Fugitive Indicted for Selling Bogus Insurance Policies and Obstructing Justice

TRENTON, NJ—A federal grand jury in Trenton returned an Indictment today against a former Voorhees, N.J., resident for allegedly conspiring to defraud purchasers of commercial liability insurance by overcharging and issuing them bogus policies, and then obstructing the investigation of the fraud, U.S. Attorney Paul J. Fishman announced.

Thomas M. Grubb, Jr., 56, is charged with one count of conspiracy to commit mail and wire fraud, and two counts of obstruction of justice. Grubb was originally arrested on April 14, 2008, and charged by Complaint with one count of obstruction of justice. On November 5, 2008, Grubb failed to appear in court, and a warrant was issued for his arrest. He remains a fugitive.

According to the Indictment returned today:

Grubb was employed at Aconorate Insurance Agency in Hammonton, N.J., when Aconorate engaged in a scheme to defraud its clients by overcharging them for commercial liability insurance and selling them policies that were not issued by a legitimate insurance carrier. Grubb – along with individuals identified in court documents as “CC-1,” the owner of Aconorate, and “CC-2,” an information technology employee at Aconorate – procured insurance for Aconorate commercial liability insurance clients through an insurance broker in Texas, identified as “GM.” Many of the clients were bars, restaurants, and nightclubs.

Grubb and the owner of Aconorate substantially inflated the premiums that they charged these customers, sometimes increasing the quote that GM provided by as much as 700 to 800 percent. As a result, between June 2004 and July 2006, Grubb and the owner of Aconorate collected over $1 million dollars in premiums for commercial liability insurance procured through GM, and kept over $597,000 of the premiums for themselves.

Grubb and others also took steps to create the appearance that the insurance companies purportedly issuing the policies were legitimate, including creating websites, mailing addresses, and telephone numbers for the insurance companies, and setting up their own mechanism to pay claims.

When the FBI began investigating Aconorate’s sale of the bogus policies in August 2006, Grubb, CC-1, and CC-2 obstructed the investigation by providing Aconorate clients with false and fraudulent documents to provide to the FBI. On March 3, 2008, Grubb gave one Aconorate client $25,000 in cash in an attempt to induce the client to provide false documents to the FBI. Grubb and others also provided falsified documents in response to a federal grand jury subpoena served on Aconorate.

The charges of conspiracy to commit mail and wire fraud (Count One) and obstruction of justice (Counts Two and Three) each carry maximum potential penalties of 20 years in prison and a $250,000 fine.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward; and IRS – Criminal Investigation, under the direction of Victor W. Lessoff, with the investigation leading to today’s Indictment.

This government is represented by Assistant U.S. Attorney Eric M. Schweiker of the U.S. Attorney’s Office Criminal Division in Trenton.

The charges and allegations made in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Anyone with information regarding Grubb’s current whereabouts is encouraged to contact the FBI’s Atlantic City Resident Agency at: (609) 677-6400.

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Defense counsel: Charles H. Nugent Jr. Esq., Marlton, N.J.