Calif. Insurance Broker Sentenced for Grand Theft, Fraud

April 8, 2010

A California insurance broker has pleaded guilty to a court offer of 10 years in state prison for grand theft and insurance fraud by taking $4.6 million in premiums and issuing false certificates of insurance to four companies, the state Department of Insurance reported. Mitchell Basil Zogob, 51, San Juan Capistrano, pleaded guilty April 5, 2010, to five felony counts of grand theft by embezzlement, five felony counts of insurance fraud, five felony counts of transacting as an insurance business without a certificate of authority, four felony counts of forgery, three felony counts of tax fraud, one felony count of premium fraud, and sentencing enhancement allegations for aggravated white collar crime over $500,000 and the taking of over $2.5 million.

Between January 2002 and April 2004, Zogob worked as an insurance broker and operated two businesses, Professional Employers Assurance Group (PEAG) and Program Administrators Inc., out of a Newport Beach office. He was a licensed broker for more than 20 years but did not renew his license in October 2002.

Between January 2002 and February 2003, the defendant sold workers’ compensation insurance policies to MicroSource Management and Joint Employers Group. These companies outsource the management of payroll, workers’ compensation, human resources and employee benefits to other companies. Zogob collected the premium from MicroSource Management, who had 60 client companies and 16,000 employees, and issued a forged certificate of insurance. Zogob collected the premium from Joint Employers Group, who had over 75 payroll companies and 3,500 employees, and issued a forged certificate of insurance. The defendant kept the money for himself and spent it on his extravagant lifestyle.

The defendant also sold workers’ compensation insurance to two payroll companies, Media Services Inc. and Olympic Partners/C.A.P.S. who provide services to the entertainment industry and covered over 60,000 employees. Zogob fraudulently used AIG/Granite State, Hartford, Regency, and Transglobal Indemnity Ltd., as insurance carriers on the forged certificates. Hartford, although a valid policy, was an extended coverage from a Texas business’ personal office insurance policy which the defendant used to issue bogus certificates of insurance. Regency and Transglobal Indemnity Ltd. are alleged off-shore companies whose status could not be verified and are not authorized to write insurance policies in California. Zogob had received insurance from AIG/Granite State for PEAG and fraudulently used that insurance carrier name and certificate number to issue MicroSource Management certificates of insurance.

Between January 2003 and January 2004, Zogob did business with Kellogg & Associates. He sold the company workers’ compensation insurance but failed to provide a valid certificate of insurance.

The workers’ compensation insurance claims filed by individual employees and paid out by the victimized companies is still under review and the amount is yet to be determined.

From April 2001 to April 2003, Zogob willfully failed to file a tax return and presently owes the Franchise Tax Board over $122,000.

Deputy District Attorney Debbie Jackson of the Insurance Fraud Unit prosecuted this case.

Source: CDI

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