Luray couple faces civil, criminal charges for $800K in insurance fraud

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By Randy Arrington

LURAY, Dec. 18 — Transamerica Life Insurance Company has filed a civil lawsuit in federal court against a Luray couple and their nonprofit corporation for what the insurance provider says were fraudulent claims totaling more than $800,000 over a decade.

“In this case, Transamerica claims Stephen Kaufmann and Bonnie Kaufmann defrauded Transamerica out of $808,000 over a ten-year period in which they, using their allegedly sham non-profit corporation, Taking Care of, submitted claims on behalf of Bonnie Kaufmann for a condition she did not have,” reads a Dec. 2 court filing in the U.S. District Court for the Western District of Virginia in Harrisonburg.

“Transamerica claims that toward the end of the scheme, Stephen Kaufmann submitted fraudulent claims under a separate policy issued to him,” the court document continues.

On Dec. 2, Chief U.S. District Judge Michael F. Urbanski “delayed [civil] proceedings for 120 days to protect the Kaufmanns’ Fifth Amendment rights pending an [criminal] indictment,” according to a recent article in Virginia Lawyers Weekly.

The Luray Police Department arrested Stephen Kaufmann on Sept. 28 and charged him criminally with five counts of obtaining money by false pretenses and five counts of conspiracy to use false pretenses to obtain money. The police exercised search warrants the next day and seized computers, cell phones and paper files.

No indictments have been filed in the Page County Circuit Court at this point. With the December grand jury session canceled, the next session is scheduled to take place on Wednesday, Jan. 6. According to the VLW article, “Page County Commonwealth’s Attorney Kenneth Alger II said the criminal case would remain in the state system.”

The Dec. 2 decision in federal court also stated that, “At this point, an indictment against the Kaufmanns has not been obtained, but law enforcement has represented an indictment is imminent.”

The criminal charges follow the civil suit filed by Transamerica in federal court on Sept. 18 claiming that the Kaufmanns did not need the assistance that they were provided, nor were they eligible to waive premium obligations under the policies.

“They purchased long-term care policies with Transamerica in the late 1990s. In 2010, Bonnie Kaufmann submitted a claim for benefits, representing that she could not conduct her Activities of Daily Living without hands-on assistance. She simultaneously filed for bankruptcy,” reads court documents on the case. “Her claims were approved by Transamerica, and Stephen Kaufmann became her sole caregiver. Stephen Kaufmann created Taking Care of, served as its CEO and director, and allegedly provided care to his wife as its sole client. 

“Over the course of the next several years, the Kaufmanns submitted hundreds of invoices in which they claimed Stephen Kaufmann personally provided 72 hours of care to Bonnie Kaufmann each week, amounting to $107,000 each year in benefits, all the while continuing to work full time as an attorney,” the court document continues. “Eventually, Stephen Kaufmann began submitting claims under his insurance policy. However, many of the invoices submitted on his behalf reflected that he paid for out-of- pocket care to assist him on the same dates for which he submitted invoices claiming he had provided hands-on care to his wife. A claims investigation by Transamerica revealed neither party was impaired in their ability to perform Activities of Daily Living.”

In fact, although the insurance provider was lead to believe that they had “severe cognitive impairment”, both court documents and the VLW article reference YouTube videos posted by the Kaufmanns that show Bonnie “walking around her farm, climbing onto a tractor and using a box cutter to skin a 100-pound pig carcass,” according to the article.

“A series of videos posted by the Kaufmanns online show them engaging in construction projects and other activities contrary to their assertions that they could not independently bathe or use a toilet,” reads court documents in the case.

Earlier this year, an “independent medical examination” of Bonnie lead to an investigation by the insurance company. The investigation lead to the discovery of the online videos.

“Surveillance video allegedly revealed that the couple routinely billed Transamerica for time that Stephen Kaufmann spent working at his law office,” the VLW article also states. “In its lawsuit against the couple and their nonprofit, the company claimed fraud, constructive fraud, civil conspiracy and other counts.”

The civil lawsuit states that Bonnie Kaufmann was receiving about $9,000 per month in benefits from Transamerica as of June.

Stephen Kaufmann, a Luray attorney, is licensed and in good standing with the Virginia State Bar. He specializes in elder law, estate planning and long-term care planning, and has no record of any disciplinary action sanctioned by the state bar. 

He formally worked with the State Corporation Commission as a deputy commissioner of insurance. Both he and his wife advised clients on the importance of getting long-term care insurance early, according to Transamerica’s civil suit, and long-term care insurance covers assisted living or nursing home care and in-home care in some instances, the suit states.

“Kaufmann allegedly knew ‘insider’ tips,” the VLW article stated. “In a radio program, he reportedly advised listeners to be careful about revealing to their doctors conditions that could later interfere with the listeners’ ability to obtain long-term care insurance.”

Transamerica’s suit seeks to cancel the Kaufmann’s long-term care policies and recoup the $808,000 in fraudulent claims, as well as punitive damages. Court proceedings for the criminal charges in Page County Circuit Court are expected to resume at a Jan. 28 hearing.

The Dec. 2 decision rendered by Chief U.S. District Judge Michael F. Urbanski can be viewed at: Transamerica Life Insurance Co. v. Kaufmann (VLW 020-3-585).



Page County Circuit Court closed until Monday, Nov. 30

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Grand jury issues 51 indictments in October

Grand jury issues 33 indictments in September with one sealed

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