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Ex-insurance agent in W.Va. faces fraud charge

September 22, 2004|by DAVE McMILLION

charlestown@herald-mail.com

CHARLES TOWN, W.Va. - A former insurance agent in Charles Town has been charged with collecting $53,571 from customers for insurance policies that did not exist, according to court records and a Charles Town Police Department investigator.

Alleged victims in the case included the Jefferson County Chamber of Commerce and the Old Opera House, court records state.

Michael J. Cross, 73, was picked up last week in Nassau County, Fla., on a warrant issued by the Charles Town Police Department, said Detective Mark Spessert.

Cross, of 95113 Sago Drive, Fernandina Beach, Fla., was released by Florida authorities under the stipulation that he surrender to local police within three days, Spessert said.

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Cross turned himself in at Jefferson County Magistrate Court last Friday and was arraigned on a charge of fraudulent schemes, according to Spessert and magistrate court records.

Cross was released on a $50,000 bond.

Conviction under the fraudulent schemes charge carries a possible sentence of one to 10 years in jail or up to a year in jail and a fine of up to $2,500, court records say.

Cross for years sold insurance at the Moore Insurance Co. office at the corner of George and Liberty streets in Charles Town, Spessert said. He closed the office last fall.

The investigation into the case began in February when Spessert was contacted by an investigator from the West Virginia Office of the Insurance Commissioner, court records say. The investigator, Paul D. Epperly, said he had information about the Moore Insurance Agency allegedly writing fraudulent or nonexisting policies and collecting money for them from customers, according to court records.

Epperly was contacted by an attorney representing an insurance company for a local church, which believed it had obtained insurance from Cross, court records state.

Tanya Kesner, an attorney representing the Celina Group, received a claim from the St. Paul Baptist Church in Kearneysville, W.Va., for storm damage to the church, court records state. When officials with the Celina Group checked their records, they discovered the church had no policy obtained through Moore Insurance Agency, said Spessert and court records.

Because Cross used Celina Group's name to establish a nonexisting policy for the church, Celina Group had no choice but to settle the $59,850 claim which the church submitted, court records allege.

Before Oct. 4, 2001, St. Paul Baptist Church was insured by another company, but the policy became unavailable to the church, court records state.

Cross told church trustees that another company could replace the policy and wrote a "binder-type policy" for the church for $505, court records allege.

A binder policy is an application that a customer fills out to start the process of obtaining insurance, Spessert said. The application is forwarded to an insurance company for development of the policy. When the binder policy paperwork is filled out, a certain amount of money normally is collected as a down payment, Spessert said.

Kesner told police that Cross' reason for not having the church insured is that he misfiled the original application, records allege.

On Feb. 23, Spessert and Epperly met with Mary Via, executive director of the Jefferson County Chamber of Commerce, about insurance the Chamber paid for through Moore, court records say.

Since 1995, the Chamber of Commerce had been paying for a director's and officers' liability insurance, but Via discovered that the insurance was not in effect, court records state.

Each time insurance payments came due for the Chamber of Commerce, Cross would issue a binder policy, court records allege.

The Chamber of Commerce would pay for the binder policy, but no packet detailing their coverage was ever sent to them, according to Spessert and court records.

Since 1995, the Chamber of Commerce paid $24,209 to the Moore Insurance Agency for insurance that did not exist, court records allege.

When he closed the business, Cross sold many of his insurance accounts to Smith Nadenbousch and the Bennett Insurance Agency in Charles Town, Spessert said.

One of the clients whose policy was purchased by Smith Nadenbousch was a local home builder, court records say.

The home builder thought he had insurance for his new homes through an insurance company that a Smith Nadenbousch representative said does not provide builder's risk insurance, court records say.

The home builder had paid $12,369 to the Moore Insurance Agency for new homes since 1999, court records say. The builder later determined that the insurance did not exist, court records allege.

In another case, the Old Opera House in Charles Town paid $16,487 to the Moore Insurance Agency in 2001 and 2002 for insurance that did not exist, court records allege.

Spessert said many of the policies involved were low-risk insurance. For example, the director's and officers' liability insurance for the Chamber of Commerce was intended to protect the Chamber in case of any problems such as embezzlement, Spessert said.

"Basically he took a gamble with these policies, that there wouldn't be any claims," Spessert said.

Cross could not be reached for comment. A woman who answered the phone at his Florida home hung up after a reporter identified himself.

Via said Tuesday night she could not comment on the case in detail, but said local residents were "very surprised" by the situation.

The next step in the case is a preliminary hearing for Cross in magistrate court. The hearing has been scheduled for Oct. 4 at 11:30 a.m.

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