December 12, 2006

DA’s Office Arrests 3 For Insurance Scams

Insurance brokers pocketed thousands in premiums, says Rice

MINEOLA, NY - Nassau County District Attorney Kathleen Rice announced today that detectives from her office have arrested three insurance brokers for defrauding clients out of hundreds of thousands of dollars. Barry Linder, 48, of Melville, has been charged with Grand Larceny in the Second and Third Degrees and Criminal Possession of a Forged Instrument in the Second Degree. Robert Zaia, 57, of Woodmere, has been charged with Grand Larceny in the Third Degree and Criminal Possession of a Forged Instrument in the Second Degree. Wayne Forman, 47, of Great Neck, has been charged with three counts of Grand Larceny in the Second Degree.

“White-collar theft and fraud costs honest consumers and businesses millions of dollars a year,” said Rice. “My office will be aggressive in going after these criminals who force us all to pay a little more and who aren’t willing to play by the rules.”

“The Insurance Department has made the fight against fraud a priority because honest, hardworking New Yorkers and New York businesses should not have to bear the burden fraudulent activity imposes,” said Superintendent of Insurance Howard Mills. “We applaud District Attorney Rice’s actions and will continue working with law enforcement agencies to serve notice on lawbreakers that this is not an activity New York will tolerate.”

Mr. Linder operated an insurance brokerage in Syosset called “JLS and Associates.” The District Attorney alleges that in August 2004, an insurance agent for Mercer Rubber, a rubber manufacturing company, contacted various insurance brokers seeking to purchase annuities for 13 participants in the Mercer Pension Plan. The agent contacted Barry Linder and received what was deemed the best quote for 13 annuities from National Integrity Insurance. Mercer Rubber accepted this proposal and sent Mr. Linder’s firm a check for $250,376 to cover the premiums for the 13 policies. In addition to the payments made by the Mercer Rubber agent to Mr. Linder, the agent prepared the annuity applications and obtained the signature of the principal of Mercer Rubber, Norman Mason, on each application.

In March 2005, the pension actuary at Mercer Rubber requested a copy of all annuities. The agent checked and learned she only had nine policies, and requested the remaining four from Barry Linder. The Mercer Rubber agent was contacted several months later by three of the company’s annuity holders who complained that their checks were consistently late. The agent contacted Mr. Linder who claimed he would rectify the problem. When problems persisted, the agent contacted National Integrity Insurance directly and learned that Linder had only submitted payments to the insurance company to cover ten annuities, pocketing $54,301.67. The agent requested copies of all the applications and discovered that Mr. Linder had submitted forged applications for 10 annuities costing Mercer Rubber $250,376.

After discovering this, Mercer Rubber made numerous attempts to reach Mr. Linder and resolve the discrepancy. Mr. Linder never funded the remaining annuities and never repaid the $54,301.67 in premiums.

Subsequent to this complaint, the Mercer Rubber agent learned that she never received at least 11 commission checks generated from business placed through Mr. Linder with ING Insurance. Each of the checks were made out to the agent, but never received. The agent’s signature was also found forged on the checks. The checks, totally $13,063, were deposited in the JLS account and never refunded to the Mercer Rubber agent.

Mr. Linder faces a maximum of 15 years in prison if convicted of the charges.

Robert Zaia is an insurance broker who operated a business known as Sheepshead Bay Brokerage in Woodmere.

The District Attorney alleges that Mr. Zaia was contacted in late 2004 by Elvira Yondola, who worked for her husband’s company, Express Contracting. Ms. Yondola sought a quote for commercial general liability insurance for the home improvement business. Mr. Zaia indicated he could place the insurance and would need a deposit of $10,000 by October 8, 2004. Express Contracting subsequently received multiple certificates of liability insurance from Mr. Zaia showing that insurance was placed with US Liability and AIG Insurance, citing policy #CL737670.

Over the course of the next several months, Express Contracting made additional premium payments on the policy to the defendant. They issued two additional checks in March and May of 2005 to Mr. Zaia for $7,622.50. In October 2005, the company contacted Mr. Zaia about reviewing the policy. The defendant indicated that the premium had increased and due to a problem with his bank, he needed two checks for $6,250 immediately. Express Contracting made these payments to him but never received a binder from him. After some time went by, they contacted US Liability directly to obtain a copy of their policy. Ms. Yondola was advised that she had no policy, that the certificate supplied to her by the defendant was never issued by them and the policy number was not a valid policy number.

Express Contracting contacted the New York State Insurance Department and learned that the insurance license for Robert Zaia was expired and that he had a history of complaints involving premium payments.

A review of the bank records revealed that Mr. Zaia deposited the first three checks for $10,000, $7,622.50, and $7,622.50 into his Bank of America account. The funds were withdrawn within a short period of time in each case and no funds were sent to US Liability or AIG Insurance.

Mr. Zaia faces a maximum of seven years in prison if convicted of the charges.

Wayne Forman is the president of Forman International in Great Neck. Forman International was a brokerage handling a large volume of insurance clients. Forman International began having problems in 2003 as complaints were brought alleging that Forman International was not forwarding premiums received by clients to insurance companies and began to issue bad checks to both insurance companies and clients.

It is alleged that Mr. Forman used premium money to fund the operating costs of the business and to pay payroll and credit card expenses. Complaints by clients began to increase over the years, as policies were cancelled and funds were never forwarded to insurance companies.

In early 2005, Mr. Forman began to frequently overdraw the premium account and bounce checks. During the spring of 2005, Mr. Forman served as an agent for St. Paul’s Travelers. Mr. Forman’s arrangement was to collect the premiums directly from the customers and forward them to St. Paul’s Travelers. In March and April of 2005, Mr. Forman collected $263,512.92 in premiums from the company’s clients and issued bad checks to St. Paul’s in payment of the premiums. Four separate checks, three in the amount of $166,538.97 and one in the amount of $96,973.95 were sent to St. Paul’s.

A second complaint was filed against the defendant earlier this year by ARC Express and Surplus. ARC, a wholesale broker, obtained two policies for insurance for Mr. Forman’s client, Century 21. ARC made several requests of Mr. Forman for the funds. Mr. Forman at first claimed they weren’t paid and then claimed the money was accidentally issued to a London affiliate and they were awaiting its return. In fact, Century issued a check for $119,600 to Forman in December 2005 and the funds were deposited in the premium account. The funds were almost immediately used to cover payroll, as cash, or to cover other business expenses. No funds were ever issued to ARC. ARC ultimately paid the funds to the insurance company but neither they nor Century 21 has recovered the stolen funds.

Finally, a third complaint was received by the Rainbow Shops, another client of Mr. Forman. Rainbow Shops placed four policies with Wayne Forman in October 2005 for insurance. A check for $111,250 was drafted by Rainbow Shops and sent to Mr. Forman. Mr. Forman deposited the funds in the premium account.

In April 2006, Fireman’s Fund, the insurer, contacted a consultant for Rainbow and advised them that they never received the premium for the policy. Rainbow Shops contacted Mr. Forman, who claimed he was having problems with a partner and the problem would be solved shortly. Mr. Forman offered to make a partial payment to the company, though none was ever received.

Mr. Forman faces a maximum of 15 years in prison if convicted on any of the larceny charges.

The District Attorney would like to thank the New York State Insurance Department for their assistance and dedication to this case.

Assistant District Attorney Robert Emmons, Bureau Chief of the Government and Consumer Frauds Bureau, is handling the case for the District Attorney’s office.

The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty.