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Irvington Resident Pleads Guilty in Insurance Fraud Scheme

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March 7, 2015

| by Rick Pezzullo |  

An Irvington resident pled guilty in federal court on February 20 to participating in a $30 million scheme to defraud his employer and insurance regulators in connection with the bogus purchase of an Oklahoma insurance company.

Allen Reichman, 54, pled guilty to one count of conspiracy to commit wire fraud and could face a maximum of five years in prison. As part of his plea, Reichman also agreed to forfeit $200,000 to the United States and provide restitution of $10 million to a New York investment firm where he was employed as executive director of investments.

“As Allen Reichman has now admitted, he deceived his employer to enable the illegal purchase of an insurance company,” said Preet Bharara, United States Attorney for the Southern District of New York. “His associates looted the assets of the company, leaving it unable to pay policyholders, and Reichman pocketed over $200,000 in commissions on the fraudulent $30 million loan.”

According to Bharara, from July 2008 to November 2009, Reichman conspired with two bank officials and a Kentucky businessman to defraud his investment firm and regulators to provide a $30 million loan to finance the purchase of a property and casualty insurance company.

Bharara said Reichman ignored warnings that using certain assets as collateral for the loan were illegal and instead provided misleading information to various individuals at his investment firm and elsewhere regarding the loan. Reichman received at least $200,000 in commissions as part of the scheme.

The probe was part of an initiative created by President Obama’s Financial Fraud Enforcement Task Force in 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. Since it was launched, the task force has filed more than 12,840 financial fraud cases against nearly 18,730 defendants.

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