How Simple Due Diligence Could Have Saved 20 Lives

The deadly limo accident in Schoharie, N.Y, provides a somber reminder of the value of performing due diligence and conducting background investigations.
By: | October 22, 2018 • 6 min read

As details are revealed about the deadliest U.S. transportation crash in a decade, several tragic truths have started to come out, too.

In fact, many safety violations and prior criminal convictions have since been reported, all coming back to Prestige Limousine Chauffeur Service; its owner, Shahed Hussain; its operator, Nauman Hussain; and the limo’s driver, Scott Lisinicchia.

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Any and all of these facts might have given the victims pause had they been aware.

As with any heartbreaking loss of life, it is vital to consider the red flags that could have prevented the deadly accident in Schoharie, New York, which took 20 lives. This tragic accident happened just 40 miles west of our corporate headquarters. I (and several of my employees) personally know or have worked with family members related to the young men and women involved in this terribly sad incident.

I felt compelled to write about what, if anything, can be done to protect the public and the due diligence procedures employers can implement to potentially prevent a tragedy in the future.

Performing due diligence and conducting background investigations is vital for companies that provide services to the public, offer transportation options or are hiring employees to work for them. Consumers and employers alike need to be aware the highest level of safety and security can only be obtained by conducting investigations prior to hiring an employee or a company to provide services.

In many instances, something as simple as a Google search or check of a company’s online reviews can turn up relevant details.

Consider the following information that has come to light following the tragic crash in Schoharie. The limousine involved in the accident, which replaced a broken-down “party bus” initially reserved by the victims, was a 2001 Ford Excursion. The limo, booked hurriedly and at the last minute due to the breakdown of the preferred vehicle, had not been properly converted to a stretch limo. Since the limo was altered after leaving the factory, it skirted the tough safety guidelines it should have otherwise met, making it unsafe to drive.

Consumers and employers alike need to be aware the highest level of safety and security can only be obtained by conducting investigations prior to hiring an employee or a company to provide services. In many instances, something as simple as a Google search or check of a company’s online reviews can turn up relevant details.

In addition, the New York State Department of Transportation and September 2018 federal records deemed the limousine unfit for use. At that time, the vehicle was placed out of service and the owner was warned not to operate the vehicle.

In addition, according to the federal Motor Carrier Safety Administration, the vehicle was improperly classified given the number of seats it contained. Limousines can only have between 9 and 15 passengers, including the driver. Any automobile capable of carrying more, like this one, would need to be classified as a bus.

In details that have been revealed since the crash, New York State Governor Mario Cuomo revealed that the vehicle’s chassis, suspension and brakes were all unsafe. Furthermore, federal records show the company had four vehicles taken out of service after undergoing five inspections in the last two years, a whopping 80 percent failure rate.

Tragically, text messages that have been made public since the crash reveal that some of the victims complained about the shoddy condition of the vehicle and the loud noises they heard coming from the engine while they were en route to their destination.

Cuomo has also reported that the limousine driver, Scott Lisinicchia, did not have the proper commercial driver license (CDL) with a passenger endorsement that would be required to operate the vehicle. In addition, the driver had been charged with unlawful possession of marijuana in 2010. After being pulled over during a traffic stop in 2013, Lisinicchia was charged with criminal possession of a controlled substance, unlawful possession of marijuana and an equipment violation.

Prestige Limousine Chauffeur Service had plenty of issues of its own. The company’s owner, Shahed Hussain, fled Pakistan in 1994 after being arrested for murder. He was able to escape, because his father paid a bribe of $1,350, allowing him to leave with a human trafficker and travel first from Moscow to Mexico and then into the United States. Hussain used a fake British passport to achieve this, according to court testimony heard in 2010.

Once settled in Albany, N.Y., Hussain was involved in a scheme where he conspired with a crooked DMV employee to sell fake driver licenses to immigrants. Instead of facing up to 25 years in prison and a $250,000 fine for the federal fraud crime, he only paid a $100 fine and served no time, because he became an FBI informant. His work with the FBI led to the controversial arrest and conviction of several suspected terrorists.

