The owner of a Scarsdale insurance agency who masterminded what federal prosecutors called a “massive” life insurance fraud scheme involving stranger-originated policies and two insurance agents in Peekskill and Orlando, Fla., involved in the deception were sentenced to federal prison terms Wednesday in U.S. District Court in Manhattan.
Michael Binday, 50-year-old president and owner of R. Binday Plans and Concepts Ltd. in Scarsdale, was sentenced to 12 years in prison and ordered to forfeit approximately $13.52 million in criminal gains after a federal jury in October found him guilty of mail fraud, wire fraud, and conspiracy to commit mail and wire fraud.
James K. Kergil, a 59-year-old independent insurance agent in Peekskill, received a nine-year prison sentence from U.S. District Judge Colleen McMahon, who presided over the men”™s 12-day jury trial last year. Kergil was ordered to forfeit approximately $15.62 million.
Mark Resnick, a 58-year-old insurance agent in Orlando, was sentenced to six years in prison and ordered to forfeit approximately $14.32 million.
In addition to the fraud charges, Kergil and Resnick also were convicted of conspiring to obstruct justice by destroying documents and electronic records related to the fraud.
The three insurance agents are jointly liable for approximately $39.31 million in restitution ordered by the judge.
The sentences were announced by U.S. Attorney Preet Bharara in Manhattan. The case was handled by his Southern District of New York office”™s Complex Frauds and Cybercrime Unit.
Prosecutors said Binday”™s Scarsdale agency purported to obtain high-face-value life insurance policies from companies for wealthy senior citizens who needed the policies for their estate planning. In fact, Bharara said in a press release, those clients were “straw applicants who had no ability to pay the premiums and had been recruited by the defendants who were seeking big commissions for themselves.”
From 2006 through early 2009, prosecutors said, Binday and his company were almost exclusively engaged in fraudulently securing stranger-originated or STOLI policies ”“ insurance on the lives of senior citizens whose premiums are paid by professional investors who are strangers to the insured. Insurers who received the false applications were duped into issuing the high-face-value policies at lower prices for the insured seniors than are normally charged for stranger-originated polices. Prosecutors said the various life insurance companies represented by Binday”™s agency expressly prohibited their agents from soliciting and submitting STOLI business.
Prosecutors said Kergil and Resnick were among the independent insurance agents and office workers at the Binday agency in Scarsdale who prepared and submitted applications that “were riddled with lies.” Binday and his associates had projected “massive profits” for premium-paying investors at the expense of the insurers, prosecutors said.
Insurers usually paid out six-figure commissions for the issued policies. Prosecutors said Binday, Kergil and Resnick split the commissions with the secret investors. The convicted agents over a few years reaped “millions” in commissions from their “elaborate scheme,” prosecutors said.
Good Lord. They got away with that scheme for quite a long time!
This is why insurance is so expensive! I would never put my insurance there or with any other company associated with this Scarsdale Agency…