SANTA ANA - On October 16, 2017, a former sales representative for AFLAC was sentenced to 10 years in federal prison after being convicted of federal fraud charges related to a scheme that bilked the insurance company out of $4 million with fake disability claims.
In addition to her prison sentence, Patricia Diane Smith Sledge, 61, of Redlands, was ordered to pay $4,166,063 in restitution.
“The California Department of Insurance assisted with this investigation that led to the arrest, prosecution and conviction of this individual,” said California Statewide Law Enforcement Association (CSLEA) President Alan Barcelona. “Law enforcement teams working together truly make a difference.”
The joint investigation also included United States Department of Labor - Officer of Inspector General, and the Federal Bureau of Investigation.
The evidence presented at trial showed that Sledge – who was residing in Irvine while working for the company formally known as American Family Life Assurance Company – sold disability insurance policies to bogus companies, and to people who supposedly worked for those companies. Sledge then orchestrated the filing of fraudulent disability claims and directed the purported employees to doctors who would sign off on the fake injury claims.
Sledge made money both from the commissions related to the sale of the fraudulent insurance policies and from kickbacks she received from the supposedly injured “employees.”
Sledge exploited her knowledge of AFLAC’s internal policies and underwriting procedures to further the scheme. For example, Sledge and others involved in the scheme listed artificially inflated incomes on the applications for insurance because the amount AFLAC paid on disability claims was based on the policyholder’s income.
Sledge was also found guilty of witness tampering for encouraging potential witnesses to lie to federal investigators and discouraging them from cooperating in the investigation. One of these crimes was committed while she was on bond in this case.
Three others have been prosecuted for acting as fake employers and fake employees in this scheme.