Convicted Criminal Unsuccessfully Demands Less Probation

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Insurance Fraud Conviction With Only 60 days Actual Jail Unappreciated by the Felon

Lorrie Lashann Ray appealed from a judgment entered upon guilty verdicts for insurance fraud and obtaining property by false pretenses arguing for less time on probation. In State Of North Carolina v. Lorrie Lashann Ray, No. COA20-132, Court Of Appeals Of North Carolina (November 3, 2020) after judge granted her probation out of the kindness of his heart, Ms. Ray appealed the sentence.

Procedural History

Ray was tried on charges of insurance fraud and obtaining property by false pretenses. The jury found Ray guilty of insurance fraud and obtaining property by false pretenses. The trial court consolidated the convictions for judgment and sentenced Ray to 10 to 21 months of imprisonment, suspended for 24 months of supervised probation. As a condition of probation, the trial court ordered Ray to serve a 60-day active term.

Factual Background

Ray’s home in Dunn, North Carolina, was damaged in the fall of 2016 by Hurricane Matthew. Ray filed a claim with her home insurance company, Universal Property and Casualty Insurance Company (“Insurer”). Ray claimed her roof, windows, doors, porch, and electronics were damaged; there were leaks throughout the home due to the roof damage; she was living in her barn; and she lost all of the food in her refrigerator due to spoilage.

Ray contacted the Insurer on 6 December by phone, disputing the amount awarded on her claim and requesting that the Insurer perform another home inspection. The next day, Ray submitted to the Insurer an inventory of food loss totaling $1,350. On 21 December, Ray submitted estimates for roof repairs for $6,240, window repairs for $1,520, and a door repair for $427. Ray also submitted (1) a handwritten lease agreement signed by Ray and her stepfather, Robert McEachin, stating that Ray would pay $100 per day to McEachin to stay in his home; and (2) handwritten documents purporting to be 76 paid daily receipts beginning 11 October 2016 for $100 each, signed by McEachin and stating that Ray was living in his home. Twice in January 2017, Ray contacted the Insurer claiming reimbursement for living expenses in the amount of $8,300. Ray faxed the handwritten lease agreement and receipts totaling $8,300, explained that she was paying cash to McEachin, and gave the Insurer McEachin’s phone number.

Ray called McEachin and told him that the Insurer was going to call him to ask him a few questions, and that “all [he] had to do was just tell them yes.”  A representative of the Insurer visited McEachin at his home; showed him the receipts that Ray had submitted; asked him if he had signed them, to which he replied “no”; and had him sign his name on a piece of paper. McEachin told the insurance representative that he did not have a lease agreement with Ray and that Ray had not stayed with him between October 2016 and January 2017. McEachin testified at trial that he did not write or sign the purported receipts and that Ray did not stay in his house.

Discussion

Ray argues that the trial court erred by sentencing her for both obtaining property by false pretenses and insurance fraud for the same alleged misrepresentation. Ray also argues that the trial court improperly delegated its authority to Ray’s probation officer by failing to set a completion deadline for the active term of Ray’s split sentence.

Sentencing Based on Both Convictions

Where the legislature clearly expresses its intent to proscribe and punish exactly the same conduct under two separate statutes, a trial court in a single trial may impose cumulative punishments under the statutes.

The elements of insurance fraud are:

  1. Ray presents a statement for a claim under an insurance policy;
  2. that statement contained false or misleading information;
  3. Ray knows the statement is false or misleading; and,
  4. Ray acted with the intent to defraud.

The elements of obtaining property by false pretenses are:

  1. A false representation of a past or subsisting fact or a future fulfillment or event,
  2. which is calculated and intended to deceive,
  3. which does in fact deceive, and
  4. by which Ray obtains or attempts to obtain anything of value from another person.

Based on the separate and distinct elements that must be proven, the legislature clearly expressed its intent to proscribe and punish a misrepresentation intended to deceive under both statutes.

With regard to the subject of the two crimes, it is clear that the conduct of Ray is violative of two separate and distinct social norms. Where obtaining property by false pretenses is generally likely to harm a single victim, a broader class of victims is harmed by insurance fraud. Fraud perpetrated on insurers through the submission of false claims increases insurers’ cost of doing business—beyond simply the financial loss of having paid an insured a finite amount on a fraudulent claim—because it requires insurers to investigate fraudulent claims and establish ongoing processes for avoiding future fraudulent claims.

Had conviction and punishment of both crimes in a single trial not been intended by the legislature, it could have addressed the matter. It did not.

Active Term of Sentence

Ray argued that the trial court improperly delegated its authority to Ray’s probation officer by failing to set a completion deadline for the active term of Ray’s split sentence.

Under North Carolina’s criminal statutes, a trial court may sentence a defendant to special probation as a form of intermediate punishment, under certain circumstances. When doing so, the court may suspend the term of imprisonment and place Ray on probation and in addition require that Ray submit to a period or periods of imprisonment at whatever time or intervals within the period of probation, consecutive or nonconsecutive, the court determines. The total of all periods of confinement imposed as an incident of special probation, but not including an activated suspended sentence, may not exceed one-fourth the maximum sentence of imprisonment imposed for the offense, and no confinement other than an activated suspended sentence may be required beyond two years of conviction.

The statute itself sets the outer limit, or completion deadline, of an active term as a condition of special probation as the end of the period of probation or two years after the date of conviction, whichever comes first. In this case, the trial court sentenced Ray to 10 to 21 months of imprisonment, and suspended that sentence for 24 months of supervised probation. As a condition of probation, the trial court ordered Ray to serve a 60-day active term.

The trial court appropriately determined the “intervals within the period of probation” as two thirty-day periods, and the completion date is set by statute as 27 August 2021—which, in this case, is both the end of the two-year probationary period and two years from the date of conviction.

Therefore, the trial court did not err by imposing a sentence based on convictions for both obtaining property by false pretenses and insurance fraud based on the same misrepresentation, and the trial court did not err by failing to set a completion deadline for the active term of Ray’s sentence as a condition of special probation.

ZALMA OPINION

Ms. Ray, who could have been sentenced to five years in prison for each conviction, balked at serving two 30 day incarceration events plus probation. Ungrateful for a kind and easy sentence for two major felonies she added to her crime by filing a worthless appeal. The judge and appellate court should have withdrawn the sentence and sentence her to serve the full 10 to 21 months in prison because I have no mercy in me for those who commit insurance fraud.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

https://zalma.com/zalmas-insurance-fraud-letter-2/ Read last two issues of ZIFL here.

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