2 Ex-Agency Officials Sentenced in $10-Million Insurance Scam

A federal judge on Monday sentenced two former officials of a now-defunct Irvine insurance agency, one to 2 1/2 years in prison and another to probation, for their roles in a scheme that bilked millions of dollars from policyholders, prosecutors said.

Michael A. Rubell, 54, the former chairman of Rubell Helm Insurance Services Inc., was sentenced to the prison term, to be followed by three years of supervised release.

Kathleen Stewart, formerly Kathleen Helm, once an executive vice president of the company, received three years of probation, including six months of home detention.

Assistant U.S. Atty. George Cardona said the sentences are the most recent in a case that gained national attention when a U.S. senator cited it as an example of how some in the insurance industry preyed on small-business owners.

Rubell pleaded guilty in August, 1991, to charges of mail fraud, embezzlement and tax evasion in a scam that left thousands of employees in a variety of industries in California, Texas, Louisiana and Florida without health and life insurance.

The next year, Stewart, 42, pleaded guilty to charges of embezzlement and tax evasion, admitting she spent the money on a lavish lifestyle.

In making their pleas, the two agreed to testify on behalf of the government against other defendants, including Stewart’s former husband, James B. Helm, Cardona said.

Authorities have said they believe as much as $10 million was embezzled by company officials from a multimillion-dollar pool of group insurance premiums during the company’s five years in business. The company was closed in September, 1989, after a six-month probe. It had offices in Irvine, Fresno and Maitland, Fla., a suburb of Orlando.

Rubell Helm Insurance, which once promoted itself as a leader in group insurance, came under suspicion in early 1989 and became a subject of an investigation by a subcommittee of the U.S. Senate Governmental Affairs Committee in May, 1990.

Earlier this month, three former company officials, convicted by a federal jury in September of conspiracy and fraud, were sentenced to prison terms and probation, Cardona said.

James Helm, 44, a former Laguna Niguel resident who was president of the company, was sentenced to 48 months in federal prison; Scott K. Clawson of San Juan Capistrano was sentenced to three years of probation, with six months’ home detention, and Douglas L. Taylor, 35, formerly of Mission Viejo, received 24 months in prison.

Cardona said he expects the convictions will be appealed.