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The owner of a Rockford, Illinois-based managing general agency that last year had its license revoked or non-renewed by two separate state insurance departments has been indicted by a federal grand jury for mail and insurance fraud.

The U.S. Attorney’s Office for the Northern District of Illinois announced that Todd Jeremy Fendler, who controlled and operated various insurance entities, including Northern Illinois Insurance Agency Inc., Northern Underwriting Managers (NUM) and Surplus Market Solutions LLC, was charged with one count of wire fraud and one count of mail fraud related to a scheme to defraud former insurance clients of Fendler’s businesses.

According to the U.S. Attorney’s Office: “The indictment alleges that Fendler obtained bank account information from businesses and individuals who had applied for insurance policies through Fendler’s companies, and that Fendler used that information to create fictitious checks purportedly issued by the applicants. Fendler deposited those fictitious checks, the indictment charges, into bank accounts of Surplus Market Solutions.”

Two checks were specifically identified in the indictment: one “for $1,447 purportedly drawn upon a bank account of the Hollywood Wax Museum Myrtle Beach LLC, and a check for $5,205.79 purportedly drawn upon a bank account of the Beer Haus LLC.”

The charges are similar to those alleged by former clients of Fendler and his insurance organizations in complaints to the Illinois Department of Insurance and the Missouri Department of Insurance, both of which non-renewed Fendler’s insurance licenses last year.

Previous Illinois and Missouri revocation/non-renew orders alleged that Fendler and his company had a pattern of wrongly debiting funds from client accounts electronically, via Automated Clearing House (ACH) withdrawals, without authorization. Accounts were allegedly debited even when premiums had previously been paid or the policy had been cancelled.

In addition to citing numerous instances in which Fendler and NUM wrongly debited client accounts, over-charged clients and failed to submit premium payments to insurance companies, the Aug. 24, 2016, Missouri order alleged that Fender falsely applied for a non-resident license for Surplus Market Solutions LLC, using the license number and name of a former producer, Mark Traviranus. Traviranus is listed on the application as producer, applicant and sole owner of Surplus Market Solutions in Crystal Lake, Ill., the order alleges.

Traviranus, who no longer holds a non-resident producer license in Missouri, told regulators that he had no knowledge of Surplus Market Solutions and had not authorized Fendler or anyone else to submit a license application on his behalf.

NUM previously advertised with Insurance Journal and its affiliate, MyNewMarkets.com. IJ became aware of the situation with NUM via complaints submitted to both sites that mirror those described in the indictment, as well as the two orders of revocation issued by Illinois — which Insurance Journal obtained through a Freedom of Information Act request — and Missouri’s non-renewal orders, which are accessible on the insurance department’s website.

Fendler confirmed in April 2016 that NUM operates “as an ACH only company.” NUM bills in two ways, he said. “We bill pay in full or via the ACH. So if we allow someone to do monthly payments, we’re going to do it via ACH.”

Fendler suggested at that time that customers who have submitted complaints have premiums that are past due and either don’t have the money or don’t want to pay.

Each count against Fendler carries a maximum penalty of 20 years in prison and a maximum fine of $250,000. Fendler’s arraignment is scheduled for March 8, 2017, before U.S. Magistrate Judge Iain D. Johnston in Rockford.

The indictment was announced by Zachary T. Fardon, U.S. Attorney for the Northern District of Illinois; and E. C. Woodson, Postal Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. The government is being represented by Assistant U.S. Attorney John G. McKenzie.

Related:

• Missouri Non-Renews Insurance License of Northern Illinois Agency Owner, Again
• Despite Having License Revoked by 2 States, Northern Illinois Agency Continues to Operate

Topics USA Excess Surplus Illinois Missouri