Morristown man sentenced to prison for selling bogus health insurance

TRENTON, NJ – An insurance broker who stole nearly $1 million while continuing to sell health care coverage he knew was fake was sentenced Wednesday to 18 months in prison, according to U.S. Attorney Craig Carpenito.

David Clark, 75, of Morristown previously pleaded guilty before U.S. District Judge Michael Shipp to an information charging him with conspiracy to commit wire fraud.

According to documents filed in this case and statements made in court, Clark owned and operated Real Benefits Association LLC (RBA), a New Jersey limited liability company he incorporated on Dec. 17, 2003, under a similar name. Clark established RBA as a purported labor organization and as a way to market and sell health insurance to the general public through the RBA Welfare Plan. Initially, the Welfare Plan was fully insured through Perfect Health, a licensed New York insurance company. Participants paid insurance premiums to bank accounts of RBA or the Welfare Plan, which Clark then remitted to Perfect Health.

Perfect Health was purchased by Health Insurance Programs (HIP) in 2008, and HIP discontinued its insurance policy with the RBA Welfare Plan. The federal government notified Clark that RBA did not qualify as a labor organization and was required to cease operating.

Clark continued, however, to market and sell the health insurance plans to unsuspecting participants. Participants began to complain to their respective state insurance departments when their medical claims were not being paid, which prompted various departments throughout the United States to issue cease and desist orders.

Clark and conspirators continued to market and sell bogus health insurance, and from December 2008 to July 2011, they collected approximately $1.8 million in premiums for RBA health insurance coverage. Clark diverted $962,027 from the premiums paid by RBA participants for his personal use, including by using victims’ premiums to fund personal debit and credit card purchases, college tuition payments and deposits to a relative’s bank account.

In addition to the prison term, Judge Shipp sentenced Clark to two years of supervised release.

If you have information or think you might be a victim of this scheme, please contact 1-866-444-3272 to speak to an EBSA benefits advisor.

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By: Jay Edwards Follow on Twitter | Like on Facebook