A team of state investigators raided the offices of a Uniondale engineering firm Wednesday, marking the first public step in a monthslong criminal probe into whether property damage reports were forged to deny flood insurance claims to superstorm Sandy victims.
Authorities from the state attorney general's office arrived at the offices of GEB HiRise on Charles Lindbergh Boulevard at roughly 9 a.m. and emerged around 2:30 p.m. carrying file boxes and computers.
HiRise president and chief executive Joe Celentano said the company was cooperating with the probe.
A spokeswoman for Attorney General Eric T. Schneiderman confirmed investigators executed a search warrant at the company's offices in connection with allegations of forged engineering reports, but declined to elaborate further.
HiRise and a second engineering firm, U.S. Forensic of Metairie, Louisiana, have been under investigation since as early as November by New York authorities for allegedly rewriting reports after the 2012 storm to blame damage on erosion or structural defects, rather than flooding.
The alleged forgeries, lawyers for homeowners say, were part of a broad effort to help companies processing claims for the government-run National Flood Insurance Program avoid paying millions in settlements to storm victims.
Both engineering firms have denied wrongdoing. The insurance companies accused in civil cases of participating in the alleged scheme have also insisted they did nothing wrong.
"HiRise has a fifteen-year history of ethical business practices," Celentano said.
As the search unfolded in Uniondale, an executive for one of the insurance companies under scrutiny, Wright National Flood Insurance, of St. Petersburg, Florida, refused to answer questions about the alleged forgeries when called to testify at a civil hearing in federal court in Brooklyn.
The executive, Jeff Moore, repeatedly invoked his right to remain silent when asked if his company hired unlicensed engineers after Sandy, whether it ordered engineers to forge reports for thousands of insurance claims and other inquires. He even declined to confirm his title at the company.
"Under the advice of counsel, I am going to assert my constitutional privilege under the Fifth Amendment and respectfully decline to answer the question," Moore, Wright's vice president of claims, said in response to each question.
The hearing, called to determine whether the company should be sanctioned for misleading a judge about whether it knew about a forged report for a house in Long Beach, also included testimony from the founder of U.S. Forensic: Gary Bell.
Under questioning from J. Steve Mostyn, a lawyer for the Long Beach homeowners, Bell acknowledged his engineering firm was not licensed to work in New York when the report for the home was written in late 2012. According to state records, U.S. Forensic Associates LLC was not certified to practice in New York until September 2014.
Bell's lawyer, Larry Demmons, declined to comment after the hearing.
The accusations of forgery initially arose amid the nearly 1,000 pending lawsuits filed by homeowners after Sandy over disputed flood insurance claims. Those allegations have prompted outcry from the judges and politicians and eventually led to the probe by the attorney general's criminal fraud unit.
The Federal Emergency Management Agency, which runs the flood insurance program, is undertaking its own investigation.
Flood settlements are paid by the federal government -- not the companies that process claims. Critics say the program gives those private contractors financial incentive to cut corners on claims by penalizing them for any overpayments to homeowners, but not for underpayments.
In December, FEMA announced a series of reforms to ensure claims aren't underpaid, including instituting penalties for underpayments.
Earlier this week, Mostyn and FEMA's recently appointed deputy associate administrator, Brad J. Kieserman, began negotiating a broad framework to settle all of the roughly 900 pending lawsuits over disputed flood insurance lawsuits in New York. After two days of talks, Mostyn said they were approaching a deal.
During a brief interview Wednesday, Kieserman said he couldn't comment on specifics of the negotiations, but added: "I am optimistic."
Kieserman also declined to say whether any deal might include a provision to compensate homeowners who have not filed lawsuits but suspect they may have been victims of the alleged forgery scheme. He did not, however, rule it out.
"Everything is on the table in settlement negotiations," he said.