Highlands Man and His Parents Ran Insurance Fraud Scheme, AG Says

HIGHLANDS, NJ - A Highlands man and his parents were arrested and charged last week with running an alleged life insurance scheme, in which they would sell fraudulent life insurance policies and then collect as much as $4 million in commissions from the insurance companies, according to the New Jersey Attorney General.

Evan Pescatore, 35, of Highlands, pictured above, and his parents Frank Pescatore, 70, and Janice Pescatore, 64, of Asbury Park, were charged with first-degree conspiracy to commit money laundering, and two-counts of second-degree money laundering in an indictment handed up by a state grand jury Thursday.

According to the indictment, Evan Pescatore and his father “approached and recruited” 13 applicants by offering them “free insurance” and the option to sell their policy in the future for profit. In submitting or causing to submit the life insurance applications, the father-son team misrepresented to the eight insurance companies that the applicants/insureds would be paying for their own policies and that no “free insurance” or rebates had been offered, state prosecutors said.

In fact, Evan Pescatore took out loans from a third-party lender to pay for the premiums on the policies, which ranged from $15,000 to $582,520, according to prosecutors.

The polices were issued by AXA Equitable Life Insurance Company, Minnesota Life Insurance Company, Lincoln Benefit Life Insurance Company, Allianz Life Insurance Company of North America, Zurich American Life Insurance Company, Genworth Life Insurance Company, Royal Neighbors of America and Banner Life Insurance Company. When the insurance companies disbursed agent commissions to Evan Pescatore – more than $3 million in total – he and his parents transferred or assisted in transferring the commission funds to the lending sources in order to repay the loans for the insurance premiums, according to the indictment.

Evan Pescatore was also charged with first-degree money laundering; and he and his father were also each charged with insurance fraud, theft by deception, conspiracy to commit insurance fraud, and conspiracy to commit theft by deception, all in the second degree.

This process of providing applicants/insureds with an inducement to apply for life insurance policies by paying their premiums, known as “rebating,” is prohibited by the insurance industry as well as state law.

“Rebating fraud is a costly problem for insurance companies but the ultimate victim is the consumer. They’re the ones who pay the price in the form of higher premiums,” said Acting Insurance Fraud Investigator Christopher Iu. “These indictments should serve as a warning that we will not allow criminals to get rich by cheating the insurance system and driving up costs for honest policy holders.”

“This family allegedly conspired in a criminal plot to file more than a dozen fraudulent insurance applications that cost numerous insurance companies millions of dollars in ill-gotten commissions, rebates, and free-short-term insurance,” said New Jersey Attorney General Christopher Porrino. “Though the alleged scheme was complicated, the defendants carefully shepherded illicit funds through a series of transactions, knowing that they would reap hundreds of thousands of dollars in undeserved commissions along the way.”