Former Fugitive Admits Selling Bogus Insurance Policies
CAMDEN, N.J. – A former insurance broker admitted today to conspiring to defraud purchasers of commercial liability insurance by overcharging for policies as well as issuing some customers bogus policies, U.S. Attorney Paul J. Fishman announced.
Thomas M. Grubb Jr., 58, of Voorhees, N.J., pleaded guilty before Chief U.S. District Judge Jerome B. Simandle in Camden federal court to an indictment charging him with one count of conspiracy to commit mail fraud and wire fraud.
Grubb was originally arrested on April 14, 2008, and charged by complaint with one count of obstruction of justice. On Nov. 5, 2008, Grubb failed to appear in court and a warrant was issued for his arrest.
Special agents of IRS-Criminal Investigation apprehended Grubb in Port Charlotte, Fla., on Dec. 6, 2011.
According to documents filed in this case and statements made in court:
Grubb was employed at Aconorate Insurance Agency in Hammonton, N.J., when Aconorate engaged in a scheme to defraud its clients by overcharging them for commercial liability insurance and selling them policies that were not issued by a legitimate insurance carrier. Grubb – along with the individuals identified in court documents as “CC-1,” the owner of Aconorate, and “CC-2,” an information technology employee at Aconorate – procured insurance for Aconorate commercial liability insurance clients through an insurance broker in Texas, identified as “GM.” Many of the clients were bars, restaurants, and nightclubs.
Grubb and the owner of Aconorate substantially inflated the premiums that they charged these customers, sometimes increasing the quote that GM provided by as much as 700 to 800 percent. Between June 2004 and July 2006, Grubb and the owner of Aconorate collected more than $1 million dollars in premiums for commercial liability insurance procured through GM and kept over $597,000 of the premiums for themselves.
Grubb and others also took steps to create the appearance that the insurance companies purportedly issuing the policies were legitimate, including creating websites, mailing addresses, and telephone numbers for the insurance companies, and setting up their own mechanism to pay claims.
The mail fraud and wire fraud conspiracy charge carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is scheduled for July 30, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, Newark field office, with the investigation leading to today’s guilty plea.
The government is represented by Attorney in Charge R. Stephen Stigall of the U.S. Attorney’s Office Criminal Division in Camden.
Defense counsel: Anne Singer Esq., Haddonfield