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In 2006, Hussain purchased a dilapidated motel and was sued for taking reservation money for unavailable rooms. In 2017, this property, the Crest Inn Suites and Cottages in Gansevoort, New York, failed two building inspections and was cited for several violations, including improper fittings and lack of support for the waste lines. At that time, all residents were forced to evacuate.

Hussain is believed to be back in Pakistan, but his son, Nauman Hussain, was arrested after the accident on charges of criminally negligent homicide. Nauman Hussain was caught by police in what appeared to be an attempt to flee in a vehicle filled with his personal belongings.

What can be done to prevent this sort of horrific incident?

Thorough personal research before committing to work done by contractors, maintenance workers or rentals of any kind is critical. It pays to be informed. Peruse Google, Yelp, Facebook, TripAdvisor, Angie’s List and other websites that might provide reviews of a company and listen to your gut. Speak to others who have used the companies you are considering and ask for their opinions. If something strikes you as problematic, absolutely do not move forward.

We recommend any company involved in the transportation industry conduct the following background investigation searches:

  • Social Security and Address History Searches
  • Statewide, Federal and Criminal Searches
  • DMV Searches — reveals past violations or issues of licensure
  • Foreign Assets Control (OFAC) — ensures companies aren’t doing business with firms being sanctioned by the U.S. or individuals involved in terrorism, narcotics and/or other disreputable activities
  • Infinity Screening — periodic post-employment background investigations
  • E-Verify — verifies an applicant’s legal eligibility to work in the U.S.
  • Drug Screening
  • Employment Verification
  • Department of Transportation Verification — provides an applicant’s driving position safety performance history within the last 3 years
  • Vendor Integrity Investigations — critical if you are hiring subcontractors on behalf of your place of employment
  • Social Media Investigations — conducted on an ongoing basis, social media investigations provide a wealth of knowledge
  • For New York State companies, we also recommend License Event Notification System (LENS) — automated reporting system that sends ongoing license record changes, such as accidents and convictions, by email

If something does turn up during the course of an investigation, you can use your judgment to determine whether it is a deal-breaker given your circumstances. Having this information on your side is critical, however, in protecting the well-being of your customers, employees, friends and family. It’s also essential when it comes to reducing your liability as a business owner. &

Mario Pecoraro is President and CEO of Alliance Worldwide Investigative Group Inc., which specializes in background screening and insurance fraud investigations and has grown into a national/international investigative firm with a variety of services including pre- and post-employment screening customizable to any industry. He is also owner of sister company, Avvocato Litigation Support International, Inc., which is powered by Alliance Worldwide Investigative Group, providing attorneys and law firms all forms of legal support. In addition, Preferred Adjustment Company, powered by Alliance, provides full service claims handling and property/casualty adjusting services for insurance carriers, self-insured companies and attorneys. Mario can be reached at sales@allianceinvestigative.com. For more information visit our website at www.allianceinvestigative.com.

Risk Scenario

A Recall Nightmare: Food Product Contamination Kills Three Unborn Children

A failure to purchase product contamination insurance results in a crushing blow, not just in dollars but in lives.
By: | October 15, 2018 • 9 min read
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.

PART ONE: THE HEAT IS ON

Reilly Sheehan, the Bethlehem, Pa., plant manager for Shamrock Foods, looks up in annoyance when he hears a tap on his office window.

Reilly has nothing against him, but seeing the face of his assistant plant operator Peter Soto right then is just a case of bad timing.

Sheehan, whose company manufactures ice cream treats for convenience stores and ice cream trucks, just got through digesting an email from his CFO, pushing for more cost cutting, when Soto knocked.

Sheehan gestures impatiently, and Soto steps in with a degree of caution.

“What?” Sheehan says.

“I’m not sure how much of an issue this will be, but I just got some safety reports back and we got a positive swipe for Listeria in one of the Market Streetside refrigeration units.”

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Sheehan gestures again, and Soto shuts the office door.

“How much of a positive?” Sheehan says more quietly.

Soto shrugs.

“I mean it’s not a big hit and that’s the only place we saw it, so, hard to know what to make of it.”

Sheehan looks out to the production floor, more as a way to focus his thoughts than for any other reason.

