Insurance Agent Charged with Fraud for Allegedly Providing Free, High-Value Life Insurance Policies in Order to Collect Commissions
TRENTON – Attorney General Christopher S. Porrino and the Office of the Insurance Fraud Prosecutor (“OIFP”) announced that an insurance agent was charged today with insurance fraud, money laundering and theft by deception for allegedly providing co-conspirators with free life insurance to cause an insurance company to disburse more than $200,000 in commissions.
Arthur Sinuk, 73, a New York City resident licensed to sell insurance in New Jersey, was indicted by a state grand jury today as the alleged ringleader in a scheme to provide free, high-value, life insurance policies with Allianz Life Insurance Company of North America (“Allianz”) to two co-conspirators and obtain commissions from Allianz.
This process of providing applicants/insureds with an inducement to apply for life insurance policies by paying their premiums, known as “rebating,” is prohibited by the insurance industry as well as state law.
Alleged co-conspirators James Vasiloff, 55, of Somers, NY and Fort Lee, and John Jansen, 52, of Wantagh, NY, were also charged in the indictment handed up by a state grand jury in Trenton. Both Jansen and Sinuk are licensed insurance agents in New York.
“Instead of working hard to make honest sales, Arthur Sinuk allegedly used fraud and deceit to collect commissions from Allianz on two multi-million-dollar life insurance policies he secured for two applicants who had no intention of paying for them,” said Attorney General Porrino. “His alleged co-conspirators joined in the scheme to get free life insurance until their policies lapsed for lack of payment.”
“Rebating fraud violates the legitimate purpose of insurance by providing benefits to individuals through fraudulent and ill-gotten commissions, rebates, and free-short-term insurance,” said Acting Insurance Prosecutor Iu. “Carriers don’t have a chance to recoup underwriting expenses on these straw policies because they lapse in short order. These financial losses are passed on to honest policy holders in the form of higher costs.”
According to the indictment, Sinuk “approached and recruited” Vasiloff and Jansen to apply for life insurance policies with the offer that Sinuk would arrange for the premiums to be paid for each policy. Vasiloff’s policy was for $5 million. Jansen’s was for $2 million. In submitting or causing to submit the two life insurance applications and other necessary documents to Allianz, Sinuk, Vasiloff, and Jansen all misrepresented to Allianz that the applicants would be paying for their own policies and that no “free insurance” or rebates had been offered.
In fact, Sinuk took out loans from a third-party lender to pay for the premiums on both policies - $108,730 for Vasiloff’s and $42,414 for Jansen’s - according to the indictment. Allianz, which pays its agents 100 percent of the premium amount as commission, paid Sinuk a total amount of $151,144 in commissions for the two sales. When Sinuk received his commission payments, he then allegedly repaid the third-party lender.
Allianz also paid commissions on the policies to Sinuk’s hierarchy - $38,045.50 for Vasiloff’s policy and $14,844.90 for Jansen’s. About half of the commissions that were disbursed to Sinuk’s hierarchy were allegedly passed along to Sinuk soon thereafter. Subsequently, the policies for Vasiloff and Jansen both lapsed after about 18 months for lack of payment.
The charges against the men are:
- Sinuk – Two counts each of conspiracy (2nd degree), insurance fraud (2nd degree), and theft by deception (2nd degree); money laundering (2nd degree); insurance fraud (3rd degree); theft by deception (3rd degree).
- Vasiloff – Conspiracy (2nd degree); insurance fraud (3rd degree); theft by deception (2nd degree);
- Jansen – Conspiracy (2nd degree); insurance fraud (2nd degree); theft by deception (3rd degree).
The indictment is merely an accusation and the defendants are presumed innocent until proven guilty. Second-degree crimes carry a sentence of five to 10 years in state prison and a criminal fine of up to $150,000. Third-degree crimes carry a sentence of three to five years in state prison and a criminal fine of up to $15,000.
Deputy Attorney General Kelly Levy and Assistant Attorney General Robert Grady presented the case to the grand jury. Detectives Natalie Brotherston, Taryn Seidner, and Matthew Armstrong coordinated the investigation. Acting Insurance Fraud Prosecutor Iu noted that some important cases have started with anonymous tips. People who are concerned about insurance cheating and have information about a fraud can report it anonymously by calling the toll-free hotline at 1-877-55-FRAUD, or visiting the Web site at www.NJInsurancefraud.org. State regulations permit a reward to be paid to an eligible person who provides information that leads to an arrest, prosecution and conviction for insurance fraud. ========================
FORT LEE, NJ — A borough man allegedly conspired with two other insurance agents as part of a scheme where they illegally earned more than $200,000 in commissions.
James Vasiloff, 55, of Fort Lee and Somers, New York, was charged with conspiracy, insurance fraud and theft by deception, said Attorney General Christopher Porrino.
Vasiloff and John Jansen, 52, were recruited by Arthur Sinuk, 73, to apply for life insurance policies from Allianz Life Insurance Company of North America with the idea that Sinuk would arrange for the premiums to be paid for each policy, Porrino said.
Vasiloff's policy was for $5 million, Jansen's was for $2 million; all three misrepresented to Allianz that Vasiloff and Jansen would be paying for their own policies and that no "free insurance" or rebates were offered, Porrino said.
Sinuk allegedly took out loans to pay the policy premiums — $108,000 for Vasiloff's and $42,000 for Jansen's; Allianz then paid Sinuk $151,000 in insurance agent commissions, which he allegedly used to repay the loans.
The policies lapsed after premiums were not paid on them for 18 months, Porrino said.
Jansen was also charged with conspiracy, insurance fraud and theft by deception. Sinuk was charged with two counts of conspiracy, insurance fraud, theft by deception, money laundering, insurance fraud and theft by deception.