thedrifter
10-21-03, 11:27 AM
A Question of Trust
LI woman's business dealings with veterans raise suspicions
By Sandra Peddie INVESTIGATIONS TEAM
October 19, 2003
Since 1998, veterans, their advocates, local law enforcement and even a congressman have complained to the Department of Veterans Affairs about a woman they say illegally charged veterans thousands of dollars to file claims and sometimes harassed them if they couldn't or wouldn't pay her.
And even though veterans have said they gave VA investigators evidence that Karen Fotiou, 39, of Miller Place, was breaking the law, federal authorities never charged her, did not warn the veteran community overall about her activities, and even helped her continue operating, Newsday has found.
"Those of us in the legal community have been screaming about her for years, and the VA didn't do a damned thing," said Felicia Pasculli, a Bay Shore attorney who advocates for veterans.
"The government is big on lip service to veterans," she said. "The reality is that they are not a priority."
While federal investigators haven't charged Fotiou, both the Suffolk and Queens district attorneys have indicted her on multiple counts of grand larceny, scheming to defraud, and impersonating an attorney in cases not involving veterans. The veterans' cases are federal and fall outside the district attorneys' jurisdictions.
Fotiou, who has a criminal record for fraud and theft, has built a successful business on Long Island and in Queens filing VA claims for veterans. Taking advantage of a federal law that discourages lawyers from filing claims because they can't legally be paid and a confusing VA bureaucracy, Fotiou charged veterans hundreds of thousands of dollars, and sometimes withheld medical records if they didn't pay her, according to records and interviews.
She collected nearly $140,000 for filing VA claims from 63 veterans from
1996 through 1999, according to office records, invoices and interviews. In addition, records show she also charged some veterans at least $50,000 for other work that they believed was being done by her as an attorney.
Fotiou and her associates recruited clients at the Veterans Affairs Medical Center in Northport. Some were seeking treatment there for emotional or mental difficulties. A number of the veterans had little or no income.
And at least five of the men from whom she collected fees were living in homeless shelters at the time, records show.
Under federal law, it is illegal to charge veterans for filing claims with the VA. Only after a claim has been denied can a certified representative charge for handling an appeal.
"It's a misdemeanor offense," said Bruce Sackman, the special agent in charge of the VA's Inspector General's regional office. He said his office investigated Fotiou, but decided her activities weren't serious enough to prosecute.
"Just imagine this," Sackman said, "in the big scheme of crimes in the U.S. Attorney's office, you're going to go in there and say you want to prosecute someone for violating [that law]? I mean, come on. You know that's going to go over like a ton of bricks.
"That federal law," he added, "goes along with hundreds of federal laws that no one has ever been prosecuted for."
However, a woman in Tacoma, Wash., was convicted in June 2002 of illegally charging veterans for filing claims, and was ordered to pay $101,000 to 26 former prisoners of war.
Asked in a later interview about the Tacoma case, Sackman said it was a first for his agency and that it came about after the Fotiou investigation.
He noted that the Fotiou case did not involve former prisoners of war, and he said he was unaware that Fotiou had handled as many claims as she has.
To confirm the details of Fotiou's activities, Newsday interviewed 23 veterans, 13 advocates, 13 former employees and associates, and numerous officials.
But in a three-hour interview, Fotiou denied she broke the law, saying she did much of her work for free and that her clients still owe her $800,000.
Fotiou said she was only trying to help people, helping them shop and setting up bank accounts for them.
"It's not a crime to care about people and want to help," she said. "I know I didn't do anything wrong."
Fotiou said an investigator from the Inspector General's office met with her several times, revised her retainer agreement and showed her how to keep operating. Though she said she couldn't recall his name, she described him as "a wonderful man."
Thomas Valery, the sole investigator based at Northport, worked on the Fotiou case. He confirmed "there was a conversation like that," but said "it was not me" who advised her. Valery, now retired, declined to say who it was. Sackman, Valery's Manhattan-based supervisor, said he was not aware of that conversation.
"To the best of my memory," he said, "she was told to cease and desist."
Joe Sledge, the VA hospital's spokesman, said he too called the Inspector General about Fotiou, but that VA officials did nothing further.
