An Irvington man faces up to five years in prison after admitting his role in a $30 million insurance fraud scheme, officials said.
Allen Reichman, 54, pleaded guilty in Manhattan federal court Friday to one count of conspiracy to commit wire fraud, the U.S. Attorney’s Office said.
From July 2008 to November 2009, Reichman, Charles Antonucci Sr., Matthew Morris and Wilbur Anthony Huff ran a scam to defraud insurance regulators and Reichman’s employer to illegally purchase Oklahoma-based Providence Property and Casualty Insurance Company, officials said.
The group deceived the investment firm that Reichman worked for into loaning $30 million to finance Antonucci’s purchase of Providence, which was owed $5 million by a company Huff controlled, the U.S. Attorney’s Office said.
The men misled the firm and Oklahoma insurance regulators about the purchase’s financing, which involved securing the $30 million loan through Providence’s own assets, a move that was illegal. Despite several warnings from the firm that the loan should not be issued, Reichman and the men provided false information regarding the collateral that would be used for the loan, the U.S. Attorney’s Office said.
The loan was issued near the end of January 2009, with the money being secured by assets that were supposed to be kept in reserve to pay Providence’s policyholder claims. Reichman pocketed at least $200,000 in commission from the deal, while Providence, with its assets pilfered by the conspirators, became insolvent in November 2009, the U.S. Attorney’s Office said.
Reichman is to be sentenced by U.S. District Court Judge Naomi Reice Buchwald on a future date. He agreed to forfeit $200,000 and repay the firm $10 million as part of his plea.