Insurance Agents in a “Pickell” After Stealing Premiums

It seems the Pickell cousins are indeed in a bit of a pickle after being found guilty of an insurance fraud scheme that involved stealing premiums from clients.

According to The Mercury, Kevin John Pickell and Robert Francis Pickell have been sentenced by Judge Thomas Parisi in the Berks County Court of Common Pleas to more than two years of incarceration and court supervision. They were charged with the theft of insurance premiums from numerous clients, including six public school districts.

The Pickells, who worked together in KDN Lanchester Corp, which is an insurance brokerage firm in Sinking Spring, were found guilty of stealing more than $800,000 in funds that were set up to pay workers compensation and liability insurance premiums from the Daniel Boone, Exeter, Conrad Weiser, Fleetwood, Schuylkill Valley and Wyomissing school districts. They also stole another $163,000 that was meant to pay insurance premiums for businesses and organizations in New Jersey and Pennsylvania.

On top of jail time and house arrest, the cousins are also required to repay $864,594.56 in restitution, which will be paid off by both men. The money will be given to the insurance companies and organizations that suffered losses due to the thefts, which includes the School Boards Insurance Company (SBIC). $75,000, the proceeds from the sale of KDN Lanchester Corp, has already been given over to the court to go toward that restitution

“When a company like that is victimized, the only way they can cover that loss is by raising rates,” said Frederiksen. “Every policy holder pays the price. Our focus from the beginning of the trial, in addition to encouraging incarceration, we wanted to make sure restitution was dealt with. Our stress for incarceration, too, was to see that they didn’t write a check to buy their way out of jail.”

According to information from the attorney general’s office, the SBIC first reported the missing premiums that should have come from KDN. The SBIC also alerted the six school districts to the missing payments.

Since 2006, KDN and the SBIC had been under agreement that the insurance brokerage firm would collect the premiums and forward them on, minus a commission fee.

Not too long afterwards, in 2007, 2008 and 2009, KDN failed to forward some of the money. After the SBIC threatened to contact the Pennsylvania Department of Insurance in 2007 and 2008, KDN forwarded more than $1 million in overdue premium payments. According to a criminal complaint, when they were contacted about the missing payments in 2009, KDN issued checks that were returned to SBIC for insufficient funds.

Also according to the attorney general’s office, the Pickells reportedly wrote checks from accounts that were set up for insurance premium payments. They are said to have bought cars for themselves and family members, paid off mortgages, and even purchased expensive food and wine. One former employee of KDN, who quit back in February of 2009 after the premiums weren’t being paid, told the attorney general’s office that the Pickells had been living “extravagantly.”

Some employees of the firm also noted that during the investigation the firm stopped paying them through the standard payroll account and started issuing them business checks instead.

In an interview that took place on the day of the sentencing, Robert Pickell’s lawyer, John Fioravanti, stated that his client had gotten in over his head.

“Robert contributed hundreds of thousands of dollars to the business. He kind of got in over his head and kept avoiding the responsibilities,” said Fioravanti, who added that Robert Pickell was diagnosed with depression. He said the Pickells’ troubles began when the business “started to go bad” and they tried to maintain the lifestyle they had become accustomed to. “This guy had a very successful business for a long time.”

Fioravanti also noted that he thought the sentence that the judge handed down was fair. He stated, “I thought it was very thoughtful and actually creative. I think the judge really took into account the guy’s character, his reputation in the community, his potential and his family ties, and the crime and fashioned a sentence that I thought was fair.”

“If they hadn’t been writing so many checks to themselves, their business would’ve been viable,” said Frederiksen. “This was not a one shot deal. Money disappeared week after week, month after month, while they continued to support their lavish lifestyles. There was no effort to cut back on their spending.”

It is unknown if the Pickells’ have had their insurance licenses revoked or if they will have the ability to operate as insurance agents again in the future.

Kevin Pickell received 380 to 780 days in county jail. If he gets released early for good behavior, Judge Parisi added the requirement that he remain under house arrest until the full 780 days is reached, plus an additional one year of house arrest. Pickell must also serve 20 years of probation, according to Nils Frederiksen, from the Pennsylvania Attorney General’s Office.

Robert Pickell was sentenced to 300 to 780 days in county jail with the same sentence restrictions, one year of house arrest after the full sentence has been served and 20 years’ probation, Frederiksen said.

Fioravanti noted that both men were also given the opportunity for work release.

Frederiksen stated that the lengthy probation was a way for the court to guarantee that the two men would not commit similar crimes in the future.

“We’re satisfied the sentence balances the issues of incarceration and restitution, and will make sure both of these men will remain under close supervision and scrutiny. Hopefully they will move forward from this,” he said.

The cousins will report to Berks County jail to start serving their prison terms on September 1^st.