"There wasn't a whole lot anybody could do," Sledge said.
However, when one veterans service organization, Disabled American Veterans, tried to warn veterans about Fotiou by posting flyers on the grounds, VA officials told the group to take them down, said Ray Desmond, of the DAV's Long Island chapter.
Robert Schuster, director of the VA Medical Center at Northport, did not respond to requests for an interview. Sledge said he wasn't aware of the flyers, but that he would have told them to take them down because they take paint off the walls.
Targeting Her Business
Fotiou, who at her peak had offices in Patchogue, Astoria and Hicksville, bragged to clients and associates of being a "powerhouse" firm. With a bookcase full of law books, a slick Web site featuring courtroom scenes and an ad under "lawyers" in the phone book, many clients believed she was a lawyer. She is not.
In 1995, she pleaded guilty to unauthorized practice as an attorney and was placed on three years' probation. Fotiou said she pleaded guilty only because she was pregnant and tired of going to court. She also was convicted in 1986 of credit card fraud in Virginia and petty theft in 1983 in California, but Fotiou blamed both on mistaken identity.
Meanwhile, Fotiou marketed her business aggressively, bragging to veterans about her connections with the VA, and drumming up much of her business at the Northport hospital. At least three veterans were paid to recruit clients for her.
One, Joseph Hawes, a convicted drug dealer, passed out her business cards at the hospital, according to Fotiou and numerous veterans. Fotiou said she attended many programs at the VA to solicit clients.
Veterans, meanwhile, said her best recruiting spot was a medical center support group for Vietnam veterans suffering from post-traumatic stress, the most likely group to be eligible for cash awards.
That's how James Szakmary and Lewis Corn met her. Both men, Vietnam veterans, suffer from post-traumatic stress, along with other service-related injuries. Both have had trouble paying bills and, when fellow veterans at the support group recommended Fotiou, both went to her.
However, both men now say they did not learn until later that the men who recommended Fotiou were getting paid by her.
For 17 years, Szakmary worked as an air traffic controller at Kennedy Airport. Then nightmarish war memories overwhelmed him. "I started getting too many flashbacks, and I couldn't distinguish work from reality," he said.
His bosses reassigned him to crash investigations, but the bodies of the dead triggered more flashbacks. "And they had to let me go," he said quietly.
The bills piled up. By 1997, Szakmary was behind on his mortgage and on a second mortgage, as well. He had no answer on the claim he had filed with the VA five years earlier. "I needed the money," Szakmary said. "I was getting desperate."
He first met with Fotiou in November 1997. She assured him she only took on cases she could win - a claim she also made in letters to veterans.
"She really comes on like your friend," Szakmary said. But within months, he grew uneasy.
Although Fotiou was billing him monthly, he said she seemed to be doing little on his case. When he asked her to explain the monthly bills, she said she added up her monthly expenses and divided that figure among her clients.
Fotiou confirmed doing that, saying it was too time-consuming to itemize each bill.
Corn went to Fotiou and felt uneasy early on, as well. Plagued by war memories and emotionally fragile, he felt desperate for help. When he saw other veterans - including one in a Marine uniform - working in her office, though, he put his apprehensions aside.
Trouble started fairly quickly, he said. When he called her to check on his claim, she wouldn't call back. When he asked Fotiou for itemized bills, she refused to provide one, he said.
"She told me herself she would throw my records out," he said.
Fotiou made it clear, according to invoices and internal memos, that she would drop a case if monthly payments were not made, further stalling the veteran's claim. In a letter to one veteran, Fotiou said she would notify "the appropriate agencies not to proceed" until she received payment.
Fotiou had veterans sign contracts guaranteeing payment. In one, she demanded $1,500 down, 30 percent of any award and payment of all expenses related to filing the claim.
If a veteran couldn't or wouldn't pay, she sometimes became angry, according to internal records. In one memo, for instance, she wrote notations after each veteran's case. After one name she wrote, "Promised to pay. But hasn't. I'm going to throw file out the window." After Lewis Corn's name, she wrote, "Am sick of his B.S. Has never paid one dime since Oct. 96.
