Two charged in theft of $1 million: Prosecutors: Spring Twp. insurance brokers diverted funds from 6 Berks school districts [Reading Eagle, Pa.]

Jan. 8--Two partners in a Spring Township insurance agency have been charged with diverting about $1 million in insurance premiums paid by six Berks County school districts, spending some of the money on luxury cars, expensive wine and employee bonuses.

Kevin J. Pickell, 52, of Blue Bell, Montgomery County, and Robert F. Pickell, 43, of Collegeville, also in Montgomery, collected the premiums but failed to forward the money to the insurer, School Boards Insurance Co. of Pennsylvania, according to court documents fi led Wednesday by the state attorney general's offi ce.

The Pickells, who are cousins, were arraigned Wednesday before District Judge Ann L. Young, Wernersville, on charges that include running a corrupt organization, theft, insurance fraud and conspiracy. Both remain free on bail.

The Pickells are principals in KDN-Lanchester Corp. in the Village Square Shopping Center in the Spring Ridge section of the township.

The school districts -- Conrad Weiser, Daniel Boone, Exeter, Fleetwood, Schuylkill Valley and Wyomissing -- paid $1,030,413 in premiums for the 2008-09 school year.

Of that, $839,166 was to be forwarded to SBIC. The remaining $191,247 was for commissions, but the attorney general is charging the Pickells with stealing it, too.

"In our view, the commissions were invalid because there were no insurance policies," said Nils Fredericksen, spokesman for the attorney general.

A spokesman for the Pennsylvania School Boards Association, the parent of School Boards Insurance Co., said the districts were insured even though the premiums were not forwarded to SBIC.

"By law, they continued to have full coverage," David Salter said.

According to court documents:

On April 4, 2009, SBIC informed the attorney general's office that KDN failed to remit premiums it had collected for liability and worker's compensation insurance. KDN, which has a brokerage agreement with SBIC, was authorized to collect premiums and deduct commissions.

When it failed to receive the premiums, SBIC contacted the districts' business managers. Each said the premiums had been paid to KDN.

In July, SBIC told insurance investigators a similar situation had occurred the previous year, 2007-08. In that instance, KDN remitted over $1 million when SBIC threatened to notify the Pennsylvania Insurance Department.

This time, investigators obtained search warrants for KDN accounts at Harleysville and Wachovia banks in Wyomissing and learned that no checks had been written to SBIC.

Instead, the Pickells and several KDN employees wrote checks to themselves from the accounts.

Special Agent Robert A. Eckenrode said documents seized during a search of KDN's offices Oct. 7 showed Robert owns 80 percent of the company and Kevin, 20 percent.

Robert is listed as KDN president. He told Eckenrode he was paid $60,000 a year and had use of a companyowned BMW 645 convertible. His wife, Robert said, was supplied with a company-owned Lincoln Navigator.

The search of KDN's offi ce also uncovered several vials of anabolic steroids and unused syringes.

Robert Pickell was charged with possessing a controlled substance for delivery. Kevin Pickell was charged with possession of a controlled substance.

Contact Ron Devlin: 610-371-5030 or [email protected].

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