Florida Insurance Agent Awaiting Sentencing in $4.8 Million Premium Diversion

William Rabb

Pensacola, FL (WorkersCompensation.com) — A Florida insurance agent is awaiting his fate after pleading guilty to defrauding erstwhile policyholders, some of whom were his friends, of almost $5 million over an eight-year period.

John M. Thomas of Pensacola, owner of the well-known Thomas Insurance agency, which sold workers’ compensation, commercial liability and property policies, could face at least 20 years in prison, according to federal prosecutors. Sentencing is set for Nov. 29.

Thomas, 51, pleaded guilty unexpectedly last week to wire fraud and money laundering charges in a long-running premium diversion scheme. From 2013 to early this year, Thomas collected premiums from at least 67 clients, but failed to obtain coverage through carriers. He then gave fake insurance certificates and declarations pages to the clients and used the premium payments to purchase such items as an African safari, a Utah ski resort condominium and a Florida beach condominium, a Lexus automobile, gold coins, and expensive restorations to a 1979 Jeep, according to the July indictment.

Prosecutors have asked that most of the property be forfeited.

“It appears that he was well connected with the country club set, some of whom he was taking money from,” said Craig Rettig, a Pensacola plaintiffs’ attorney who has filed suit against Thomas on behalf of commercial property owners who said they were defrauded. “But you don’t see many insurance agents with resort condominiums and luxury cars and restored Jeeps like that.”

Thomas and his attorney did not comment for this article. Prosecutors did not say what brought the fraud to light, or if more indictments are imminent, but that the guilty plea was the result of a joint investigation by the FBI and the Florida Department of Financial Services’ insurance fraud bureau.

Thomas Insurance, housed in a small house near downtown Pensacola, is the target of at least three civil suits brought by former clients who say they were victimized. Two complaints show that business owners discovered the fraud after Hurricane Sally swept through the Panhandle in September 2020 and damaged their properties.

But the property owners saw no action on their claims and no payments. The owners were bilked out of premiums as well as the cost of damage to their properties.

“By not purchasing insurance with the premiums paid by his clients, John M. Thomas caused approximately $2,262,056.74 in unpaid claim losses by hurricane, fire and liability claims,” the U.S. Attorney’s Office for the Northern District of Florida said in the indictment.

According to the suit brought in February by Pensacola Beach Properties Inc., owned by real estate agent Beth Schachner, Hurricane Sally damaged multiple buildings.

“When plaintiff began making contact with the insurance companies believed to have been providing coverage, she was informed that defendant had failed to forward payment to the insurance companies,” the lawsuit complaint explains.

Thomas, without aide of a lawyer in the civil suit, admitted some of the allegations but denied others. Schachner’s attorney did not respond to messages left by WorkersCompensation.com.

In another suit, filed in January, a New York couple who owned a home in Gulf Breeze, Florida, near the beach, charged that their home sustained wind and flood damage in the storm. Thomas told them he had filed the wind claim and promised to send the couple the documentation and policy. He never did, the complaint notes.

“John Michael Thomas negligently breached its duty of care owed toward plaintiffs by failing to procure an insurance policy that covered wind when Hurricane Sally made landfall,” the suit reads.

The property owners, David and Martha Rosner, have demanded a jury trial and unspecified damages.

Rettig’s lawsuit, filed in federal court in March, explains that things began to look fishy when a major apartment complex in Mobile, Alabama, was damaged in a fire in May 2020. The Texas-based owners contacted the insurance carrier, only to be told that Thomas had never taken out a policy on the apartments.

Thomas said there was a “mix-up” and paid $500,000 from a personal account as a downpayment on the claim, Rettig said. A second check from Thomas’ bank account bounced, and that’s when the property owners decided to take legal action.

“At first, I thought that maybe he had made a mistake,” Rettig said. “But looking back, there were a lot of things that didn’t add up.”

Rettig and other attorneys said that policyholders should carefully compare policy documentation to previous policies, looking for anything unusual, and verify with carriers. Dollar amounts on coverage, for example, aren’t often square numbers, but usually include exact amounts. And checks from an agent’s personal account should be an immediate red flag.

Altogether, Thomas collected about $4.8 million in premiums from property owners and businesses over an eight-year period while living a luxurious lifestyle, prosecutors have said. Clients of the Thomas agency who feel they may have been victims of fraud are asked to call the FBI’s Jacksonville office at 904-248-7000, or email Flinsurancefraud@fbi.gov.

Attorneys involved with the cases said they hope the government will allow the forfeitures of Thomas’ properties to be used to pay restitution to the victims. Thomas appears to have held an errors and omissions insurance policy on his agency, but it is unlikely to pay because of the fraud, one lawyer said.

This is not the first incident of a prominent insurance agent being accused of defrauding friends and neighbors. The FBI notes that premium diversion is the most common type of insurance fraud. And reports from around the country suggest that falsified certificates of insurance and other documentation continue to increase.

Stakeholders may remember the case of husband-and-wife insurance agents in Brunswick, Georgia, accused of premium diversion and faking certificates in 2018. Robert and Sherry Coleman were arrested after an audit by a workers’ compensation carrier uncovered some alleged discrepancies.

Agent Robert Coleman was acquitted by a jury of charges in late 2019, but Sherry pleaded guilty last year to 14 counts of insurance fraud, according to news reports.

Many similar cases have been seen around the country. The Coalition Against Insurance Fraud, which tracks news reports of fraud, notes more than 35 cases this year. In Mission Viejo, California, for example, an insurance agent was charged in April with 90 counts of fraud and diversion.

Unlike the high-flying Pensacola agent, though, the woman collected just $183,000 in stolen premiums over eight years, prosecutors said, according to a local newspaper.

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