Agents behaving badly: 4 cases of caught in the act
While of course the vast majority of insurance agents and financial advisors behave ethically and in the best interest of their clients, there are always going to be some bad eggs out there who take advantage of clients for their own personal gain.
Often their misdeeds are ultimately discovered and brought to light, typically with the help of wronged clients and investigators from law enforcement and/or insurance companies.
What follows are four such stories of insurance fraud that made headlines recently in the communities where they occurred – spanning from the shockingly audacious to the desperate and remorseful to the just not so smart.
Give it a quick read, and if you have any thoughts or want to share other examples of agents behaving badly, please do so on this thread: Agents behaving badly
• Producer who paid himself $96,000 per month now has 37-year jail sentence
A “chronic con artist” who was planning to commit murder to prevent his insurance fraud schemes from coming to light was sentenced to 37 years in jail and to pay restitution of $137 million by a federal judge in Maryland in late 2015.
Jeffrey Brian Cohen, 40, received the sentence after pleading guilty to the offenses of wire fraud, aggravated identity theft, making false statements to an insurance regulator and obstruction of justice. His company, Indemnity Insurance Corp., was a major player in bar and nightclub insurance.
From a release detailing the case from the U.S. Attorney’s Office, District of Maryland:
According to his plea agreement, Cohen acted as the president and chairman of the board of a Delaware corporation Indemnity Insurance Corporation RRG (Indemnity). Cohen previously controlled a District of Columbia corporation called Indemnity Insurance Corporation of DC, Risk Retention Group (Indemnity-DC), which was a predecessor entity to Indemnity. Both companies were located in Sparks, Maryland, and provided general liability insurance, liquor liability insurance, and excess liability insurance coverage to their customers, which were individuals and companies involved in the entertainment industry, such as nightclubs, concert tours, and special events. Both companies operated in several states…
Cohen admitted that from January 2008 to the fall of 2013, he obtained insurance premiums by falsely representing the financial status of Indemnity and other Cohen controlled entities to some policyholders, a rating agency, independent financial auditors, the DC Insurance Commissioner and the Delaware Insurance Commissioner.
Specifically, Cohen created false financial documents, including bank statements, letters of credit, and confirmations of bank account balances. Cohen transmitted some of these false documents to A.M. Best in order to obtain financial ratings for Indemnity and Indemnity-DC that were not based on the companies’ true financial condition. Cohen then touted the A.M. Best ratings to potential policyholders, policyholders, and regulatory agencies. Cohen also transmitted false emails, management representation letters, financial statements, and other documents to the auditing firms Marcum and BDO, so the auditors would provide an unqualified audit opinion on Indemnity-DC and Indemnity financial statements that Cohen knew were false. Cohen used the name and identity of a bank official to create a false bank confirmation.
According to court documents, as of 2013, Cohen paid himself more than $96,000 a month. He lived in a multi-million dollar house in Florida, and maintained homes at different points in Phoenix, Reisterstown (Md.) and Baltimore. He purchased luxury cars including a Bentley and an Aston Martin.
To conceal the true financial condition of the companies, Cohen transmitted fraudulent audited and unaudited financial statements for Indemnity-DC and Indemnity to the DC Insurance Commissioner and the Delaware Insurance Commissioner. Cohen also made false statements to representatives of the Delaware Insurance Commissioner in June 2012.
According to court documents, more than 5,000 policyholders paid more than $100 million in premiums for coverage that was illusory because Cohen’s companies never had sufficient capacity to cover its loss exposure. Many of these policyholders suffered additional harm when the fraud scheme collapsed in 2013… The Court made a factual finding that the actual losses caused by the fraud scheme exceeded $100 million.
A Baltimore Sun article about the case said when federal agents arrested him in June 2014, they found firearms, disguises and a notebook with what appeared to be a “hit list” that included the Delaware judge overseeing the liquidation of his business and Delaware’s insurance commissioner/lieutenant governor. He also had a Lexus SUV with vanity license plates “RISKTKR.”
If you’ve got a few minutes to kill, check out the YouTube video of the Jeffrey B. Cohen Estate Sale to see how well crime paid – for a while.
Next page: Advisor commits suicide but repays his victims via his life insurance
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