Ex-Broker in N.J. Sentenced to Four Years in Prison for Loan Scheme

A federal judge sentenced a former partner of a New Jersey-based insurance brokerage firm to 48 months in federal prison for his role in a $20 million fraudulent loan scheme.

Gavin Gatta, 48, also was sentenced to three years of supervised release and ordered to pay restitution, which U.S. District Court Judge Dennis M. Cavanaugh said will be at least $22 million. The exact amount of restitution will be determined later, a spokeswoman for the U.S. attorney said.

In October, Gatta, a former partner at Smith Gatta Gelok, a Monmouth County, N.J.,-based insurance brokerage firm that assisted businesses in buying commercial insurance, pleaded to wire fraud. The U.S. attorney said Gatta submitted bogus applications for premium financing and used the money to buy several Ferraris, an Aston Martin, a Mercedes, a Porsche and jewelry. Prosecutors said Gatta admitted that, beginning in 2003, he prepared applications for premium financing on behalf of clients who did not need or request such financing, and had, in fact, already paid their premiums in full (BestWire, Oct. 8, 2010).

An order from the New Jersey Department of Banking and Insurance in July said Gatta agreed to have his license suspended pending an investigation of allegations of misconduct. Smith Gatta Gelok has since been sold.

(By Diana Rosenberg, senior associate editor, BestWeek)