Morris County Man Admits Selling Bogus Health Insurance, Netting Nearly $1M

A Morristown man pleaded guilty Wednesday to conspiracy to commit wire fraud after selling fake health insurance to thousands of customers and bringing in nearly $1 million, United States Attorney Paul Fishman announced.

David Clark, 70, owned and operated Real Benefits Association, LLC (RBA) and established it as a purported labor organization and as a way to market and sell health insurance to the general public through a “welfare plan.”

RBA was insured by Perfect Health, a New York insurance company until 2008. At that time, Fishman said, Perfect Health was purchased by Health Insurance Programs (HIP), which then discontinued its insurance policy with the RBA Welfare Plan.

At that time, Fishman said, RBA was notified by the federal government that it no longer qualified as a labor organization and was required to cease operations.

Clark continued on, however, marketing and selling the health insurance plans to participants, Fishman said. Customers began complaining to their respective states’ insurance departments when medical claims were not being paid, which prompted cease and desist orders and an investigation, Fishman said.

From December 2008 to July 2011, Clark and coconspirators collected some $1,789,596 in premiums for RBA health insurance coverage, Fishman said. Of that, $962,027 was diverted for Clark’s personal use.

Clark used the money to fund personal debit and credit card purchases, college tuition payments and made deposits into a relative’s bank account, Fishman said. 

Clark now faces a maximum penalty of up to 20 years in prison and a $250,000 fine or twice the gain or loss caused by the offense. He is scheduled for sentencing Aug. 20, 2014.