NJ officials announced that two Monmouth County men have been sentenced for engaging in a fraudulent scheme, pursuant to which they unlawfully issued free life insurance policies to individuals and recouped more than $4 million in fraudulent commissions on those policies from various insurance companies.
According to The NJ Attorney General’s Office, Frank Pescatore, 73, of Asbury Park, was sentenced to three years in State prison by Superior Court Judge Lourdes Lucas in Monmouth County on Monday. Pescatore pleaded guilty to second-degree insurance fraud on December 3, 2020.
Officials said he was sentenced as a third-degree offender under a plea agreement.
“Frank Pescatore will serve time in prison for his lead role in a scheme that defrauded the insurance system of millions for his personal gain,” said Attorney General Grewal.
His crimes not only involved issuing policies that should not have been issued and that lapsed prematurely, but are also the type of offenses that contribute to higher insurance costs in the long run for all of us. This sentence sends a strong deterrent message that we will hold accountable those that cheat the system.”
Pescatore’s son, Evan Pescatore, 38, of Highlands, a former life insurance agent, was sentenced to three-years of non-custodial probation on Monday for participating in the scheme. He pleaded guilty to third-degree insurance fraud on December 3, 2020.
In pleading guilty, the two men admitted to defrauding insurance companies in a scheme to provide high-value life insurance policies at no cost to applicants in order to obtain commissions from the insurance companies. Eighteen policies – with face values totaling $61.5 million – were caused to be issued by eight insurance companies in the scheme.
This process of providing applicants and 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 by New Jersey law.
The FBI estimates that the total cost of non-medical insurance fraud is more than $40 billion per year, costing the average U.S. family between $400 and $700 per year in the form of increased premiums.
“My office will continue to pursue these cases to protect the integrity of New Jersey’s insurance industry,” said Acting Insurance Fraud Prosecutor Tracy M. Thompson. “These crimes affect every policy holder who must pay higher insurance costs to cover the losses suffered by insurance carriers.”
Deputy Attorney General Jennifer L. Menjivar represented the State at sentencing. Detectives Natalie Brotherston, Taryn Seidner, and Matthew Armstrong coordinated the investigation with assistance from analyst Kelly Celenza.