This story is reprinted with permission from FC&&S Legal, the industry'sonly comprehensive digital resource designed for insurancecoverage law professionals. Visit the website to subscribe.

Kimberly Graziano, a former insurance broker on Long Island whopreviously pleaded guilty to charges of grand larceny, scheme todefraud and other crimes has been sentenced to three to nine yearsin prison.

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The court also ordered Graziano to pay a total of $1.8 millionin restitution to her victims.

Graziano owned and operated K.A.G. Insurance Brokerage, Inc., inIslandia, New York.

Several different schemes

According to prosecutors, Graziano and K.A.G. Insurance engagedin several distinct schemes to defraud a financing company, herclients, and several insurance carriers including National GeneralInsurance, Progressive Insurance Company, MetLife, Tudor, AIG, andGolden Insurance Company.

Suffolk County District Attorney Thomas Spota said in astatement that Graziano had “falsified contracts by inducing afinancing company, Alliance Premium Funding Corp. of Floral Park,to financially back policies that purported to be for her agency'scorporate customers. The investigation found the defendant neveractually purchased insurance coverage for her clients.Consequently, Graziano and her firm were indicted in March of lastyear for the theft of more than $1 million in falsely financedinsurance coverage.”

Prosecutors said that there was evidence of nearly 30 forgedfinancing contracts totaling in excess of $1 million of stolenfunds from Alliance Premium Funding.

'She left a real mess in her wake'

In a related scheme, Graziano collected premium payments andfalsified insurance cards and false certificates of liabilityinsurance coverage to convince her customers that they hadinsurance coverage in place when, in fact, they did not have anyinsurance, according to prosecutors.

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“Her schemes began to unravel when her clients' vehicleregistrations were suspended by DMV for lapses in insurancecoverage, and claims made on commercial insurance policies werebeing denied by the insurance carriers for lack of a policy. Sheleft a real mess in her wake,” District Attorney Spota said.

In 2015, K.A.G. Insurance's license to operate as an insurancebroker expired and no renewal application was filed. Despite this,Graziano and K.A.G. Insurance “continued to operate and extendseveral illegal schemes that ultimately victimized several dozenfirms,” District Attorney Spota added. Cement truck operators,towing companies, and snow removal businesses were among thevictims scammed by Graziano.

Lost business, fines for commercial clients

Many of Graziano's commercial clients lost business and had todeal with DMV fines as well as tens of thousands of dollars infines assessed for operating without valid workers' compensationcoverage, according to the district attorney.

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Graziano and K.A.G. Insurance pleaded guilty to nine charges ofgrand larceny, scheme to defraud in the first degree, three countsof criminal possession of a forged instrument in the second degree,insurance fraud in the fifth degree, and a violation of stateinsurance law.

Steven A. Meyerowitz, Esq., is the director of FC&S Legal,the editor-in-chief of the Insurance Coverage Law Report, and thefounder and president of Meyerowitz Communications Inc. Email himat [email protected].