Former Irvine Insurance Executive Pleads Guilty : Crime: Michael Rubell admits to bilking clients of $10 million, promises to help with other fraud cases.
A one-time Irvine insurance executive admitted in a Los Angeles court Monday that he bilked thousands of people in California and three other states of about $10 million in bogus insurance premiums. He promised to help authorities investigate other insurance fraud cases, federal officials said.
Michael A. Rubell, 51, pleaded guilty to charges of mail fraud, embezzlement and tax evasion, authorities said. He faces a 30-year prison sentence.
Rubell, once regarded as a highly successful insurance broker, made the admission almost two years after the California Insurance Department revoked his license to sell insurance after a six-month investigation into alleged wrongdoings and embezzlement.
Rubell was chairman of Irvine-based Rubell Helm Insurance Services Inc. The now-defunct company also had offices in Fresno and Maitland, Fla., U.S. Atty. Robert W. Genzman said in a statement issued at Orlando, Fla.
Authorities said that in five years of business, Rubell Helm administered worthless group health and life insurance plans for employers in California, Florida, Texas and Louisiana. It collected premiums that should have been used to purchase insurance coverage and pay employee claims.
“Thousands and thousands of people here and in the other states thought they had insurance coverage but really had nothing but worthless paper,” said Assistant U.S. Atty. James G. Glazebrook, who will head prosecution of Rubell on additional Florida charges.
Rubell Helm, which was shut down in September, 1989, “used various fraudulent and deceptive means to conceal the fact that employees were not receiving the insurance coverage represented,” Genzman said, adding:
“During this time, Rubell and others misappropriated millions of dollars in premiums paid by employers to Rubell Helm Insurance Services, using the money to live lavish lifestyles.”
Before the firm was dissolved, Rubell and his partner, James Helm, reportedly paid themselves $369,000 a year each, used company funds to remodel their homes and to pay $100,000 to a personal tailor and $5,000 to an exercise consultant, authorities said.
Rubell and Helms were the subjects of a subcommittee of the Senate Governmental Affairs Committee in May, 1990. At the hearing, Sen. Sam Nunn (D-Ga.) charged the two with “operating an illegal insurance operation.”
Nunn testified at the time that Rubell and Helms were part of a widespread insurance scam in which insurance con artists prey on owners of small businesses. The owners, eager to buy affordable medical insurance for their employees, purchase the plans. Part of the money taken from the employers was used to pay smaller claims. But thousands of larger claims remain unpaid, authorities claim.
As part of his plea agreement, Rubell is expected to cooperate with the government in a continuing investigation being carried out by several government agencies.
