An insurance broker who, prosecutors alleged, stole nearly $1 million while continuing to sell health care coverage he knew was fake has pleaded guilty in federal district court in New Jersey to an information charging him with conspiracy to commit wire fraud.
According to documents filed in the case and statements made in court, the broker, David Clark, of Morristown, N.J., owned and operated Real Benefits Association, LLC ("RBA"), a New Jersey limited liability company he incorporated on Dec. 17, 2003 under a similar name. Mr. Clark established RBA as a purported labor organization and as a way to market and sell health insurance to the general public through the RBA Welfare Plan, prosecutors asserted. They added that, initially, the Welfare Plan was fully insured through Perfect Health, a licensed New York insurance company. Participants paid insurance premiums to bank accounts of RBA and/or the Welfare Plan, which Mr. Clark then remitted to Perfect Health.
According to the government, Perfect Health was purchased by Health Insurance Programs ("HIP") in 2008 and HIP discontinued its insurance policy with the RBA Welfare Plan. The federal government allegedly notified Mr. Clark that RBA did not qualify as a labor organization and was required to cease operating. Nonetheless, prosecutors contended, Mr. Clark continued to market and sell the health insurance plans to unsuspecting participants. Eventually participants began to complain to their respective state insurance departments when their medical claims were not being paid, which prompted various departments throughout the United States to issue cease and desist orders, the government asserted.
The government contended that Mr. Clark and conspirators continued to market and sell bogus health insurance, and from December 2008 to July 2011, they collected approximately $1,789,596 in premiums for RBA health insurance coverage. According to prosecutors, Mr. Clark diverted approximately $962,027 from the premiums paid by RBA participants for his personal use, including by using victims' premiums to fund personal debit and credit card purchases, college tuition payments, and deposits to a relative's bank account.
