant to NYCPL § 520.30, and the criminal defendant that is the subject of the bond is never admitted to bail.”

The Court of Appeals held Insurance Law § 6804(a) prohibits a bail bond surety from retaining a premium when the criminal defendant is not released on bail. “In our view, the risk associated with the bail bond is that the principal admitted on bail he will fail to appear and the bail bond will be forfeited (see CPL 540.10). If the posted collateral does not cover the bail bond, the surety may suffer a financial loss. The surety does not incur this risk when the principal is not released and so has no opportunity to jump bail (see Penal Law §§ 215.55, 215.56, 215.57). While the surety assumes a binding obligation to pay the bail upon posting the bail bond, no risk attaches from this obligation alone. Risk is triggered only when the court takes additional steps following the posting, approving the bail bond and issuing a certificate authorizing the principal’s release (see CPL 510.40[3] ). When a hearing is ordered under CPL 520.30, the court approves or disapproves the bail bond after the hearing (see CPL 520.30[3] ). If the court disapproves the bail bond, the surety never runs the risk it contracted to insure. In light of the statutory language and legislative history described above, the principle that premium follows risk also supports our interpretation of Insurance Law article 68 as providing that, when a court holds a bail source hearing under CPL 520.30, the surety may retain a premium only when the principal is released on bail.” See Gevorkyan v. Judelson, 29 N.Y.3d 452 (2017) attached.

Arthur Bogoraz has now set up shop in Canada, under a company selling corporate wellness called Vital Management.

Read the decision here.