Pa. Broker Arrested For Alleged Premium Finance Fraud

May 10, 2007

A former Bucks County, Pennsylvania insurance broker has been arrested by the Pennsylvania Attorney General’s Office for allegedly defrauding four insurance premium companies and the state’s bureau of unemployment compensation out of more than $1 million.

Attorney General Tom Corbett identified the defendant as Thomas William Hurd of Philadelphia. Hurd was a licensed insurance agent and president of the Thomas Hurd Insurance Agency and Hurd Insurance Associates, both located in Bensalem.

Corbett said that Hurd’s businesses sold commercial lines of insurance to transportation lines and acted as a broker for limousine services, buses, ambulances, and taxis.

According to the criminal complaint, Hurd submitted false and misleading information to premium finance companies and secured financing for insurance policies that did not exist or for insurance policies that were obtained and pre-maturely cancelled.

The charges state that when Hurd obtained premium financing he allegedly failed to secure the policy noted in the premium finance agreement and converted the financed monies to his own use.

Corbett said that finance companies require brokers to secure 25 percent of the total policy premium, from the insured, to protect their investment in the event of pre-mature cancellation. Premium finance companies then loan the remaining 75 percent of the total of a policy. Once Hurd had the full 100 percent of the money, he allegedly failed to either fully fund the policies causing premature cancellation, or funded the policies in full and then cancelled policies prior to expiration causing the premium return to be sent to him.

In addition, the criminal complaint states that on a number of occasions Hurd did not forward clients’ payments to the premium finance company, which caused premature cancellation of the policy. Unused portions of the premium were returned to Hurd by the insurance company and he allegedly failed to forward the money to the premium finance companies.

Corbett said that there were also times where Hurd used a wholesale broker to obtain policies for transportation companies. Hurd allegedly obtained premium financing and deposit money, which he failed to forward to the wholesale broker.

The four premium finance companies that were affected by Hurd’s alleged illegal activity are; AI Credit, Jersey City, NJ; AMGRO, Worcester, MA; NCMIC, Cliev, IA; and Bloss and Dillard, Huntingdon, WV. The four companies lost nearly $1 million between 2001 and 2003.

Corbett said that in addition to Hurd pocketing several hundred thousand dollars in his own accounts, between 2002 and 2003, numerous employees of the Hurd Insurance Agency allegedly received portions of their salaries in addition to unemployment compensation benefits.

According to the criminal complaint, five employees were placed on unemployment by Hurd, at his request, to help offset his salary expenditures. During that time period, Hurd allegedly reduced their salaries and had the difference made up for in unemployment compensation.

“These employees continued to work for Mr. Hurd as they received unemployment benefits,” Corbett said. “The only individual who profited and received the benefit in this scheme was Hurd, as he received several full-time employees while paying only a fraction of their salary.”

Through this scheme, Corbett said that Hurd allegedly defrauded the Pennsylvania Bureau of Unemployment Compensation out of more than $68,000.

Hurd is charged with one count of corrupt organizations, a first-degree felony punishable by up to 20 years in prison and a $100,000 fine. Additionally, he is charged with four counts of theft by failure to make required disposition of funds received, four counts of insurance fraud and one count of theft by deception. Each of those charges is a third-degree felony punishable by up to seven years in prison and a $15,000 fine.

Hurd will be prosecuted in Bucks County by Deputy Attorney General Gregg Shore of the Attorney General’s Insurance Fraud Section.

Corbett thanked the Bensalem Police Department and Bucks County District Attorney Diane Gibbons for their assistance with the case.

A person charged with a crime is presumed innocent until proven guilty.

Source: Pennsylvania Attorney General

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