The former operator of a Georgia insurance agency has been sentenced to four years in federal prison after pleading guilty to insurance fraud.
John Paul Kill, the former operator of Appeal Insurance Agency, of Norcross, Ga., illegally collected more than $3.7 million from nearly 800 trucking companies nationwide for selling and/or brokering fictitious cargo insurance policies, according to a plea agreement Kill entered into with federal prosecutors back in May.
“The defendant held himself out as an honest broker to hundreds of trucking companies, but he simply pocketed their premium payments instead of securing legitimate insurance coverage,” U.S. Attorney John Horn said in a press release announcing the verdict. “His scam tricked clients into believing they had proper insurance coverage and endangered small businesses operating in more than 20 states.”
According to the charges and other information presented in court, Kill began offering cargo insurance policies to trucking companies in 2013. Kill falsely represented to clients that he would bind cargo insurance policies through Lloyd’s, the insurance market located in London, England, the release stated.
In the insurance industry, binding coverage serves as an agreement between the insurance provider and insured parties to provide insurance coverage. In reality, Kill did not bind any policies with Lloyd’s and instead pocketed the premium payments.
For a small portion of victims, Kill bound cargo insurance policies through a different company that offered less extensive coverage than the trucking companies thought they had purchased through Kill. Most of the victims received no insurance policies at all. Kill instead attempted to pay claims for losses out of the premium payments he collected for new policies, the release stated.
The U.S. Department of Justice said nearly 800 trucking companies located in Alabama, Arkansas, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah and Virginia paid approximately $3.75 million in premiums for fraudulent insurance policies from 2013 through mid-2014.
Under the terms of the plea agreement, Kill faces a maximum term of imprisonment of 10 years and a maximum fine of $250,000. As part of the deal, prosecutors have agreed to recommend that Kill receive less than the maximum penalty because of his “expeditiously entered plea of guilty and the resulting conservation” of judicial resources, according to the plea agreement.
Kill also agreed to forfeit his financial assets, which he disclosed in court documents to be $725,841.
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