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A federal grand jury in New Orleans has indicted five individuals on six counts of an alleged wire fraud conspiracy in connection with a 2017 auto accident with a tractor-trailer that prosecutors say was staged.
The indictment is dubbed the “tip of the iceberg” by attorneys representing the truck’s owner, Covenant Transportation Group of Chattanooga, Tenn. It marks the first such criminal charges brought by federal authorities in New Orleans investigating what could be a string of similar instances.
The accident, which occurred at the intersection of Chef Menteur Highway and Downman Road in New Orleans, was planned with the intention of filing two federal civil lawsuits in 2018 seeking large damages from Covenant, according to the indictment filed in the Eastern District of Louisiana on Oct. 24.
The accident occurred around 12:30 p.m. on June 6, 2017, when a 2009 Chevrolet Avalanche sideswiped a 2017 Freightliner tractor-trailer operated by Southern Refrigerated Transport of Texarkana, Ark., a subsidiary of Covenant.
Those named in the indictment were Damian Labeaud, 47, of New Orleans; Lucinda Thomas, 63; Mary Wade, 55, Judy Williams, 59 and Dashontae Young, 25, all of Houma, La.
If convicted, each of the defendants could face a maximum of 25 years in prison and be fined up to $250,000 per count.
The indictment also accused, but did not indict or name, an attorney it claimed played a major role in the conspiracy.
“It was a further part of the scheme and artifice to defraud that ‘Attorney A’ [unidentified] paid Labeaud $7,500 on the day of the staged accident,” the indictment said. “It was further part of the scheme and artifice to defraud that Attorney A demanded approximately $1 million per plaintiff in settlement for Thomas, Williams and Wade.”
Those three defendants said they were treated by doctors “who are known to the grand jury at the direction of Attorney A,” the indictment alleged.
The indictment charges that Thomas underwent neck surgery because Attorney A told her that she “would get more money through the lawsuit if she had the surgery.”
Covenant attorneys James Prather and Bowman Fetzer, of New Orleans law firm Galloway Johnson, told Transport Topics they spent at least three months investigating the accident, piecing together cellphone records, cell tower records, dash and police body cam videos and other documents they eventually handed over to the FBI.
“We initially thought the case smelled funny, but we didn’t have any evidence,” Prather said.
But after three months, they managed to gather enough evidence to file documents in the civil suits alleging fraud, Fetzer said.
Earlier this year, trucking fleets in the New Orleans area were notified of numerous suspicious accidents after a “fake accident” lawsuit against Mississippi-based Whitestone Transportation drew public attention.
In their federal lawsuit against Whitestone, Tiffany Turner, Adonte Turner and Dimitri Frazier, all of New Orleans, said they were traveling in a 2010 Chevrolet Impala in the center lane on Interstate 10 when their vehicle was struck by a semi-truck driven by Robert Runnels. They claim Runnels moved to the left lane and suddenly back to the center lane, causing a collision. The three said they sustained “severe and serious bodily injuries” and were seeking $1 million in actual and exemplary damages from Whitestone for negligent entrustment of its vehicle to Runnels, failure to properly train its employees and other acts of “negligence and imprudence.” They also sought damages for medical expenses, mental anguish, loss of enjoyment of life, physical pain and suffering and inconvenience.
However, similarities among a string of 30 or more cases in addition to the Whitestone case — all in the New Orleans area — included multiple people in a claimant vehicle, sideswipe allegations with commercial vehicle trailers, minimal damage to claimant vehicle, little to no damage to the insured trailer and a commercial vehicle driver who is either unaware of or denies impact, according to trucking attorneys.
The Whitestone case ultimately was dismissed after the plaintiffs got word that the FBI was investigating the case.
Chance McNeely, executive director of the Louisiana Motor Transport Association, said in such fake or staged cases, the deck typically is stacked against trucking companies.
“In Louisiana, we estimate our insurance costs are three to five times more than the national average,” McNeely said earlier this year. “We have a litigious culture, and we have a significant amount of marketing for lawsuits against trucks. Our trucks are doing what a lot of trucking companies are doing, that’s putting cameras on their trucks. Self-defense is our best approach.”
Covenant Transport Services, a division of the parent company, ranks No. 42 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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