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TRENTON
- Attorney General Stuart Rabner and Criminal
Justice Director Gregory A. Paw announced
that a Pennsylvania man and an Essex County
woman have been charged today in a state
grand jury indictment for their roles in
a $221,000 insurance bond premium theft
scam.
According to Insurance Fraud Prosecutor
Greta Gooden Brown, Michael P. Kelly, 57,
of Mt. Bethel, Pennsylvania, and Kathryn
E. Temple, 34, of Caldwell, were each charged
with second-degree and third-degree theft
by failure to make required disposition.
The indictment alleges that between July
22 and Sept. 19, 2005, Kelly and Temple
stole $221,182 by failing to provide legitimate
bonds to contractors. During that time period,
Kelly and Temple owned, operated, or controlled
the Apple Agency, a licensed insurance agency,
located in Mt. Olive. A contractor, Coleman
Spohn Corporation, contacted the Apple Agency
to purchase bonds in connection with performance
of two construction projects. Typically,
sub-contractors are required to post performance
bonds with general contractors to insure
that the sub-contractor’s construction
performance meets all specifications of
the building contract.
According
to the indictment, Kelly and Temple, through
the Apple Agency, delivered two purportedly
valid performance bonds from Builders and
Contractors Assurance Company, Ltd. in the
Bahamas. It is alleged that the premiums
for one bond was in the amount of $51,531
and for the second bond was in the amount
of $169,651. The face amounts of the bonds
were $2,061,266 and $5,655,023 respectively.
It is further alleged that Kelly and Temple
did not provide valid bonds and stole the
$221,182 premium money for their own use.
State
Investigator Gregory Pringle, and Deputy
Attorney General Dennis Kwasnik coordinated
the investigation. Kwasnik represented the
Office of Insurance Fraud Prosecutor before
the state grand jury. The Department of
Banking and Insurance routinely assists
the Office of the Insurance Fraud Prosecutor
with the investigation and prosecution of
licensed insurance agents. This assistance
enables the state to coordinate criminal
investigations and prosecutions with any
imposition of licensing sanctions in all
such cases in order to protect the public.
"It
is particularly troublesome when persons
operating insurance agencies engage in fraud,"
said Prosecutor Brown. "The public
places a great deal of trust in insurance
products such as performance bonds and expects
to be able to rely on bonds if necessary.
My office will continue to investigate and
prosecute this type of misconduct wherever
appropriate."
The
indictment is merely an accusation. The
defendant is presumed to be innocent until
proven guilty beyond a reasonable doubt.
Under state law, crimes of the second degree
carry a maximum punishment of 10 years in
state prison and a criminal fine of $150,000,
while crimes of the third degree carry a
maximum punishment of five years in state
prison and a criminal fine of $15,000.
Prosecutor
Brown noted that some important cases start
with anonymous tips. People who are concerned
about insurance cheating and have information
about a fraud can report it anonymously
by calling the toll-free hotline 1-877-55-FRAUD
or visiting the Web site www.NJInsuranceFraud.org.
State regulations permit an award to be
paid to an eligible person who provides
information that leads to an arrest, prosecution
and conviction for insurance fraud.
The
Office of Insurance Fraud Prosecutor was
established by the Automobile Insurance
Cost Reduction Act of 1998. The office is
the centralized state agency that investigates
and prosecutes both civil and criminal insurance
fraud, as well as Medicaid fraud.
>> Kelly
et al. Indictment (88k pdf) plug-in
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