Murray, Three Others Charged In $7.5 Million Insurance Fraud Scheme

Aug. 25--In September 2005, Christine Oliver-Shean, then president of the Murray Insurance Agency, was celebrating her birthday during lunch at Caferazzi on Spruce Street in downtown Scranton.

That lunch, accor-ding to a grand jury presentment against the insurance agency and its principals released Wednesday, marked the beginning of the end of a multimillion-dollar, decade-long fraud.

The state attorney general hit Brian Murray, 67, and Ms. Oliver-Shean, 51, each with more than 20 charges ranging from corrupt organization and income tax fraud to theft and forgery. Mr. Murray's wife, Diane D. Murray, and Ms. Oliver-Shean's husband, Timothy G. Shean, were also charged.

Ms. Oliver-Shean got a chilly reception from Mrs. Murray, who owned Caferazzi, during that 2005 birthday lunch, according to the presentment. When Mr. Murray arrived, he and his wife met in the kitchen.

Mrs. Murray's other business, Lavelle-Murray Advertising, had received a statement for a loan for which Lavelle-Murray never applied -- a loan used to pay insurance premiums. The advertising agency's annual premium was a modest $3,000 and paid in full, she explained. Yet the ad agency had more than $3 million in loans in its name.

Mr. Murray told his wife there was nothing to worry about. Later, he gave the bill to Ms. Oliver-Shean and told her to pay it.

Soon after, Mr. Murray had a heart attack, and he and his agency became the target of regulators, clients, creditors and law enforcement, a downward spiral that culminated Tuesday with scores of felony charges against Mr. Murray and Ms. Oliver-Shean.

The Murrays, once at the center of civic and social life in the city, stood shoulder-to-shoulder like a couple dressed for a wedding, except for the handcuffs and leg irons.

They were allowed to go home by District Judge John Mercuri, who permitted Mr. Murray to continue his electronically monitored house arrest. Mrs. Murray was released on $100,000 unsecured bail.

A preliminary hearing was set for Aug. 31. The Murrays declined to comment as they left the Lackawanna County Courthouse.

The presentment alleges that for at least a decade, Murray Insurance routinely collected premiums from large commercial and institutional clients without buying the underlying insurance. Then the firm would forge declaration sheets to make it appear the agency had the insurance. If a claim occurred, the agency would cover it from the premiums of others, careful to stay between insurer and insured. The company also applied for loans on behalf of clients without their knowledge to cover up the scam and keep the agency going.

State Attorney General Tom Corbett called Murray Insurance "a financial pyramid scheme."

"It is interesting to note that the building where Murray's insurance business was headquartered is known as 'One Pyramid Center,' because this was a massive illegal pyramid -- allegedly stealing millions of dollars from new clients to conceal past thefts and keep the scheme in operation," Mr. Corbett said in a prepared statement.

The building, once owned by Mr. Murray, was sold at a bankruptcy auction Monday.

The presentment outlines the following:

- Beyond pocketing clients' premiums rather than buying insurance, there are other alleged offenses, including tax evasion and forgery used to cover up the ongoing scheme.

- The unlikely rise of Ms. Oliver-Shean to president of Murray Insurance, even after Mr. Murray had discovered in 1997 that she embezzled $41,980 from the company by writing checks to cash. After becoming president of the agency in 2001, she allegedly continued to steal money, $549,067, to pay tens of thousands of dollars of her household credit card debt.

- To cover her own theft and meet the needs of the agency, Ms. Oliver-Shean allegedly applied for premium financing loans on behalf of clients without their knowledge by forging their signatures. Loan proceeds would go into Murray's general fund. In one case, she obtained a loan on behalf of the Lackawanna Bicycle Club, a group that was not a client. Ms. Oliver-Shean's husband, Timothy, was a member, and she forged his signature. From 1996 to 2006, Ms. Oliver-Shean obtained more than $5 million from forged loan applications for companies such as Lavelle-Murray, Northeast Eye Institute and Muncy Homes, using the money to cover her own theft, pay past loans and keep the agency afloat.

- Mr. Murray's insurance company, Gaffer Insurance, was incorporated in Bermuda and allegedly used to evade taxes and as a slush fund where money was commingled with various other Murray holdings. Investigators found Gaffer was housed in a filing cabinet in Scranton and that Murray employees considered the Bermuda address a joke.

The presentment included the testimony of several former employees of Mr. Murray who, upon learning of the lack of insurance for clients, notified Mr. Murray. He allegedly told one employee to "mind your own business."

Underwriters were ordered to "go bare" on a policy, or "sweat it out" -- parlance for taking the risk and not buying the actual insurance on behalf of a client. When one underwriter refused, Mr. Murray took the file from her hand and gave it to Ms. Oliver-Shean. Mr. Murray and Ms. Oliver-Shean would forge documents to dupe outside accountants, making it look as though the various companies were in the black, according to the presentment.

As the insurance agency's prospects grew darker, Ms. Murray ordered staff at Lavelle-Murray to cut checks to Murray Insurance as loans. In one case, the advertising agency took out a loan to finance shortfalls at the insurance agency, according to the presentment.

Contact the writer: [email protected] brian Murray

n Charged in June with theft of $1.3 million of insurance premiums, he now also faces two counts of corrupt organization, one count each of money laundering and criminal conspiracy, all first degree felonies punishable by up to 20 years in prison and $25,000 in fines. He also is charged with several counts of forgery, 15 counts of various types of theft and other charges, each third-degree felony punishable by seven years in prison and $15,000 in fines. He also is charged with misdemeanor counts of tampering with evidence, obstruction of law, filing false corporate tax returns and state income tax returns and failure to file corporate state tax returns.

Christine Oliver-Shean

n Charged with one count of forgery, a second-degree felony punishable by up to 10 years in prison and a $25,000 fine. Charged with 21 counts of various forms of theft, three counts of forgery, one count each of insurance fraud and aiding in the consummation of a crime, all third-degree felonies. Faces misdemeanor counts of fabricating physical evidence, obstructing the administration of law, filing false corporate state income tax returns and personal state income tax returns and failure to file corporate state tax returns.

Diane D. Murray

n Charged with one count each of theft by unlawful taking and criminal conspiracy, both third-degree felonies. She faces misdemeanor counts of willfully filing false and fraudulent corporate state income tax returns and personal state income tax returns.

Timothy G. Shean

n Accused of conspiracy, tampering with evidence and obstructing law enforcement.

To see more of The Times-Tribune or to subscribe to the newspaper, go to http://www.thetimes-tribune.com/.

Copyright (c) 2010, The Times-Tribune, Scranton, Pa.

Distributed by McClatchy-Tribune Information Services.

For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com, e-mail [email protected], or call 866-280-5210 (outside the United States, call +1 312-222-4544)