A central New Jersey husband and wife who ran a now-defunctinsurance brokerage firm have pleaded guilty to their roles in ascheme to steal more than $770,000 by failing to remit insurancepremiums to seven insurance companies.

Brian P. Mohen pleaded guilty to second-degree misapplication ofentrusted property and two counts of third-degree failure to filean income tax return. His wife, Lisa A. Stanko-Mohen, pleadedguilty to one count of third-degree misapplication of entrustedproperty and two counts of third-degree failure to file an incometax return.

Under the plea agreement, prosecutors agreed to recommend thatMr. Mohen be sentenced to eight years in state prison and that Ms.Stanko-Mohen be sentenced to five years of probation. In addition,the defendants will execute consent judgments that will requirethem to pay a total of $660,446 in restitution and $116,451 inunpaid taxes, including interest and penalties.

“The defendants had a fiduciary obligation to their clients toremit insurance premiums to insurance companies, but chose insteadto selfishly line their own pockets,” New Jersey Acting AttorneyGeneral John Hoffman said. “This type of crime, which ultimatelyincreases insurance rates for honest New Jerseyans, will not betolerated.”

“Today's guilty pleas show that the Office of the InsuranceFraud Prosecutor continues to make the investigation andprosecution of corrupt insurance brokers a top priority,” ActingInsurance Fraud Prosecutor Ronald Chillemi said.

The defendants were the managing directors of Arden FinancialServices, Inc., located in Far Hills Borough, New Jersey. Thecompany specialized in the sale of management liabilityinsurance.

In pleading guilty, Mr. Mohen admitted that between February 28,2007 and June 7, 2010, he was responsible for the misappropriationof approximately $770,768. Ms. Stanko-Mohen admitted that shewas responsible for the misappropriation of more than $1,000. An investigation by the New Jersey Office of the Insurance FraudProsecutor determined that the defendants had misappropriated themoney by failing to remit premiums they received to seven companies– Indian Harbor Insurance Company ($300,900), Great AmericanInsurance Company ($128,694), Catlin Specialty Insurance Company($123,250), XL Specialty ($89,250), Navigators Insurance Company($71,823), The Camden Fire Insurance Association ($52,650), andGreenwich Insurance Company ($4,200).

Prosecutors said that New Jersey law and Arden's produceragreement with the insurance companies established a fiduciaryrelationship between Arden and the insurance companies with whichArden was doing business and required Arden to hold all insurancepremiums it received in a segregated trust account. The comminglingof premiums with any other funds or the misappropriation orconversion of premiums to Arden's or the defendants' own use wasexpressly prohibited by New Jersey law.

The investigation determined that the defendants commingledtrust account funds with office funds, failed to remit premiums dueand owing to those insurance companies, and misappropriatedpremiums for their own purposes.

Once the defendants' fraudulent actions were discovered, theinsurance companies made good on the policies, so that thepolicyholders did not lose coverage, prosecutors said.

The defendants also admitted that they failed to file an incometax return for the tax years ending 2008 and 2009. Theinvestigation determined that they subsequently failed to pay$49,900 in income tax for 2008 and $21,969 in income tax for2009.