Fraud in the industry reared its ugly head again this past week when a pair of new cases came to light.
On July 25, a life insurance agent was charged with mail fraud, money laundering and asset forfeiture by the U.S. Attorney’s Office in Baton Rouge, La., for his alleged role in devising a scheme to defraud New York Life and Lincoln Financial by receiving commission payments for selling life insurance policies based on false statements and representations.
Timothy R. Schlatre, 34, of Denham Springs, La., allegedly conspired, through March 2011, with six other individuals to submit false information to the companies regarding the six applicants' net worth and annual income. Policies were issued, leading to substantial fraudulent commission payments to Schlatre. Because the policy values were so large, Schlatre allegedly provided the premium payments on behalf of the applicants, which constitutes rebating, a practice also prohibited by state law and by both insurance companies.
The U.S. Attorney’s Office wrote in the bill of information about the case that Schlatre defrauded New York Life and Lincoln Financial into issuing life insurance policies in excess of $100 million, resulting in commissions in excess of hundreds of thousands of dollars.
Schlatre faces a maximum sentence of 30 years in prison and fines of up to $500,000 or twice the gross gain or loss from the offense, whichever is larger.
On July 27, two Minneapolis women pleaded guilty to stealing more than $1.6 million from ING, where they were employed, according to documents filed in U.S. District Court in Minneapolis.
Angela Patrice Madison, 41, and Tracy Dione Jackson, 42, face up to 20 years in prison and fines of $250,000. As a policy plan coordinator for the employee benefits team, Madison admitted in a pleadings document that she was personally responsible for stealing about $1.1 million while handling requests from ING clients who sought to obtain loans or surrender their life insurance policies. She generated false statements in the names of various people, including Jackson, who cashed the checks and split the proceeds with Madison, court documents show.
According to a Minneapolis Star Tribune report, the 9-year scheme came to light after an anonymous tip to bank officials.
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