Major Fraud Perpetrator Asserts Fifth Amendment Privilege to Avoid Prosecution

Post 5489

Fraudster Refuses to Answer Questions About His Alleged Fraud

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In Great American Insurance Co. v. Gemstone Property Management, LLC, et al., No. 23-cv-9100 (LJL), United States District Court, S.D. New York (September 8, 2026) Great American Insurance Company alleged that it was defrauded through a scheme in which Subin Associates, LLP recruited individuals to stage construction-site injuries, arranged unnecessary medical treatment and litigation funding, and pursued fraudulent personal-injury claims.

Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.

After Great American subpoenaed Hernandez for a deposition and Hernandez Associates for documents, Hernandez answered basic background questions but invoked the Fifth Amendment when asked about his employment, affiliations, knowledge of persons and entities connected to the alleged scheme, and familiarity with relevant documents.

FIFTH AMENDMENT LAW

The Fifth Amendment privilege against self-incrimination applies in civil discovery whenever a witness reasonably believes that an answer could be used in a criminal prosecution or could lead to incriminating evidence. A court may not compel answers over a valid assertion of the privilege without authorized immunity.

The witness bears the burden of showing a substantial and real—not merely speculative—risk of incrimination. The privilege covers both directly incriminating answers and answers that could furnish a link in the chain of evidence, but it cannot be used merely to avoid testimony the witness would prefer not to give. The court evaluates each question in context, considering whether its incriminating tendency is apparent from the circumstances.

DISCUSSION AND ANALYSIS

A District Court cannot compel a witness to answer deposition questions, over a valid assertion of his Fifth Amendment right, absent a duly authorized assurance of immunity at the time. The person asserting the Fifth Amendment privilege bears the burden of establishing his entitlement to it.”

The court found Hernandez’s invocation valid. Great American’s allegations potentially implicate federal and state offenses including mail fraud, wire fraud, racketeering, money laundering, conspiracy, and aiding and abetting.

Hernandez did not need to be the scheme’s principal actor to face criminal exposure. His asserted fear was reasonable because Subin had been accused in several civil RICO and fraud cases involving staged accidents and fraudulent insurance claims; Hernandez and Hernandez Associates had themselves been named as participants in at least one related action; Great American had independent evidence tying Hernandez to Subin, claimant transportation, shared office space, and litigation-funding businesses; and Hernandez submitted an ex parte declaration that the court reviewed in camera and found supportive of a non-speculative risk of prosecution.

The court determined that Hernandez had not made an impermissible blanket assertion. He answered neutral introductory questions and invoked the privilege only when questions addressed matters that could link him to Subin, related entities, relevant documents, or the alleged fraud. Those questions could furnish evidentiary links in a possible criminal case, so the privilege applied.

Hernandez submitted an ex parte declaration, which the Court has reviewed in camera, that makes clear that his fear of prosecution is not merely speculative

Considering the evidence together, the fear of prosecution here rises far above the speculative, trifling, or imaginary.

CONCLUSION

The court denied Great American’s motion to compel Hernandez to answer the deposition questions for which he invoked the Fifth Amendment. It also denied without prejudice the motion to compel Hernandez Associates to produce documents and directed the Clerk of Court to close the motion. Great American must use evidence from sources other than the defendant who believes that he will be prosecuted if he testifies.

ZALMA OPINION

Insurance Fraud is a serious crime that is a felony in most states. Great American alleged that Hernandez was a participant in a major fraud scheme taking millions fraudulently from Great American and others. It had serious evidence and wanted information from Hernandez to tie up all loose ends in their fraud investigation. Hernandez knew he was involved in criminal activity and if he testified about that activity as Great American insisted he would be prosecuted as he admitted to criminal acts. The Fifth Amendment protected him and Great American must get its evidence from sources other than the criminal.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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