LANSING, MI – Attorney General Bill Schuette today announced the sentencing of Oakland County insurance broker, John Flaherty, 70-years-old, of Troy.
He was sentenced by Judge Daniel P. O’Brien, in Oakland Circuit Court, to serve 14 months to 20 years imprisonment and ordered to pay $1.3 million restitution to his victims following a conviction on one count of Conducting a Criminal Enterprise (Racketeering).
“Local insurance agents trusted that this man was doing legitimate business when in fact he was taking advantage of them and their customers in order to benefit himself,” said Schuette. “This violation of trust is against the law and will not be tolerated.”
The charges were filed after it was discovered that Flaherty was allegedly pocketing insurance premiums paid by local insurance agents on behalf of their customers and intended for the insurance companies, using his insurance brokerage firm, Alternative Insurance Services, Inc.
The Attorney General’s investigation revealed that Flaherty, starting as early as 1999, would take small sums of insurance premium money from agents and spend it on himself rather than forwarding it to the insurance companies to whom the money was owed.
Flaherty used the money to pay for expensive cars, clothing and even to live in a hotel for over a year, while he was using additional premiums to pay the mortgage on a home he owned. Flaherty was able to cover the fraud for years by taking money from other premiums to cover the money he stole. However, once his business slowed he was unable to continue covering the fraud. All told, Flaherty had taken $1.3 million.