The owner of multiple property/casualty insurance operations in northern Illinois has been indicted once again, this time on charges that he defrauded more than 100 clients.
Todd J. Fendler, of Rockford, Ill., previously had been charged in federal court on Feb. 28 with one count of wire fraud and one count of mail fraud in connection with a scheme to defraud former insurance clients of his businesses.
An indictment handed down by an Illinois grand jury on Aug. 22, however, supersedes the previous indictment and charges Fendler with 19 counts of wire fraud and one count of mail fraud in connection with his alleged fraudulent activity.
Fender owned and operated various insurance entities in Rockford, including Northern Illinois Insurance Agency Inc., Northern Underwriting Managers (NUM) and Surplus Market Solutions LLC.
The February indictment alleged 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,” according to the U.S. Attorney’s Office for the Northern District of Illinois. The fake checks were then deposited into bank accounts connected with Surplus Market Solutions, the February indictment alleged.
Those types of activities were similar to those described in complaints filed by former clients of Fendler and his insurance organizations with 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.
The Kansas Insurance Department in March 2017 also revoked Fendler’s nonresident producer’s license in that state after an investigation found that, among other things, he “violated the insurance law or regulation of another state,” “improperly withheld, misappropriated or converted moneys or properties” in the course of doing business, and “has used a fraudulent and dishonest act and has demonstrated untrustworthiness in the conduct of business in this state.”
The current, superseding indictment alleges Fendler used the methods noted above 鈥� obtaining clients’ bank account information, wrongfully removing funds from client bank accounts via ACH and EFT withdrawals, and creating fictitious checks purportedly written by insurance applicants and depositing them into bank accounts he controlled 鈥� to defraud more than 100 former insurance clients out of over $800,000.
If convicted, Fendler faces a maximum of 20 years in prison and a maximum fine of $250,00 for each of the 20 counts against him, along with restitution.
In announcing the superseding indictment, the U.S. Attorney’s office stated that if Fendler is convicted, “the Court must impose a reasonable sentence under the advisory United States Sentencing Guidelines.”
The Aug. 22 indictment was announced by Joel R. Levin, Acting United States Attorney for the Northern District of Illinois, and E. C. Woodson, Inspector-in-Charge of the U.S. Postal Inspection Service in Chicago. Assistant U.S. Attorney John G. McKenzie is representing the government.
NUM previously advertised with Insurance Journal and its affiliate, MyNewMarkets.com. IJ first became aware of the situation with NUM via complaints submitted to both sites that mirror those described in the earlier indictment, as well as the two orders of revocation issued by Illinois 鈥� which Insurance Journal obtained through a Freedom of Information Act request 鈥� and Missouri’s non-renewal orders, which are accessible on the insurance department’s website.
Fendler told Insurance Journal 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 submitted complaints had premiums that were past due and either didn’t have the money or didn’t want to pay.
Fendler’s arraignment will be held at a later date before U.S. Magistrate Judge Iain D. Johnston.
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