Louisiana State Police have begun a sweeping criminal investigation of the Texas law firm McClenny Moseley & Associates and the Alabama construction contractor Apex Roofing & Restoration, two of the companies at the center of what state officials call the largest home insurance fraud in state history.
A State Police report filed last month says its New Orleans-based Insurance Fraud/Auto Theft Unit is leading the investigation, which is based on an earlier probe by the Louisiana Department of Insurance.
The state police report says LDI’s fraud investigators interviewed 25 Apex customers who reported that MMA collected their insurance proceeds even though they “confirmed they never hired MMA to represent them.”
State Police investigators told WWL-TV they are starting their investigation with five St. Tammany Parish cases and expanding from there. The report says they are considering possible criminal charges for insurance fraud, forgery, bank fraud and unlawful solicitation by attorneys.
In May, the Insurance Department fined MMA, its founding partners, James McClenny and Zach Moseley, and the firm’s former Louisiana partner William Huye, a record $2 million for what Insurance Commissioner Jim Donelon called an “illegal insurance scheme.”
Huye was disbarred in Louisiana and moved to Austin. MMA no longer has any licensed Louisiana attorneys. It closed its office in New Orleans and is now all but insolvent after a string of multimillion-dollar lawsuits by its financiers. But Apex, which hired MMA to represent it when it ventured into the Louisiana market in 2021, is still operating in several states, including Louisiana, where it maintains offices in Lafayette and Covington.
Dueling claims
By naming Apex, the State Police report echoes a federal court order from U.S. Magistrate Judge Michael North in March, which said Apex “assisted” MMA as its “agent” in what North called the “Apex scheme.” North’s ruling also identified a separate “scheme” by MMA to pay $14 million to an Arizona marketing firm, Velawcity, to sign up thousands of Louisiana clients using improper online messages.
Apex responded by filing a malpractice lawsuit against MMA, in which it denied conspiring with the law firm or receiving anything of value to help it sign up clients.
In a secret recording obtained by WWL-TV, Moseley, MMA’s sole remaining attorney, is heard admitting to his staff in New Orleans that MMA used a document Apex customers had signed with the roofer, called an assignment of benefits, to go after the homeowners’ insurance money.
“If we tell the insurance company we represent the roofing company, they’re going to tell us to (expletive) off and they’re not going to ever negotiate with us,” Moseley explained on March 6. “But since we have the rights of the homeowner, let’s tell the insurance company we are the homeowner and … they’ll negotiate with us quicker, and they will pay us faster.”
Peter Butler, a New Orleans attorney now representing Apex, told WWL-TV that MMA had misled Apex about what it did with Apex customers’ insurance claims.
“Apex is disappointed that it was mentioned in an opinion recently rendered when it never had a chance to give its side of the story to the court,” Butler said in April. “Apex’s position is that it was not the agent for MMA, ever. To the contrary, by law, as Apex’s attorney, MMA became Apex’s agent.”
Apex alleges MMA misled it by directing roofing employee Trish Drummond to sign contracts on behalf of Apex customers so they would officially hire MMA. The lawsuit cites an email March 7, 2022, from MMA paralegal Mary Katherine Smith, the wife of then-partner Pate Smith, to Drummond, instructing her to write “Trish Drummond OBO client name” on attorney employment contracts.
But a WWL-TV review of court filings found a contract signed by Drummond on a homeowner’s behalf a full month before MMA allegedly directed her to do so. On Feb. 7, 2022, Drummond signed on behalf of a Covington homeowner and listed Apex’s legal director, Franky Despino, as the client. On the line for the client’s phone number is Apex’s number.
Butler said in a statement Monday that more documents would be presented in court to show MMA had directed Apex to sign on behalf of homeowners “on or before” Feb. 7. But he declined to provide WWL-TV with that documentation.
‘It makes me sick’
Two former Apex sales staffers told WWL-TV in interviews that they became key cogs in MMA’s efforts to collect insurance money for unwitting storm victims.
Dan Shaw trained Apex’s salespeople, both the Level 1 door-knockers and the Level 2s and 3s who came in to close deals. He kept training documents showing the Level 2s and 3s were supposed to get the homeowners to sign forms to “onboard” MMA.
“It makes me sick that the homeowners were preyed on,” Shaw said. “They thought that they were in good faith doing the right thing. They were being told not the whole story from Apex.”
Shelby Lacey started as a Level 1 door-knocker in January 2022, and over the next year, she said she worked her way up to a closer and supervisor at Apex’s Covington office. She said she and other Apex salespeople were led to believe MMA was serving as Apex’s “in-house lawyers” to make sure insurance companies paid quickly.
But she said she grew suspicious when she was told her compensation depended not only on how many deals she inked for Apex, but also how many customers signed contracts with MMA. Lacey was fired by Apex and started her own roofing company, Skyline Roofing & Construction. Last month, she sued Apex.
In the lawsuit, Lacey alleges her compensation from Apex “was often disallowed or ‘charged back’ to (her), when a property owner failed to sign a separate representation agreement with McClenny Moseley.”
“We would not be paid for that particular claim if they did not sign the document,” she said in an interview.
“Apex disagrees with the allegations made by Lacey and Shaw and will defend itself in the suit,” Butler said Monday. “Apex cannot comment further at this time due to ongoing litigation.”
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