Mass. Broker Sentenced for Issuing Bogus Liability Policies

December 6, 2002

John Grinnell, a former insurance broker from Fall River, Mass., was sentenced by U.S. District Judge Mark L. Wolf to 5 years’ probation on charges of issuing almost 150 bogus insurance liability policies and taking more than $150,000 in premiums.

Grinnell will serve the first year of his sentence in home confinement, with electronic monitoring for the initial six months. He was also ordered to pay restitution in the amount of $156,870 and a $1,300 fine. Grinnell pleaded guilty on August 26, 2002 to 13 counts of mail fraud.

At the earlier plea hearing, the prosecutor told the Court that if the case had proceeded to trial, the government’s evidence would have shown that from October 1995 to May 1998, the defendent wrote approximately 149 bogus insurance policies totaling nearly $56 million dollars in liability coverage. He then fraudulently collected the insurance premiums.

Grinnell was a licensed insurance broker who owned and operated J.V. Grinnell Insurance Agency, located at 28 Jeannette Road in Belmont, Massachusetts when he wrote special liability “Surplus Lines” policies. During a time that he was under a “special lines” contract with the Hermitage Insurance Company, he failed to inform the company when he wrote policies and he kept premiums which were owed to Hermitage. Hermitage terminated its contract with Grinnell in May of 1997. Nonetheless, he issued an additional 89 policies and pocketed those premiums as well.

The case was investigated by the U.S. Postal Inspection Service, with assistance from the Massachusetts Insurance Fraud Bureau. It was prosecuted by Assistant U.S. Attorney Victor A. Wild in Sullivan’s Economic Crimes Unit.

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