A Central New Jersey couple that ran a now-defunct insurance brokerage firm has been charged with allegedly conspiring to steal nearly $1.8 million by failing to remit insurance premiums to eight insurers.
The 27-count state grand jury indictment was announced by New Jersey Attorney General Jeffrey Chiesa on Dec. 11.
Brian Mohen, 46, and Lisa Stanko-Mohen, 47, were each charged on Dec. 10 with conspiracy, insurance fraud, six counts of theft by failure to make required disposition of property received, six counts of misapplication of entrusted property, and one count of use, control or operation of a corporation for furtherance or promotion of a criminal object, all in the second degree.
Additionally, the defendants were each charged with three counts of misapplication of entrusted property, three counts of theft by failure to make required disposition of property receive, two counts of failure to file income tax return and two counts of failure to pay taxes, all in the third degree.
Mohen was additionally charged with second-degree issuing a bad check and Stanko-Mohen was charged with fourth-degree forgery.
The defendants were the managing directors of Arden Financial Services Inc. in Far Hills Borough.
The insurance policies that Arden sold protected officers of companies from being sued for being negligent in the performance of their duties, for discriminating against employees, and for committing professional malpractice in their profession.
The state grand jury indictment alleges that between 2007 and 2010, the defendants, through Arden, stole $1,798,880 by failing to remit premiums they received to eight insurers — Zurich American Insurance Co. ($1,028,112), Indian Harbor Insurance Co. ($300,900), Great American Insurance Co. ($128,694), Catlin Specialty Insurance Co. ($123,250), XL Specialty ($89,250), Navigators Insurance Co. ($71,823), The Camden Fire Insurance Association ($52,650), and Greenwich Insurance Co. ($4,200).
New Jersey law and Arden’s producer agreement with the insurers established a fiduciary relationship between Arden and the insurers with which Arden was doing business and required Arden to hold all insurance premiums it received in a segregated trust account.
The commingling of premiums with any other funds or the misappropriation or conversion of premiums to Arden’s or the defendants’ own use was expressly prohibited by New Jersey law.
An investigation determined that the defendants allegedly commingled trust account funds with office funds, failed to remit premiums due and owing to those insurance companies, and misappropriated premiums for their own purposes.
The indictment further alleges that in 2008, Mohen issued a check in the amount of $741,445 to Zurich Insurance to cover a policyholder’s premium, knowing that the bank would not honor the check.
The check was bounced due to insufficient funds. In addition, the indictment alleges that in 2009, Stanko-Mohen forged a document purportedly from Navigators Insurance Co. to a policyholder.
Once the defendants’ alleged fraudulent actions were discovered, the insurance companies made good on the policies, so that the policy holders did not lose coverage.
Lastly, it was also alleged that the defendants failed to file an income tax return for the tax year ending 2008 and subsequently failed to pay $49,900 in income tax for that year. Mohen and Stanko-Mohen also failed to file an income tax return for the tax year ending in 2009 and subsequently failed to pay $21,969 in income tax for that year.
Second-degree crimes carry a maximum sentence of 10 years in state prison and a criminal fine of up to $150,000 while third-degree crimes carry a maximum sentence of up to five years in state prison and a criminal fine of up to $15,000. Fourth-degree crimes carry a maximum sentence if 18 months in state prison and a criminal fine of up to $10,000.
The indictment is merely an accusation and the defendants are presumed innocent until proven guilty.
“This indictment sends a strong message to insurance brokers that the theft of insurance premiums by brokers will not be tolerated in New Jersey,” New Jersey Attorney General Chiesa said.