Plus cheated me on other work ... no more B.S."
continued.....
LI woman's business dealings with veterans raise suspicions
By Sandra Peddie INVESTIGATIONS TEAM
October 19, 2003
Since 1998, veterans, their advocates, local law enforcement and even a congressman have complained to the Department of Veterans Affairs about a woman they say illegally charged veterans thousands of dollars to file claims and sometimes harassed them if they couldn't or wouldn't pay her.
And even though veterans have said they gave VA investigators evidence that Karen Fotiou, 39, of Miller Place, was breaking the law, federal authorities never charged her, did not warn the veteran community overall about her activities, and even helped her continue operating, Newsday has found.
"Those of us in the legal community have been screaming about her for years, and the VA didn't do a damned thing," said Felicia Pasculli, a Bay Shore attorney who advocates for veterans.
"The government is big on lip service to veterans," she said. "The reality is that they are not a priority."
While federal investigators haven't charged Fotiou, both the Suffolk and Queens district attorneys have indicted her on multiple counts of grand larceny, scheming to defraud, and impersonating an attorney in cases not involving veterans. The veterans' cases are federal and fall outside the district attorneys' jurisdictions.
Fotiou, who has a criminal record for fraud and theft, has built a successful business on Long Island and in Queens filing VA claims for veterans. Taking advantage of a federal law that discourages lawyers from filing claims because they can't legally be paid and a confusing VA bureaucracy, Fotiou charged veterans hundreds of thousands of dollars, and sometimes withheld medical records if they didn't pay her, according to records and interviews.
She collected nearly $140,000 for filing VA claims from 63 veterans from
1996 through 1999, according to office records, invoices and interviews. In addition, records show she also charged some veterans at least $50,000 for other work that they believed was being done by her as an attorney.
Fotiou and her associates recruited clients at the Veterans Affairs Medical Center in Northport. Some were seeking treatment there for emotional or mental difficulties. A number of the veterans had little or no income.
And at least five of the men from whom she collected fees were living in homeless shelters at the time, records show.
Under federal law, it is illegal to charge veterans for filing claims with the VA. Only after a claim has been denied can a certified representative charge for handling an appeal.
"It's a misdemeanor offense," said Bruce Sackman, the special agent in charge of the VA's Inspector General's regional office. He said his office investigated Fotiou, but decided her activities weren't serious enough to prosecute.
"Just imagine this," Sackman said, "in the big scheme of crimes in the U.S. Attorney's office, you're going to go in there and say you want to prosecute someone for violating [that law]? I mean, come on. You know that's going to go over like a ton of bricks.
"That federal law," he added, "goes along with hundreds of federal laws that no one has ever been prosecuted for."
However, a woman in Tacoma, Wash., was convicted in June 2002 of illegally charging veterans for filing claims, and was ordered to pay $101,000 to 26 former prisoners of war.
Asked in a later interview about the Tacoma case, Sackman said it was a first for his agency and that it came about after the Fotiou investigation.
He noted that the Fotiou case did not involve former prisoners of war, and he said he was unaware that Fotiou had handled as many claims as she has.
To confirm the details of Fotiou's activities, Newsday interviewed 23 veterans, 13 advocates, 13 former employees and associates, and numerous officials.
But in a three-hour interview, Fotiou denied she broke the law, saying she did much of her work for free and that her clients still owe her $800,000.
Fotiou said she was only trying to help people, helping them shop and setting up bank accounts for them.
"It's not a crime to care about people and want to help," she said. "I know I didn't do anything wrong."
Fotiou said an investigator from the Inspector General's office met with her several times, revised her retainer agreement and showed her how to keep operating. Though she said she couldn't recall his name, she described him as "a wonderful man."
Thomas Valery, the sole investigator based at Northport, worked on the Fotiou case. He confirmed "there was a conversation like that," but said "it was not me" who advised her. Valery, now retired, declined to say who it was. Sackman, Valery's Manhattan-based supervisor, said he was not aware of that conversation.
"To the best of my memory," he said, "she was told to cease and desist."
Joe Sledge, the VA hospital's spokesman, said he too called the Inspector General about Fotiou, but that VA officials did nothing further.