Sheehan is jammed. It’s April, the time of year when Shamrock begins to ramp up production for the summer season. Shamrock, which operates three plants in the Middle Atlantic, is holding its own at around $240 million in annual sales.

But the pressure is building on Sheehan. In previous cost-cutting measures, Shamrock cut risk management and safety staff.

Now there is this email from the CFO and a possible safety issue. Not much time to think; too much going on.

Sheehan takes just another moment to deliberate: It’s not a heavy hit, and Shamrock hasn’t had a product recall in more than 15 years.

“Okay, thanks for letting me know,” Sheehan says to Soto.

“Do another swipe next week and tell me what you pick up. I bet you twenty bucks there’s nothing in the product. That swipe was nowhere near the production line.”

Soto departs, closing the office door gingerly.

Then Sheehan lingers over his keyboard. He waits. So much pressure; what to do?

“Very well then,” he says to himself, and gets to work crafting an email.

His subject line to the chief risk officer and the company vice president: “Possible safety issue: Positive test for Listeria in one of the refrigeration units.”

That night, Sheehan can’t sleep. Part of Shamrock’s cost-cutting meant that Sheehan has responsibility for environmental, health and safety in addition to his operations responsibilities.

Every possible thing that could bring harmful bacteria into the plant runs through his mind.

Trucks carrying raw eggs, milk and sugar into the plant. The hoses used to shoot the main ingredients into Shamrock’s metal storage vats. On and on it goes…

In his mind’s eye, Sheehan can picture the inside of a refrigeration unit. Ice cream is chilled, never really frozen. He can almost feel the dank chill. Salmonella and Listeria love that kind of environment.

Sheehan tosses and turns. Then another thought occurs to him. He recalls a conversation, just one question at a meeting really, when one of the departed risk management staff brought up the issue of contaminated product insurance.

Sheehan’s memory is hazy, stress shortened, but he can’t remember it being mentioned again. He pushes his memory again, but nothing.

“I don’t need this,” he says to himself through clenched teeth. He punches up his pillow in an effort to find a path to sleep.

PART TWO: STRICKEN FAMILIES

“Toot toot, tuuuuurrrrreeeeeeeeettt!”

The whistles of the three lifeguards at the Bradford Community Pool in Allentown, Pa., go off in unison, two staccato notes, then a dip in pitch, then ratcheting back up together.

For Cheryl Brick, 34, the mother of two and six-months pregnant with a third, that signal for the kids to clear the pool for the adult swim is just part of a typical summer day. Right on cue, her son Henry, 8, and his sister Siobhan, 5, come running back to where she’s set up the family pool camp.

Henry, wet and shivering and reaching for a towel, eyes that big bag.

“Mom, can I?”

And Cheryl knows exactly where he’s going.

“Yes. But this time, can you please bring your mother a mint-chip ice cream bar along with whatever you get for you and Siobhan?”

Henry grabs the money, drops his towel and tears off; Siobhan drops hers just as quickly, not wanting to be left behind.

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“Wait for me!” Siobhan yells as Henry sprints for the ice cream truck parked just outside of the pool entrance.

It’s the dead of night, 3 am, two weeks later when Cheryl, slumbering deeply beside her husband Danny, is pulled from her rest by the sound of Siobhan crying in their bedroom doorway.

“Mom, dad!” says Henry, who is standing, pale and stricken, in the hallway behind Siobhan.

“What?” says Danny, sitting up in bed, but Cheryl’s pregnancy sharpened sense of smell knows the answer.

Siobhan, wailing and shivering, has soiled her pajamas, the victim of a severe case of diarrhea.

“I just barfed is what,” says Henry, who has to turn and run right back to the bathroom.

Cheryl steps out of bed to help Siobhan, but the room spins as she does so.

“Oh God,” she says, feeling the impact of her own attack of nausea.

A quick, grim cleanup and the entire family is off to a walk-up urgent care center.

A bolt of fear runs through Cheryl as the nurse gives her the horrible news.

“Listeriosis,” says the nurse. Sickening for children and adults but potentially fatal for the weak, especially the unborn.

