HIGHLANDS – A Highlands man and his parents have been indicted by a state grand jury in connection to a $4 million insurance fraud scheme.
Evan Pescatore, 35, and his parents Frank Pescatore, 70, and Janice Pescatore, 64, of Asbury Park, are accused of illegally providing people free, high-value life insurance policies in order to collect the lucrative commissions on those policies from the insurance companies, according to a statement from the office of Attorney General Christopher S. Porrino. The trio allegedly then used those proceeds to pay off loans that covered the premiums on the policies.
The scheme involved 18 policies issued by eight insurance companies with a face value totaling $61.5 million.
“This family allegedly conspired in a criminal plot to file more than a dozen fraudulent insurance applications that cost numerous insurance companies millions of dollars in ill-gotten commissions, rebates, and free-short-term insurance,” Porrino said in the statement. “Though the alleged scheme was complicated, the defendants carefully shepherded illicit funds through a series of transactions, knowing that they would reap hundreds of thousands of dollars in undeserved commissions along the way.”
Each was charged with first-degree conspiracy to commit money laundering and two-counts of second-degree money laundering in an indictment handed up Wednesday, according to the statement.
Evan Pescatore was also charged with first-degree money laundering. He and his father were also each charged with second-degree insurance fraud, theft by deception, conspiracy to commit insurance fraud and conspiracy to commit theft by deception.
Frank Pescatore, 70, of Asbury Park. (Photo: Office of the New Jersey Attorney General)
According to prosecutors, Evan Pescatore and his father approached 13 "applicants" and offered them “free insurance” and the option to sell their policy in the future for profit.
Evan Pescatore and his father misrepresented to the insurance companies that the applicants would pay for their own policies, according to the statement. Instead, Evan Pescatore took out loans ranging from $15,000 to $582,520 to pay for the premiums on the policies.
When the insurance companies sent more than $3 million in commissions to Evan Pescatore, he and his parents transferred or assisted in transferring the money to lenders in order to repay the loans for the insurance premiums, according to the statement.
The insurance companies also paid other commissions, totaling more than $1 million, connected with the policies; half of those proceeds were allegedly passed along to Evan Pescatore soon thereafter.
The practice of getting people to apply for life insurance by paying their premiums is known as "rebating" and is illegal, the statement said.
Janice Pescatore, 64, of Asbury Park. (Photo: Office of the New Jersey Attorney General)
The polices were issued by AXA Equitable Life Insurance Company, Minnesota Life Insurance Company, Lincoln Benefit Life Insurance Company, Allianz Life Insurance Company of North America, Zurich American Life Insurance Company, Genworth Life Insurance Company, Royal Neighbors of America, and Banner Life Insurance Company.
First degree crimes carry a sentence of 10 to 20 years in state prison and a fine of up to $500,000, according to the statement. 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.
“Rebating fraud is a costly problem for insurance companies but the ultimate victim is the consumer," Acting Insurance Fraud Investigator Christopher Iu said in the statement. "They’re the ones who pay the price in the form of higher premiums. These indictments should serve as a warning that we will not allow criminals to get rich by cheating the insurance system and driving up costs for honest policy holders.”
People who are concerned about insurance fraud 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. There can be a reward for those who provide information that leads to an arrest, prosecution and conviction for insurance fraud.