Four men charged with scamming 218 elderly clients

Posted: May 23, 2012

The Pennsylvania Attorney General announced criminal charges Tuesday against four Philadelphia-area men for allegedly scamming 218 elderly clients out of $700,000 in premiums for home-care and health services that were rarely delivered.

At a news conference in Norristown, Linda Kelly identified the four as Bruce Howard Cherry, 52, and Robert P. Lerner, 56, both of Philadelphia; Ross M. Rabelow, 52, of Southampton, Bucks County; and Thomas J. Muldoon, 57, of Broomall, Delaware County. 11

Their victims came from New York, New Jersey, Maryland and 41 counties in Pennsylvania reaching from Erie to Philadelphia, with the majority from Lehigh County and Southeastern Pennsylvania.

Kelly said the victims were easy pickings for the financial fraud scheme because most were widows over 80 living alone with no nearby family to help with financial decisions.

“This was a disturbing and despicable scheme designed to extract as much money as possible from unwitting seniors who believed they were protecting themselves against costly future home-care expenses,” Kelly said.

The four were arrested Monday on theft, insurance fraud, conspiracy and related offenses, Kelly said. A District Judge in Hatboro ordered Cherry, Rabelow, and Muldoon held at the Montgomery County prison when each failed to post $1 million cash bail. Lerner was being held at the prison on $250,000 cash bail.

Kelly said the men, who knew each other from working in the elder-care industry, set up three papers corporations.

Using door-to-door solicitations and cold-call tactics, they sold a confusing welter of overlapping contracts for long-term health care and assistance with bathing and dressing at home. They also sold home safety equipment and elder advocacy services to clients unclear about what future coverage they needed.

The companies — American Comfort Home Care Services, Global Services for the Home and Cherry Senior Solutions — never even created an escrow fund to cover the services they offered. With the exception of three percent of moneys collected by American Comfort which paid for some services, most of the take went for the men’s mortgages and other living expenses, Kelly said.

The scam came to light last year when one victim complained of not receiving contracted services. Another reported the theft of a blank check. At that point, the Insurance Fraud Section of the Attorney General’s Office began investigating.

According to a grand jury indictment released Tuesday, the typical victim was pressed to purchase 1,000 hours of services to be used within 12 months, at a cost of $1,590. The selling point was that the $1.59 per hour was cheaper than the rates offered by competing service providers.

“A dollar and fifty-nine cents an hour? That’s not a workable business model,” said senior deputy attorney general Eric Schoenberg.

When elderly customers went to arrange services they had purchased, their demands were “ignored, delayed, discouraged, or minimized,” Kelly said.

In one case, an elderly woman was told her contract was null and void because friends and family were helping her.

In a second, after the client’s family complained, a home-care worker was dispatched to the victim’s home — but an investigation revealed the worker was hired through an ad on Craigslist and an interview at a Dunkin’ Donuts. No background check was carried out, Kelly said.

The most extreme case was victim “G,” a widowed 79-year-old retired schoolteacher from central Pennsylvania who lives alone, Kelly said. During 40 visits from February 2009 to April 2011, the woman made 24 payments totaling $57,135 for redundant services which were never delivered, Kelly said.

The names of all scam victims were withheld because some will testify if the matter comes to trial, said Nils Fredericksen, spokesman for the attorney general.

It was not immediately clear if the four had hired legal representation. Maximum penalties for engaging in a corrupt organization and taking the proceeds of an unlawful activity, both first-degree felonies, are 20 years and $25,000 per count, with each victim comprising a count, Kelly said.

Kelly said the 218 victims are only the ones they have identified; there may be more who don’t know they were targets because they have not yet asked for services. She asked citizens who suspect they were scammed to call the Attorney General’s Office at 610-631-5164.

Contact Bonnie L. Cook at 610-313-8232 or bcook@phillynews.com. Read her blog MontCo Memo at www.philly.com.

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