An investigation by the California Department of Insurance and FBI has resulted in a guilty plea from a 62-year-old Fresno man who operated an insurance brokerage and benefits management company. The man acknowledged that he spent $6,089,500 in clients' funds on personal and business operating expenses.
The pool of money that he dipped into represented money held for employers to cover the high deductibles of their employees' health insurance plans. The money could only be withdrawn for specific purposes related to his clients' insurance needs. The man was the president and only shareholder of the company, which processed claims for over 3,200 businesses.
The plea agreement described the methods that the man used to embezzle from the holding accounts. He moved the money from the employer accounts into other accounts before making withdrawals. The millions embezzled went to his mortgage payments, credit card bills, car loan, business expenses, personal investments and the purchase of a portion of a payroll company.
In 2016, a federal grand jury indicted him for mail fraud, money laundering and 20 counts of embezzlement. He awaits his sentencing and could face up to five years behind bars and a $250,000 fine.
A person accused of financial fraud could seek advice from a criminal defense attorney familiar with embezzlement cases. The attorney could explain the potential penalties associated with accusations such as falsely billing a company or misappropriating funds. A defense strategy might emerge if legal counsel could undermine the prosecutor's case by challenging the defendant's connection with the evidence. Another strategy could involve negotiating a plea deal and creating a restitution agreement.