There’s been another development in the Strems saga indicating that once again… “THE END IS NEAR.”
You may recall in this series of articles (Collapse of an Evil Empire, Parts I thru XI) that the Strems Law Firm (SLF) and its’ owner, Scot Strems were subject to a class action suit filed by Hale, Hale & Jacobson P.A., a prominent trial law firm. In that RICO-style suit (Ortiz v. Strems), Ortiz alleged she was a victim of unsavory and illegal Strems solicitation practices and that such practices were being committed on a large scale. (See NOTE #1 below)
The allegations in the Ortiz case were similar to those in a case filed by Citizens, also against Strems. Citizens alleged a RICO-style conspiracy between Strems and its’ consultants which included soliciting clients in the same manner and by at least one of the same consultants, alleged in the Ortiz case and in the Florida Bar’s Solicitation Complaint against Strems, see: Citizens v Strems Law Firm, Contender Claims, et al.) (See NOTE #2 below)
Both suits were part of allegations still pending at the Supreme Court of Florida (SCOF) by the Florida Bar seeking the disbarment of Scot Strems.
Yesterday, in a joint press conference with CFO Jimmy Petrandis Citizens President, Barry Gilway, announced a $1million settlement in the complaint filed by Citizens.
The significance of the settlement seems to depend on who you talk to but, it’s likely that the practices generally described in the complaint will not continue, at least not with the defendants named in this suit and that others employing (or contemplating) similar approaches will also be dissuaded. Strems did not admit guilt as part of the settlement but, by virtue of this press conference, Citizens is apparently declaring victory.
At this point the Supreme Court has not rendered a final decision in any of the cases pending against Scot Strems, who is still subject to emergency suspension of his license to practice law with a final decision by the court regarding disbarment allegations expected within the next several months.
For now here’s the full text from yesterday’s press conference.
Law firm, co-defendants settle fraud claims with Citizens for $1 million
May 12, 2022 – Tampa–A Miami-based law firm and its co-defendants have agreed to a $1 million settlement with Citizens Property Insurance Corporation (Citizens) after the state-created insurer filed a lawsuit that alleged fraudulent claims involving the firm in collusion with a public adjusting firm and a water mitigation company.
The settlement was announced today at a press conference in Tampa hosted by Florida Chief Financial Officer Jimmy Patronis, who lauded Citizens’ efforts and urged other insurance companies to take an aggressive stance against property insurance fraud.
Citizens Special Investigations Unit (SIU) initiated its investigation of the Strems Law Firm in 2016 after detecting suspicious patterns linking the law firm to the public adjusting and water mitigation companies. Investigators combed through more than 5,000 claims and sent more than 400 cases to the Department of Financial Services’ Division of Investigative and Forensic Services (DIFS), which initiated its own criminal investigation.
Following investigations by Citizens’ SIU and DIFS, Citizens filed suit in 2020 against the Strems Law Firm, public adjusting firm Contender Claims Consultants (CCC), and All Insurance Restoration Services (AIRS) arguing that the law firm engaged the public adjusters to create or fraudulently increase the severity of claims – mostly nonweather water loss claims – submitted on behalf of policyholders. Four individuals – Scot Strems (Strems), Guillermo Saavedra (CCC), Cesar Guerrero and Derek Parsons (AIRS) – were also named in the lawsuit.
The complaint alleged the defendants created false invoices and took other steps to inflate the cost of claims submitted to Citizens and other insurance companies. In Citizens’ case, the alleged fraud dates back to 2014.
“Citizens and our DIFS investigators combed through 400 different cases, and it became clear that Miami-based Strems law firm was a major player in the fraud,” Patronis said. “Had this fraud been left unchecked, it could have cost policyholders $16 million a year. As criminal investigations continue, this action sends a loud signal that if you’re ripping off customers, we’re going to find you and hold you accountable.”
Citizens and other insurance companies have argued that fraud surrounding assignment of benefits agreements, non-weather water losses, and abusive litigation have been major drivers forcing premium hikes on Florida property insurance consumers. Joseph Theobald, Senior Director of Citizens SIU, has been coordinating Citizens’ efforts to crack down on fraud.
“I’m proud of the work done by Joe and his SIU team and the collaborative relationship they have developed with DFS investigators,” said Barry Gilway, Citizens President, CEO and Executive Director. “I thank CFO Patronis for his support as we continue to work together to ferret out fraud.”
Under the settlement finalized March 21, 2022, Citizens is to be paid $1 million and will dismiss the case against the defendants and all parties agreed to pay their own legal costs. Strems and the fellow defendants continue to deny wrongdoing in the settlement agreement, while Citizens stands behind the allegations in its complaint.
The Florida Bar in 2020 initiated disciplinary action against Scot Strems, the firm’s principal. Strems was suspended for two years by the Florida Supreme Court, and additional sanctions are pending. The firm was restructured and is now doing business as The Property Advocates, P.A.
“This settlement certainly accomplishes what we set out to do, which was to seek justice for what we saw as an egregious fraud and to expose the threat of this type of activity,” said Theobald, Senior Director of Citizens SIU. “This action, combined with the actions of the Florida Bar and the Florida Supreme Court brought a swift end to this relationship.”
NOTE #1: The allegation–In December of 2016 Sonia Ortiz contacted a purported Public Adjusting Firm, Contender Claims Consultants, (CCC) to request it inspect her property for damage. CCC reportedly found two losses. She had no intention of seeking legal representation and signed electronic agreements for both losses that she did not know contained agreements with SLF. In 2017 she identified another potential loss and contacted CCC specifically stating that she did not want to be with SLF. CCC’s representative stated he would not turn the claim in to Strems. On December 14, 2017 Ortiz received payment for this claim that was minus a contingency fee paid to SLF. According to the complaint, paragraph 40: “The Strems Law Firm and various third parties work together to unethically and illegally solicit, engage and profit off of unwilling and unsuspecting consumers throughout the State of Florida.”
NOTE #2: Please note the Supreme court has not reached a final judgement on any of the cases pending against Strems by the Florida Bar or the Reports of the Referee to which they were assigned. For those having as much difficulty following this as I am explaining it, I’ve taken all but one of “Collapse of an Evil Empire” postings (PART I thru PART XI) and placed them in one document which links to all of the materials (and more) that I’ve consulted in writing each article. You can review and print it here. It may be amended later to include any subsequent announcements regarding Strems but for now could serve as an easily accessible compendium with links to all the cases and more.
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