Former Conn. Broker Charged in Carrier Scam

December 15, 2004

The United States Attorney for the District of Connecticut recently announced that James M. Corey, 43, of Prospect, Connecticut, pleaded guilty this month before Senior United States District Judge Ellen Burns in New Haven to a felony count of mail fraud for defrauding approximately 28 insurance carriers of approximately $2.4 million.

Corey reportedly admitted that he fraudulently obtained life insurance policies on the life of his sister, misrepresenting or omitting material facts regarding, among other things, her medical and criminal history.

According to documents filed with the Court and to statements made in court, Corey, a former insurance broker, had background in obtaining life insurance policies and collecting on such policies. From June 1993 through October 2001, Corey devised a scheme to defraud various insurance carriers by preparing approximately 28 insurance applications for policies in the name of his sister, the proposed insured, which typically had a death benefit approximating $100,000.

Corey reportedly included materially false and fraudulent information on these insurance applications, including, by way of example, the misstatement of his sister’s medical history and criminal record. On these applications, Corey also frequently denied that other insurance policies were being sought or had been obtained on the same insured. He also failed to correct information he knew to be false and otherwise made material omissions of true facts that he had a duty to provide.

Relying on such misstatements and material omissions made by Corey, as noted above, the insurance carriers issued policies to the defendant’s sister that they would not have otherwise issued or would not have issued on the same terms.

Later, upon the death of the insured in October 1999, Corey submitted claims for payment of the death benefit to the named beneficiaries under the policies and, in submitting such claims, continued, in certain instances, to misstate the number of outstanding policies on the insured and to describe the cause of death as “natural causes.”

Although not a named beneficiary on the policies, Corey maintained access and control of the insurance proceeds and, in fact, on various occasions, directed the use of such proceeds. As a result of the scheme, the various insurance carriers suffered significant loss, totaling approximately $2,409,266.

As a condition of his guilty plea, Corey has also agreed to forfeit assets that were purchased with proceeds from this offense, including, but not limited to, real estate located in Prospect, 12,250 shares of Metalast International Stock, and three late-model vehicles.

When he is sentenced by Judge Burns on Feb. 17, 2005, Corey faces a maximum term of imprisonment of five years and a fine of up to $4.8 million.

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