65° Good Morning
65° Good Morning

State begins criminal probe of claims that Sandy insurance denials were fraudulent

This corner lot on Michigan Street in Long

This corner lot on Michigan Street in Long Beach is among the properties affected by a federal judge's order to release flood insurance documents suspected of being falsified to deny superstorm Sandy claims. It was photographed on Nov. 13, 2014. Credit: Johnny Milano

The New York attorney general's office has launched a criminal investigation into allegations that government contractors forged documents to deny flood insurance claims after superstorm Sandy, according to a person with knowledge of the probe.

The move comes as a growing number of homeowners on Long Island and in Brooklyn has alleged in civil lawsuits that engineering reports were secretly rewritten after the 2012 storm to say houses were damaged by structural defects rather than flooding. Those forged reports, homeowners say, were used to deny claims from the National Flood Insurance Program.

A spokesman for Attorney General Eric T. Schneiderman declined to comment.

A separate federal probe, meanwhile, expanded Wednesday as the Federal Emergency Management Agency asked investigators to begin examining engineering reports by GEB HiRise of Uniondale.

GEB HiRise did not return calls seeking comment. A spokesman for FEMA, which runs the flood insurance program, confirmed the agency had referred GEB HiRise to the U.S. Department of Homeland Security's Office of Inspector General but declined to comment further.

Flood insurance is underwritten by the federal government, but FEMA hires private companies to administer policies and adjust claims. Homeowners say those companies conspired to lowball Sandy settlements, hoping to avoid federal audits.

The federal probe began after a judge concluded in November that a second engineering company, U.S. Forensic of Metairie, Louisiana, secretly rewrote a report used to deny a full settlement for a house in Long Beach.

This month, a Brooklyn couple filed a class-action suit against GEB HiRise, making similar allegations. The couple, Stephen and Sarise Dweck, say the engineer who inspected their home drafted a report saying floodwaters damaged the foundation. Yet, a HiRise staffer who is not a licensed engineer and never visited the site rewrote the report, blaming damage on pre-existing defects, according to the suit.

The engineer who actually visited the house, Harold Weinberg, declined to comment. But he filed an affidavit as part of the Dwecks' lawsuit saying HiRise faked his signature on the report used to deny the couple's claim.

"The false report issued by HiRise, purportedly in my name, is a forgery," he wrote.

Sen. Charles Schumer (D-N.Y.), who was among the officials who pushed to begin the probe, said FEMA should keep digging. "The fact that a new engineering firm has been referred . . . only furthers our suspicions of a potentially pervasive practice of engineering firms doctoring reports and seriously underpaying Sandy homeowners," Schumer said.

More news