Former Inland Empire Insurance Agent Sentenced to Federal Prison for Submitting Fraudulent Loan Applications to Pay for Premiums
RIVERSIDE, California – An Upland man who pleaded guilty to federal bank fraud and tax charges for submitting fraudulent loan applications in a scheme that caused nearly $6 million in losses has been sentenced to one year and one day in federal prison.
Derek Richard Brewart, 53, a former licensed insurance agent and owner of Hamilton Brewart Insurance Agency (HBIA) in Upland, was sentenced Wednesday afternoon by United States District Judge Jesus G. Bernal. In addition to the prison term, Judge Bernal ordered Brewart to pay $5,926,430 in restitution to the victim, Universal Bank of West Covina. As part of the sentence, Brewart is also required to work with the Internal Revenue Service to determine the amount owed in unpaid taxes.
Brewart pleaded guilty in February 2015 to two charges – bank fraud and filing a false tax return. As part of the scheme, Brewart secured loans from Universal Bank in his clients’ names without their knowledge or authorization. HBIA brokered the sale of insurance from various carriers who wrote general liability, earthquake, malpractice, worker’s compensation and other policies. Because of the significant cost of these policies, HBIA clients sometimes sought loans so they could pay the premiums associated with the policies over a period of time.
Over the course of about four years, Brewart submitted fraudulent loan applications to Universal Bank to secure premium financing loans. The loans were submitted on behalf of HBIA clients, who did not know that Brewart was submitting the applications. The proceeds of the loans were used to pay HBIA’s expenses.
In some cases, Brewart took premium payments from clients and never obtained insurance for them.
“This defendant used his insurance expertise to engage in a scheme that violated the trust given to him as a licensed agent and cost a local bank nearly $6 million,” said United States Attorney Eileen M. Decker. “His clients trusted him to protect their assets, but he repaid them by placing their assets at risk for his own financial gain.”
When he pleaded guilty, Brewart also admitted that he filed false tax returns for tax years 2010 and 2011. As part of his guilty plea, Brewart admitted that he failed to report to the Internal Revenue Service approximately $785,922 of the income he received for the two years.
The investigation into Brewart’s fraudulent scheme and tax fraud violations was jointly conducted by the Federal Bureau of Investigation, the California Department of Insurance and IRS Criminal Investigation.