Sentenced ND Insurance Agent Got Involved in Nigerian Email Scam

An insurance agent who worked for a North Dakota mutual insurance company has been sentenced by a federal judge on three counts of wire fraud.

U.S. District Judge Daniel L. Hovland sentenced Alan R. Henning after he pleaded guilty to the charges in August 2011, according to U.S. Attorney Timothy Q. Purdon of the District of North Dakota.

From January 2004 through November 2010, Henning was employed as an insurance agent and general business manager with West McLean County Farmers Mutual Insurance Co., Minot, N.D. The fraud mostly involved property insurance policies, a spokesperson with Purdon's office said.

"We learned about Henning's fraud during a state-conducted audit, which the insurance department does every five years," Debra Keller, manager with West McLean County Farmers Mutual, told Best's News Service. The company immediately terminated him in early November 2010, she said. Henning got himself involved in the "Nigerian email scam," also known as the "black money scam" and "the 419 scam," Keller said.

Henning had a ghost account at a bank in the company's name that no one was aware of and he would deposit premium checks from policyholder payments and take those out as cash and pay his own bills, she said. He also wired nearly $800,000 from that account overseas, Keller said, referring to the Nigerian scam. His fraud involved unauthorized loans against the company's assets and also inflating claims, she said.

Henning allegedly used his position to divert funds from incoming premiums, created false or fraudulent policy claims and received unauthorized loans against company-owned certificates of deposit, the U.S. Attorneys office said. He would then wire the funds to various people located in China, South Africa, Malaysia, Greece and the United Kingdom.

According to the North Dakota Insurance Department, the county mutuals write property lines consisting primarily of fire, wind and hail (allied line) coverages. Much of their business is in rural areas and small towns and cities. They have limited authority to write in cities with populations of more than 10,000 people, the department said.

West McLean County Farmers Mutual was incorporated on Feb. 19, 1907 (Best's News Service, Feb. 16, 2007), according to A.M. Best Co.

The case was investigated by the U.S. Postal Inspection Service, the North Dakota Insurance Department, the North Dakota Insurance Commission Fraud Unit and the Department of Homeland Security.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])