Late last month, Troy, Michigan, insurance broker John Flaherty, 70, was sentenced to serve between 14 months and 20 years in prison and ordered to pay restitution to victims of $1.3 million.
Flaherty, owner of Alternative Insurance Services, was convicted of Conducting a Criminal Enterprise, or racketeering, as the result of a scheme beginning in 1999.
According to Michigan Attorney General Bill Schuette, Flaherty routinely pocketed a portion of premiums collected by independent agents and paid to his firm, while forwarding the majority of funds onto the insurers.
“Local insurance agents trusted that this man was doing legitimate business when in fact he was taking advantage of them and their customers in order to benefit himself,” said Schuette in a prepared statement. “This violation of trust is against the law and will not be tolerated.”
According to Schuette, Flaherty skimmed $1.3 million off the top over the course of years, using the money to buy expensive cars, pay his mortgage and live in a hotel for a year. Schuette said he was able to cover the fraud by using current premiums to make up past shortages until his business started to slow down.