"There wasn't a whole lot anybody could do," Sledge said.
However, when one veterans service organization, Disabled American Veterans, tried to warn veterans about Fotiou by posting flyers on the grounds, VA officials told the group to take them down, said Ray Desmond, of the DAV's Long Island chapter.
Robert Schuster, director of the VA Medical Center at Northport, did not respond to requests for an interview. Sledge said he wasn't aware of the flyers, but that he would have told them to take them down because they take paint off the walls.
Targeting Her Business
Fotiou, who at her peak had offices in Patchogue, Astoria and Hicksville, bragged to clients and associates of being a "powerhouse" firm. With a bookcase full of law books, a slick Web site featuring courtroom scenes and an ad under "lawyers" in the phone book, many clients believed she was a lawyer. She is not.
In 1995, she pleaded guilty to unauthorized practice as an attorney and was placed on three years' probation. Fotiou said she pleaded guilty only because she was pregnant and tired of going to court. She also was convicted in 1986 of credit card fraud in Virginia and petty theft in 1983 in California, but Fotiou blamed both on mistaken identity.
Meanwhile, Fotiou marketed her business aggressively, bragging to veterans about her connections with the VA, and drumming up much of her business at the Northport hospital. At least three veterans were paid to recruit clients for her.
One, Joseph Hawes, a convicted drug dealer, passed out her business cards at the hospital, according to Fotiou and numerous veterans. Fotiou said she attended many programs at the VA to solicit clients.
Veterans, meanwhile, said her best recruiting spot was a medical center support group for Vietnam veterans suffering from post-traumatic stress, the most likely group to be eligible for cash awards.
That's how James Szakmary and Lewis Corn met her. Both men, Vietnam veterans, suffer from post-traumatic stress, along with other service-related injuries. Both have had trouble paying bills and, when fellow veterans at the support group recommended Fotiou, both went to her.
However, both men now say they did not learn until later that the men who recommended Fotiou were getting paid by her.
For 17 years, Szakmary worked as an air traffic controller at Kennedy Airport. Then nightmarish war memories overwhelmed him. "I started getting too many flashbacks, and I couldn't distinguish work from reality," he said.
His bosses reassigned him to crash investigations, but the bodies of the dead triggered more flashbacks. "And they had to let me go," he said quietly.
The bills piled up. By 1997, Szakmary was behind on his mortgage and on a second mortgage, as well. He had no answer on the claim he had filed with the VA five years earlier. "I needed the money," Szakmary said. "I was getting desperate."
He first met with Fotiou in November 1997. She assured him she only took on cases she could win - a claim she also made in letters to veterans.
"She really comes on like your friend," Szakmary said. But within months, he grew uneasy.
Although Fotiou was billing him monthly, he said she seemed to be doing little on his case. When he asked her to explain the monthly bills, she said she added up her monthly expenses and divided that figure among her clients.
Fotiou confirmed doing that, saying it was too time-consuming to itemize each bill.
Corn went to Fotiou and felt uneasy early on, as well. Plagued by war memories and emotionally fragile, he felt desperate for help. When he saw other veterans - including one in a Marine uniform - working in her office, though, he put his apprehensions aside.
Trouble started fairly quickly, he said. When he called her to check on his claim, she wouldn't call back. When he asked Fotiou for itemized bills, she refused to provide one, he said.
"She told me herself she would throw my records out," he said.
Fotiou made it clear, according to invoices and internal memos, that she would drop a case if monthly payments were not made, further stalling the veteran's claim. In a letter to one veteran, Fotiou said she would notify "the appropriate agencies not to proceed" until she received payment.
Fotiou had veterans sign contracts guaranteeing payment. In one, she demanded $1,500 down, 30 percent of any award and payment of all expenses related to filing the claim.
If a veteran couldn't or wouldn't pay, she sometimes became angry, according to internal records. In one memo, for instance, she wrote notations after each veteran's case. After one name she wrote, "Promised to pay. But hasn't. I'm going to throw file out the window." After Lewis Corn's name, she wrote, "Am sick of his B.S. Has never paid one dime since Oct. 96.
Plus cheated me on other work ... no more B.S."
continued.....