Insurance Executive Sentenced to 37 Years for $100 Million Scam
December 12, 2015 by Frank Klimko, Washington correspondent, BestWeek: frank.klimko@ambest.com
BALTIMORE – A federal judge sentenced a former Maryland insurance company president to 37 years in prison for orchestrating a $100 million insurance scam that used a web of false financial documents to fool state regulators while he enjoyed a champagne lifestyle.
U.S. District Judge William D. Quarles Jr. sentenced Jeffrey Brian Cohen, of Reisterstown, Maryland, to prison followed by three years of supervised release for wire fraud, aggravated identity theft, making false statements to an insurance regulator and obstruction of justice. Four days into his trial in June, Cohen pleaded guilty to the wire fraud and other offenses.
Cohen’s swindle fueled a life that included mansions and vintage automobiles, prosecutors said. According to court documents, Cohen paid himself more than $96,000 a month, lived in a multimillion-dollar house in Florida and maintained homes in Phoenix, Reisterstown and Baltimore. He purchased luxury cars including a Bentley and Aston Martin.
“Cohen’s substantial criminal conduct may have benefited him short-term, but now Cohen is being held accountable for his criminal actions,” said Thomas Jankowski, special agent in charge, IRS Criminal Investigation, Washington D.C., Field Office. Cohen’s “sentencing stands as an example that IRS-CI, along with the U.S. Attorney’s Office and our law enforcement partners, will continue to investigate and prosecute crimes involving financial fraud.”
Cohen was president of Indemnity Insurance Corp. RRG and a previous company called Indemnity Insurance-DC. Indemnity specialized in general liability insurance, liquor liability insurance and excess liability insurance coverage focusing on the entertainment industry, such as nightclubs, concert tours and special events. According to his plea agreement, Indemnity insured more than 5,000 policyholders and collected over $100 million in premiums. But, the business was a fraud from the start. It ran from 2008 to the fall of 2013.
Prosecutors said Cohen created false financial documents, including bank statements, letters of credit and confirmations of bank account balances. Those were used to obtain ratings that did not reflect the companies’ true financial condition. According to the court’s findings, it was also probable that Cohen meant to harm a state judge, two attorneys who brought Cohen’s criminal conduct to the attention of the U.S. Department of Justice and a Delaware government official.
Indemnity Insurance was ordered into liquidation by Delaware Insurance Commissioner Karen Weldin Stewart. Investigators allege Cohen made a false claim that Indemnity held $5.1 million in cash. Cohen resigned from the company and allegedly continued efforts to prevent its seizure .
Last year, A.M. Best changed Indemnity’s Best’s Financial Strength Rating to F (In Liquidation) from E (Under Regulatory Supervision). The rating action followed the issuance of a liquidation and injunction order by the Court of Chancery of the state of Delaware (Best’s News Service, June 12, 2015).
