Owner of Legal Benefits Company Charged in $30M Loan Fraud
Federal prosecutors on Friday announced charges against the owner of a legal benefits company for allegedly defrauding multiple lenders out of $30 million.
March 16, 2018 at 03:46 PM
3 minute read
Federal prosecutors on Friday announced charges against the owner of a legal benefits company for allegedly defrauding multiple lenders out of $30 million.
Gary Alan Frank, 47, of Philadelphia, was charged by criminal complaint with one count of wire fraud by the U.S. Attorney's Office for the Eastern District of Pennsylvania.
Frank allegedly defrauded several prospective lenders through his business, the Legal Coverage Group Ltd., which contracts with employers that offer their employees a legal plan as part of their employee benefits plans, prosecutors said in a statement Friday.
“In late 2014 Frank secured a $30 million loan from two lenders, Prudential
Insurance Co. of America and Prudential Retirement Insurance and Annuity
Co. (collectively, 'Prudential'), by making various false representations regarding the size and revenue of the Legal Coverage Group's business. After obtaining these funds, Frank and the Legal Coverage Group continued to deceive Prudential and other lenders, including various individuals,” prosecutors said.
“When the relationship between Prudential and the Legal Coverage Group soured in
2017, Prudential sued the Legal Coverage Group and Frank in New York state court,” prosecutors said, “Soon after Prudential brought this suit, Frank caused counsel for the Legal Coverage Group to provide fraudulent bank documents to Prudential. For example, on or about Oct. 11, 2017, Frank caused the Legal Coverage Group's counsel to email a false September 2017 bank account summary to Prudential's attorney. The false account summary for the Legal Coverage Group reflected an ending balance of $1,526,322.12, even though the actual ending balance for this period was approximately $13,114.24.”
While the New York litigation was ongoing, prosecutors said, Frank allegedly had an attorney with Legal Coverage Group deliver three additional false Bank of America account summaries to a lawyer for Prudential.
Additionally, on Jan. 26 of this year, Frank allegedly filed a false Chapter 11 bankruptcy petition for Legal Coverage Group in Philadelphia federal court, according to prosecutors. Prosecutors alleged that during the time of the bankruptcy proceedings, Frank “made and caused others to make additional material misrepresentations regarding the Legal Coverage Group, until at least March 1, 2018, when the government executed a court-authorized search of the company's premises.”
If Frank is convicted on this count, he faces up to 20 years in prison, three years of supervised release, and a $250,000 fine.
Frank's attorney, Robert Welsh of Welsh & Recker, said on Friday “he's cooperating with the authorities by returning assets and participating in interviews.” He added that the cooperation was part of the conditions for Frank's release and that there was no plea deal on the table.
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