And very sadly, Cheryl loses her third child. Two other mothers in the Middle Atlantic suffer the same fate and dozens more are sickened.

Product recall notices from state regulators and the FDA go out immediately.

Ice cream bars and sandwiches disappear from store coolers and vending machines on corporate campuses. The tinkly sound of “Pop Goes the Weasel” emanating from mobile ice cream vendor trucks falls silent.

Notices of intent to sue hit every link in the supply chain, from dairy cooperatives in New York State to the corporate offices of grocery store chains in Atlanta, Philadelphia and Baltimore.

The three major contract manufacturers that make ice cream bars distributed in the eight states where residents were sickened are shut down, pending a further investigation.

FDA inspectors eventually tie the outbreak to Shamrock.

Evidence exists that a good faith effort was underway internally to determine if any of Shamrock’s products were contaminated. Shamrock had still not produced a positive hit on any of its products when the summer tragedy struck. They just weren’t looking in the right place.

PART THREE: AN INSURANCE TANGLE

Banking on rock-solid relationships with its carrier and brokers, Shamrock, through its attorneys, is able to salvage indemnification on its general liability policy that affords it $20 million to defray the business losses of its retail customers.

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But that one comment from a risk manager that went unheeded many months ago comes back to haunt the company.

All three of Shamrock’s plants were shuttered from August 2017 until March 2018, until the source of the contamination could be run down and the federal and state inspectors were assured the company put into place the necessary protocols to avoid a repeat of the disaster that killed 3 unborn children and sickened dozens more.

Shamrock carried no contaminated product coverage, which is known as product recall coverage outside of the food business. The production shutdown of all three of its plants cost Shamrock $120 million. As a result of the shutdown, Shamrock also lost customers.

The $20 million payout from Shamrock’s general liability policy is welcome and was well-earned by a good history with its carrier and brokers. Without the backstop of contaminated products insurance, though, Shamrock blew a hole in its bottom line that forces the company to change, perhaps forever, the way it does business.

Management has a gun to its head. Two of Shamrock’s plants, including Bethlehem, are permanently shuttered, as the company shrinks in an effort to stave off bankruptcy.

Reilly Sheehan is among those terminated. In the end, he was the wrong person in the wrong place at the wrong time.

Burdened by the guilt, rational or not, over the fatalities and the horrendous damage to Shamrock’s business. Reilly Sheehan is a broken man. Leaning on the compassion of a cousin, he takes a job as a maintenance worker at the Bethlehem sewage treatment plant.

“Maybe I can keep this place clean,” he mutters to himself one night, as he swabs a sewage overflow with a mop in the early morning hours of a dark, cold February.

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Risk & Insurance® partnered with Swiss Re Corporate Solutions to produce this scenario. Below are their recommendations on how to prevent the losses presented in the scenario. This perspective is not an editorial opinion of Risk & Insurance.®.

Shamrock Food’s story is not an isolated incident. Contaminations happen, and when they do they can cause a domino effect of loss and disruption for vendors and suppliers. Without Product Recall Insurance, Shamrock sustained large monetary losses, lost customers and ultimately two of their facilities. While the company’s liability coverage helped with the business losses of their retail customers, the lack of Product Recall and Contamination Insurance left them exposed to a litany of risks.

Risk Managers in the Food & Beverage industry should consider Product Recall Insurance because it can protect your company from:

  • Accidental contamination
  • Malicious product tampering
  • Government recall
  • Product extortion
  • Adverse publicity
  • Intentionally impaired ingredients
  • Product refusal
  • First and third party recall costs

Ultimately, choosing the right partner is key. Finding an insurer who offers comprehensive coverage and claims support will be of the utmost importance should disaster strike. Not only is cover needed to provide balance sheet protection for lost revenues, extra expense, cleaning, disposal, storage and replacing the contaminated products, but coverage should go even further in providing the following additional services:

  • Pre-incident risk mitigation advocacy
  • Incident investigation
  • Brand rehabilitation
  • Third party advisory services

A strong contamination insurance program can fill gaps between other P&C lines, but more importantly it can provide needed risk management resources when companies need them most: during a crisis.



Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at dreynolds@lrp.com.