On Feb. 18, 2014, officers from state Attorney General Eric T. Schneiderman’s office raided the Uniondale offices of HiRise Engineering P.C., responding to allegations of fraud involving flood insurance reports prepared after Hurricane Sandy. On Monday, Schneiderman’s office unsealed a 50-count indictment charging Matthew Pappalardo, 38, of Whitestone, Queens, and HiRise with altering engineering reports that assessed the structural damage of residential properties resulting from the storm.
Pappalardo and HiRise were charged with 25 counts of second-degree forgery, and Pappalardo was also charged with 25 counts of unauthorized practice of engineering. Both he and HiRise pleaded not guilty at their arraignment before Nassau County Supreme Court Justice Robert Vogle. Vogle set Pappalardo’s bail at $20,000 cash or $40,000 bond, and he was released on Monday afternoon.
According to prosecutors, employees of HiRise, under the direction of Pappalardo, a project manager, altered reports written by subcontracted engineers who visited homes damaged by Sandy. Pappalardo and the HiRise employees who changed the reports did not personally inspect the damaged buildings, court papers state, and were not New York state-licensed engineers. The altered reports were never shown to the engineers who visited the homes, but, prosecutors say, they were submitted by HiRise to the insurance adjusting firms, and those reports were used by federal flood claim administrators in their evaluation of the Federal Emergency Management Agency’s National Flood Insurance Program.
The probe began in 2013, when homeowners began questioning insurers’ damage reports on their houses. Deborah Ramey and her father, Larry Raisfeld, of Long Beach, had questions about an engineer’s report, prepared by U.S. Forensics, for their Sandy-damaged rental property. They asked their insurance company, Wright National Flood Insurance, for a re-inspection.
George Hernemar, the engineer who had done their initial report, was sent once again to Ramey’s and Raisfeld’s property, and brought his copy of that report. When Ramey compared the U.S. Forensics report with Hernemar’s copy, she discovered that changes had been made by U.S. Forensics to indicate that the damage had been caused by environmental factors not related to Sandy — which meant that the repairs would not be covered.
Schneiderman also announced on Monday the release of a report identifying several fundamental flaws in the National Flood Insurance Program, and recommending increased transparency and accountability.
“Fraudulently altering engineering reports undermines the integrity of the entire FEMA claims process, which homeowners and families rely upon in a time of crisis,” Schneiderman said in a statement. “Today’s charges reveal a flagrant disregard for the well-being and safety of New Yorkers, and my office will not tolerate it. Along with our criminal investigation, my office has also released a report calling on federal regulators and industry participants to enact reforms to ensure that the insurance claims process is more transparent, which will help protect homeowners against the alleged fraud that we have uncovered. When the next major storm hits, it’s crucial that families know exactly what kind of damage is covered by insurance, and that their claims are being handled professionally and reliably.”