New Jersey Attorney General Peter Harvey announced that the owner of a defunct Camden County insurance brokerage business has been ordered to pay more than one million dollars in restitution and jailed for seven years as a result of pleading guilty to charges of insurance fraud and failure to pay various state taxes.
The Attorney General tagged the Insurance Fraud Prosecutor’s investigation of the Pennsauken insurance broker – which left nearly a dozen corporate insurance buyers without coverage – as one of the largest insurance fraud schemes yet uncovered in the South Jersey area.
“This type of insurance and financial fraud strikes at the very heart of the states’ efforts to moderate insurance costs for the honest, insurance-paying New Jersey businessperson,” said Attorney General Harvey. “The theft uncovered in this case placed the health and health benefits of the people who worked for the client companies at great risk. While the defendant was busy stealing the insurance premium money, the corporate clients and the working families were unknowingly without health care and prescription benefits.”
According to Vaughn McKoy, director, Division of Criminal Justice and Insurance Fraud Prosecutor Greta Gooden-Brown, Philip A. McKeaney, Jr., 44, of Cherry Hill, Camden County, was sentenced by Camden County Superior Court Judge Samuel Natal to seven years in state prison and ordered to pay $1,163,831 in restitution to the businesses victimized as a result of the fraudulent scam.
Gooden Brown said that McKeaney pleaded guilty on Nov. 17, 2003 to three counts of theft by failure to make required disposition of property received (2nd degree) and two counts of misapplication of entrusted property(3rd degree). The guilty plea followed the filing of two separate State Grand Jury indictments which charged McKeaney with stealing more than $1.6 million dollars in client funds as well as diverting tax payments and employee funded unemployment and disability contributions due the State to his personal accounts.
The insurance fraud investigation reportedly determined that McKeaney was the owner and Chief Corporate Officer of Pennsauken-based Haddon National Companies Inc. (HNC), formerly located at 5090 Central Highway. HNC’s clients consisted of corporations and other organizations seeking to manage health care costs by funding self-insured health benefits plans provided for employees. As a third party administrator, HNC’s duties included using funds provided by its clients to pay individual health care claims of employees and to procure re-insurance coverage for catastrophic claims.
The State Grand Jury indictments also charged that McKeaney used monies diverted from HNC to fund a second business – Cambria Corporation, a data processing and computer repair business. It was determined that HNC’s clients were unaware of the unauthorized use of their funds. The investigation also determined that McKeaney used stolen funds to pay personal debts and expenses.
The indictment identified the corporate victims and the amounts stolen as:
• Memorial Hospital of Salem County; $541,737;
• Christiana Health Care Services, Wilmington, Del., $32,612;
• Goodwill Industries of Southern New Jersey, $185,775;
• New Jersey American Inc. (NJA), Blackwood, N.J., $180,912;
• Concord Engineering Group, Inc., Voorhees, N.J., $70,615;
• Eagle Affiliates of Harrison, Harrison, N.J., $52,860;
• King Limousine, King of Prussia, Pa., $30,942;
• Rodento Management, Wilmington, Del., $11,465; and
• Young Volkswagen, Easton, Pa., $20,289.
A second State Grand Jury indictment charged that McKeaney illegally withheld $28,722 in personal income tax payments and unemployment and disability insurance contributions due the State of New Jersey. The unpaid contributions and taxes were owed by the Clones American Corporation (formerly the Cambria Corporation).
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