Lawrence Ackerman isn’t going to spend too much time behind bars, but his business career deservedly is over. On January 15, Ackerman, founder of two fake health insurance brokerages, was sentenced in Trenton, N.J. federal court to six months in prison and six months of home confinement for his role in a $6.6 million fraud scheme. He also was ordered to pay $1 million in restitution to the welfare fund of United Auto Workers Local 2326, now based in South River, N.J. Ackerman had pleaded guilty in December 2018 after being indicted in January 2017. His partner in crime, former union president Sergio Acosta, was sentenced a little over a year ago to three years of home confinement, and ordered to pay $32,000. The actions follow a probe by the Labor Department’s Office of Labor-Management Standards, Office of Inspector General and Employee Benefits Security Administration.
Lawrence Ackerman, now 55, a resident of Old Tappan (Bergen County), N.J., headed two legitimate insurance brokerages in Fort Lee, N.J. Unfortunately, he sought to augment his income by setting up two shell companies, Atlantic Business Associates and Atlantic Medical Associates, through which he marketed union insurance plans to people whom he knew were ineligible. Through these sham companies, hundreds of people obtained insurance at inflated premiums, and once enrolled, often filed inflated benefit claims. Acosta enabled this scam by keeping premiums instead of forwarding them to Horizon Blue Cross Blue Shield of New Jersey as required. By the time Horizon cancelled the fraudulent policies and requested that the Department of Labor conduct an investigation, Acosta and Ackerman had rolled up $5.6 million of these fake claims. Acosta kept things going after that by retaining a portion of the ineligible participants, triggering an additional $1 million in losses to the UAW Local 2326 welfare fund.
The DOL investigation led to indictments in January 2017 on various fraud, embezzlement and conspiracy charges. Acosta pleaded guilty in April 2018 to superseding charges of theft, embezzlement and fund conversion; Ackerman pleaded guilty that December to a reduced superseding charge of “delivering $481,500 in health care benefits to ineligible participants.” Under the terms of the agreement, he must pay $1 million in restitution to the union welfare fund. The long delays and light sentences suggest the defendants had first-rate lawyers. It’s too bad that members of Local 2326 are paying higher health insurance premiums on account of the scheme.