Calif. Man Indicted on Federal Charges in International Insurance Fraud Scam

February 16, 2005

Matthew Wallace Schachter, aka Robert Lewis Brown, aka Matthew C. Rollins (Brown), 58, was indicted on federal charges relating to an insurance fraud scheme that allegedly netted more than $20 million over the last four years. The indictment, filed in the United States Court for the Eastern District of California, charges Brown with conspiracy, mail fraud, money laundering, and making false statements relating to an insurance fraud scheme.

If convicted, Brown could face as much as 45 years in federal prison: 20 years for the mail fraud allegations, five years for the conspiracy and making false statements charges, and 20 for the money laundering offenses.

The case continues to be jointly investigated by the California Department of Insurance’s Investigations Division, Federal Bureau of Investigations, Internal Revenue Service’s Criminal Investigation Division, and the Office of United States Attorney, Eastern District. At the request of the United States, foreign authorities have frozen bank accounts allegedly tied to the scheme. In addition, U.S. authorities are taking steps to freeze real property in Ireland and Barbados.

“Selling fake insurance policies exposes unsuspecting business people, many who operate ‘mom-and-pop’ businesses, to tremendous liability,” said California Insurance Commissioner John Garamendi. “Fiscal predators make all of us pay for their illegal activity and it cannot be tolerated. This indictment exemplifies the spirit of collaboration in which these scam artists will be pursued, and sends a strong message – don’t do it because you will be caught and prosecuted.”

Brown allegedly assumed the identity of “Robert Lewis Brown” in 1994. The true Robert Lewis Brown died on Sept. 2, 2001, in Las Vegas, Nevada. Brown’s wife, Michale Crane White, 49, aka Shirley Darlene Whitaker, was also living under an assumed identity and was arrested by Canadian authorities. She was deported to the U.S. and remains a person of interest in the case.

Tri-Continental Exchange Ltd. (TCE) and Combined Services, Ltd. (CSL) were allegedly off-shore companies operated by Brown in St. Vincent and the Grenadines. TCE and CSL sold bogus insurance policies throughout the U.S. and Canada, falsely representing that the policies were backed by a pool of legitimate, licensed and rated insurance companies, including Nationwide Mutual Insurance Co. and Globe Indemnity Company.

Although these “backing” companies are indeed legitimate, neither TCE nor CSL had any business relationship with them and were not authorized to issue policies using their names. Since January 2000, Brown has issued and renewed fraudulent insurance policies throughout North America via TCE and CSL, collecting more than $20 million in premiums along the way.

Also named in the indictment was Lloyd Thompson, Jr., 68, of Watsonville, California. Thompson was allegedly the chief underwriter for companies controlled by Brown. Thompson is a former California insurance broker whose license expired in 1994.

Brown was extradited to the U.S. in January 2005 following his arrest on Sept. 3, 2004, outside Toronto, Canada. He was arrested by the Toronto Metropolitan Fugitive Squad based on immigration charges and a U.S. arrest warrant. He most recently resided in Ireland and Barbados.

Brown remains in custody in Sacramento, California, and is scheduled for a preliminary hearing before the U.S. District Court on Feb. 14, 2005.

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