The U.S. Attorney's Office in Baton Rouge, La., on Wednesday charged life insurance agent Timothy R. Schlatre with mail fraud, money laundering and asset forfeiture for his alleged role in a life insurance scam.
The resident of Denham Springs, La., an agent for New York Life Insurance Co. and Lincoln National Corp., allegedly masterminded a scheme to reap “hundreds of thousands of dollars” in commissions by selling policies based on phony representations, according to a bill of information filed in the U.S. District Court for the Middle District of Louisiana.
Ian F. Hipwell, an attorney with Manasseh Gill Knipe & Belanger representing the insurance agent, declined to comment as the case has just been filed.
U.S. Attorney Donald J. Cazayoux Jr. claimed that through March 2011, Mr. Schlatre conspired with six other individuals to apply for life insurance coverage. The agent allegedly directed the applicants to lie about their net worth and monthly income, which allowed them to seek greater amounts of coverage, according to the bill of information.
To obtain policies from New York Life, Mr. Schlatre had to complete an agent statement, which also allegedly had the same false information about the applicants' household income, according to Mr. Cazayoux. The agent also said he would not pay or allow any rebate of premium in any manner to the customers.
Mr. Schlatre allegedly agreed to provide the applicants with money to foot the premium costs — a practice that's not only barred by the life insurers but also forbidden by state law, according to the bill of information. The agent deposited the money into the applicants' accounts so that they appeared to be making the payments, Mr. Cazayoux claimed.
Mr. Schlatre “defrauded New York Life and Lincoln into issuing life insurance policies totaling over $100 million and commission payments to which he was not entitled in excess of hundreds of thousands of dollars,” the U.S. attorney wrote in the bill of information.
Aside from facing a maximum of 30 years in prison, and fines of up to $500,000 or twice the gross gain or loss from the offense — whichever is larger — Mr. Schlatre could also lose his ride. Mr. Cazayoux alleges that on June 22, 2010, Mr. Schlatre used a cashier's check to pay for a 2007 Cadillac Escalade. The transaction involved “criminally derived property” that “derived from a specified unlawful activity, namely mail fraud,” according to the bill of information.
The U.S. attorney is seeking, upon conviction, an amount equal to the gross proceeds of Mr. Schlatre's alleged mail fraud and money laundering — and his Cadillac.
"Our company is one of the victims of this scheme because we paid the agent commissions that he was not entitled to receive,” said William Werfelman, a spokesman for New York Life. “We assisted law enforcement in their investigation of this matter, and of course this individual no longer represents the company."
Lincoln spokesman Michael Arcaro noted that the insurer "terminated the contract of independent broker Timothy Schlatre due to concerns regarding the nature of his business activities. We then alerted the appropriate authorities, and we will continue to cooperate with their investigations.”
The six individuals who were allegedly complicit in the scheme have been charged with conspiracy to commit mail fraud and each faces a maximum sentence of five years in prison and fines of up to $250,000
Carl Babin, who is representing one of the six individuals, Jason Paul Austin, said his client intends to enter a guilty plea. “He was pretty far down the totem pole,” Mr. Babin said.
Glen Petersen, who is representing Ricky Austin, noted that his client has agreed to enter a guilty plea but would make no other comment.
Marci Blaize, an attorney for Dena A. Gaudet, and Richard M. Upton, representing Todd D. Cummings, had no comment.
Attorneys representing the other two people — Jimmy O. Cassels and Jodi Marie Austin — did not immediately return calls. A spokesman at Lincoln did not immediately provide comment.