Irvington Resident Sentenced to 21 Months in Jail for Insurance Fraud Scheme
| by Rick Pezzullo |
An Irvington resident who pled guilty in federal court in February 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 was sentenced to 21 months in prison last month.
Allen Reichman, 54, who pled guilty to one count of conspiracy to commit wire fraud, could have faced a maximum of five years in prison. As part of his sentence, Reichman also had 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.
“To line his own pockets, Allen Reichman fraudulently induced his investment firm to enter into a $30 million loan transaction with an Oklahoma insurance company,” said Preet Bharara, United States Attorney for the Southern District of New York. “His dishonest scheme caused the collapse of the insurance company, and has now led to his loss of liberty.”
According to documents filed in Manhattan federal court and statements made during court proceedings, 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 18,000 financial fraud cases against more than 25,000 defendants.