LEGAL TROUBLE FOR FORMER CARONE FIRMS
Eric adviser not named as defendant in ‘money laundering scheme’
A set of corporate entities co-founded by Frank Carone, Mayor Adams’ trusted political confidante, helped orchestrate a sprawling “money laundering scheme” that ultimately bilked $3.5 million from a major insurance company, according to a new federal lawsuit.
The civil lawsuit, filed this month by GEICO in Brooklyn Federal Court, alleges Financial Vision Group LLC and three other similarly named corporate entities co-founded by Carone participated in the illegal scheme by providing the seed money for it.
The elaborate conspiracy centered around illegally operating medical clinics, which provided “unnecessary” medical treatments and then “fraudulently” billed GEICO for them after receiving funding from the Financial Vision Group entities, according to the lawsuit. The Financial Vision entities’ role allowed them and other defendants in the scheme to control the “flow of money” related to GEICO insurance payouts, the suit charges.
Financial Vision Group and the three other companies with nearly identical names are described in the suit as “funding defendants,” which “submitted, or caused to be submitted” $3.5 million in fraudulent billing to GEICO via three allegedly unlicensed health care clinic chains.
“The flow of funds between the defendants illustrates a money laundering scheme,” the suit alleges.
The lawsuit goes on to allege that the scheme was implemented by several defendants — including the Financial Vision LLCs — to conceal from GEICO their involvement in what was taking place.
Carone, who served as Adams’ chief of staff during his first year as mayor and remains a key adviser, isn’t named as a defendant in the suit. The Financial Vision Group companies — which Carone co-founded with Howard and Jordan Fensterman, his former partners at the Abrams Fensterman law firm — are named as defendants.
Carone said in text messages to the Daily News that he made loans in connection to the Financial Vision Group companies that were legitimate and that he had “no role whatsoever” in anything untoward. It’s unclear how much money Carone invested in total with the Financial Vision LLCs, but his City Hall financial disclosure form listed him as holding a $500,000 “or more” stake in 2021 with a similarly named entity, Financial Vision Capital Group.
“All I did was lend money with strict underwriting guidelines,” Carone said via text of his involvement with the Financial Vision Group entities named in the GEICO suit. “I don’t know anything about the facts they allege.”
Stu Loeser, a spokesman for Carone, later clarified that Carone “had no operational role in these companies.”
“He lent them money, for which he received stock as part of the loan collateral, but had no say in what the companies did with the money once he loaned it to them,” Loeser said.
Carone said he “walked away” from the Financial Vision entities two years ago. The companies’ alleged wrongdoing predates that — spanning from July 2018 to September 2019, according to the lawsuit.
Like Carone, Howard and Jordan Fensterman and the Abrams Fensterman law firm itself are not named as defendants in the GEICO lawsuit.
Hank Sheinkopf, a spokesman for Abrams Fensterman, said that “Howard Fensterman and Frank Carone are victims of a fraud” and that “they are in the process of suing to recoup losses.”
Sheinkopf pointed to 12 separate pending lawsuits filed by an entity called Financial Vision Capital Group II in Nassau
County Supreme Court. In one of those suits, Financial Vision Capital names one of the co-defendants in the latest GEICO suit, Daniel Kandhorov, as a defendant in that state court case.
Kandhorov, a Queens businessman, has donated to Adams’ campaign and told the news outlet The City earlier this year he considers the mayor a “good friend” following revelations that he had attended the wedding of Kandhorov’s daughter.
As part of the case against Kandhorov in Nassau County, Howard Fensterman argued in court that Kandhorov misrepresented the facts when he said medical services at issue were “proper and legitimate,” according to a transcript from October.
In response, Kandhorov’s attorney countered that he was “going to reserve our right to disqualify” Abrams Fensterman as the plaintiff’s attorney because Howard Fensterman is a “member” of Financial Vision Capital Group II. Since leaving Adams’ administration in late 2022, Carone has returned to Abrams Fensterman in an “of counsel” capacity.
Aside from Kandhorov, another defendant named in GEICO’s lawsuit is Alexandr Zaitsev, a New Jersey doctor who donated $5,100 to Adams’ 2021 mayoral campaign and has previously been accused of wrongdoing similar to what’s laid out in GEICO’s lawsuit.
Zaitsev and Kandhorov also co-founded the Financial Vision Group entities named in the GEICO suit with Carone and the Fenstermans, incorporation records reviewed by The News show. Both did not return calls.
Kandhorov and Zaitsev are described in the GEICO suit as “management defendants” who oversaw the illegal medical clinics, which are referred to as the “provider defendants.”
Once the “provider” clinics were set up, the Financial Vision Group entities began to “advance” cash to the clinics matching the amount of insurance payouts they were waiting on from GEICO, the suit alleges.
The clinics would then funnel the advanced money into a web of “shell companies,” which would in turn “launder” it back to Zaitsev, Kandhorov and “other unlicensed laypersons and entities,” GEICO charges.
GEICO alleges it has identified nine such shell companies that received more than $3 million in “illicit” payouts concealed as “marketing,” “consulting” and “management” expenses. Once GEICO issued insurance payouts to the clinics, the clinics would allegedly transfer that money to the Financial Vision Group entities to pay off the advances they’d fronted.
The Financial Vision Group entities were able to turn a profit off that flow of funds by also charging “exorbitant” 150% interest rates on each advance, according to the lawsuit.
GEICO’s attorneys declined to comment beyond the lawsuit. An initial court hearing on the suit is set for April.
Although Carone has left the Adams administration, he’s still closely connected to the mayor. He recently confirmed he plans to assist the mayor’s legal defense fund as the FBI continues to investigate his 2021 campaign over ties to the Turkish government. He also plans to serve as chairman for Adams’ 2025 reelection bid.