A central New Jersey man who ran a now-defunct insurance brokerage company was sentenced to state prison for his role in a scheme to misappropriate more than $660,000 by failing to remit insurance premiums to seven insurance companies...
TRENTON – Acting Attorney General John Hoffman announced that a central New Jersey man who ran a now-defunct insurance brokerage company was sentenced to state prison for his role in a scheme to misappropriate more than $660,000 by failing to remit insurance premiums to seven insurance companies.
Brian P. Mohen, 47, who currently lives in Spring Lake but who lived in Far Hills Borough when the crime occurred, was sentenced to five years in state prison by Superior Court Judge Julie M. Marino in Somerset County. The sentence was based on Mohen’s guilty plea to second-degree misapplication of entrusted property and two counts of third-degree failure to file an income tax return. Mohen’s wife, Lisa A. Stanko-Mohen, 48, who also ran the company, previously pleaded guilty to one count of third-degree misapplication of entrusted property and two counts of third-degree failure to file an income tax return. She was sentenced today to five years of probation. In addition, the defendants will execute consent judgments that will require them to pay a total of $660,446 in restitution and $116,451 in unpaid taxes, including interest and penalty.
“Schemes such as this one not only defraud insurance companies but also cause an undue burden on honest New Jerseyans who incur increased insurance rates to cover the cost of the fraud,” Acting Attorney General Hoffman said. “This type of criminal behavior will be vigorously prosecuted by my office.”
“Once the fraudulent actions were discovered, the insurance companies, in good faith, honored the policies so that the policy holders did not lose coverage, even though the insurance carriers never received the premium,” Acting Insurance Fraud Prosecutor Ronald Chillemi said.
The defendants were the managing directors of Arden Financial Services, Inc. (Arden), located in Far Hills Borough. The company specialized in the sale of management liability insurance.
In pleading guilty on Oct. 28, Brian Mohen admitted that between Feb. 28, 2007 and June 7, 2010, he was responsible for the misappropriation of approximately $660,400. Lisa Stanko-Mohen admitted that she was responsible for the misappropriation of more than $1,000. An investigation by the Office of the Insurance Fraud Prosecutor determined that the defendants misappropriated the money by failing to remit premiums they received to seven companies - Indian Harbor Insurance Company, Great American Insurance Company, Catlin Specialty Insurance Company, Navigators Insurance Company, XL Specialty Insurance Company, The Camden Fire Insurance Association, and Greenwich Insurance Company.
New Jersey law and Arden’s producer agreement with the insurance companies established a fiduciary relationship between Arden and the insurance companies with which Arden was doing business and required Arden to hold all insurance premiums it received in a segregated trust account. The commingling of premiums with any other funds or the misappropriation or conversion of premiums to Arden’s or the defendants’ own use was expressly prohibited by New Jerseylaw.
The investigation determined that the defendants commingled trust account funds with office funds, failed to remit premiums due and owing to those insurance companies, and misappropriated premiums for their own purposes.
The defendants also admitted that they failed to file an income tax return for the tax years ending 2008 and 2009. The investigation determined that they subsequently failed to pay $49,900 in income tax for 2008 and $21,969 in income tax for 2009.
Deputy Attorney General Thomas G. Tresansky, Jr., Detective Kristi L. Procaccino, Detective Megan Flanagan and Analyst Terri Drumm of the Office of the Insurance Fraud Prosecutor and Supervising Auditor Michael Mullane with the Division of Taxation Office of Criminal Investigations were assigned to the investigation. Acting Insurance Fraud Prosecutor Chillemi also thanked the insurance companies for their assistance in this matter.