Insurance giant seeks to question Adams adviser Frank Carone in ‘money laundering’ lawsuit

One of the country’s largest auto insurance companies is seeking to question Frank Carone, Mayor Adams’ political confidante, as part of a civil lawsuit alleging corporate entities Carone co-founded were involved in orchestrating a sprawling “money laundering scheme,” court papers reveal.

The alleged scheme, which was first reported on by the Daily News last December when the suit was filed, centers around the claim that the corporate entities, known as the Financial Vision Groups, provided funding for a web of illegally operating medical clinics. Those clinics, in turn, billed major U.S. auto insurer GEICO for some $3.5 million worth of “no-fault” medical treatments that were either “unnecessary” or never provided at all, according to GEICO’s suit, which alleges fraud and is requesting reimbursement and damages.

In a new development, GEICO’s attorneys filed a previously unreported letter in Brooklyn Federal Court in late June notifying the presiding judge they plan to depose Carone during the discovery process in the case. The June 28 letter doesn’t make clear what GEICO’s lawyers specifically want to ask Carone about or when they hope to hold the deposition, during which Carone would testify under oath.

A GEICO attorney didn’t respond to emailed questions this week.

Carone, the mayor’s former chief of staff who remains a key adviser to him, isn’t named as a defendant in GEICO’s lawsuit, but the three Financial Vision entities he helped launch are. Asked about the suit last year, Carone said he played “no operational role” in the Financial Vision entities after co-founding them and that he has since “walked away” from them.

A spokesman for Carone also said at the time that his involvement mostly related to lending money to the entities and receiving stock options in exchange for doing so.

On Monday, Carone, a licensed lawyer, said he hasn’t been contacted by GEICO’s attorneys, but that he will sit for a deposition if legally required. “I will follow whatever the law requires,” he told The News in a text.

The letter says GEICO’s lawyers also plan to question all of the suit’s named defendants, including Daniel Kandhorov, a businessman and friend to Adams, who has with his wife donated to the legal defense fund the mayor launched in response to the federal investigation into his campaign’s ties to Turkey, city records show.

Incorporation records show Kandhorov co-founded the Financial Vision vehicles with Carone and others. But Kandhorov’s also accused in the GEICO suit of having taken on a leading role in the medical clinics that allegedly pumped out the fraudulent insurance claims.

In a separate legal action in Nassau County that remains pending, Carone’s former law partner and fellow Financial Vision co-founder Howard Fensterman is suing Kandhorov on allegations he defrauded them during the Financial Vision affair.

In their latest court-filed letter, GEICO’s lawyers also notified the judge it plans to seek testimony from a certified public accountant who can speak to the fact that the funding agreements between the Financial Vision entities and the allegedly illegal medical clinics “do not comport with general business practices.” Due to the convoluted financial agreement, GEICO’s suit alleges “the flow of funds” that took place illustrated “a money laundering scheme.”

Legal issues related to no-fault insurance have dogged Carone since the early days of the Adams administration.

Shortly after Adams became mayor in January 2022, GEICO subpoenaed Carone, then Adams’ chief of staff, for documents as part of a separate no-fault insurance fraud lawsuit against some of the same defendants listed in the latest action. In response to the subpoena, Carone, who wasn’t personally named as a defendant in that suit, either, turned over records that have yet to be publicly released, court papers show.

Having played a key role in Adams’ first Brooklyn borough president campaign, Carone’s one of the mayor’s most trusted political advisers.

The Brooklyn-born barrister, who resigned as Adams’ chief of staff in late 2022, is expected to chair the mayor’s 2025 campaign and said last week the reelection team’s in the “final push” for fundraising.

“We will be in a position to finish all campaign fundraising by October, a full eight months ahead of the June primary,” Carone told Politico last Tuesday.

Simultaneously with working on Adams’ campaign, Carone’s running Oaktree Solutions, a consulting firm he launched upon leaving City Hall that has since registered to lobby members of the mayor’s administration on behalf of private business interests.

Originally Published: July 24, 2024 at 4:15 p.m.