Jail For Morristown Man That Sold Bogus Health Insurance

MORRISTOWN, NJ — A Morristown man that admitted to selling bogus health insurance has been sentenced to 18 months in prison, U.S. Attorney Craig Carpenito announced.

David Clark, 75, owned and operated Real Benefits Association, LLC (RBA) and established it as a purported labor organization and as a way to market and sell health insurance to the general public through a "welfare plan."

That company was insured by Perfect Health, a New York insurance company, through 2008. When Perfect Health was purchased by Health Insurance Programs (HIP) that year, HIP discontinued its insurance policy with the RBA Welfare Plan. RBA was notified by the federal government that it no longer qualified as a labor organization and was required to cease operations.

Clark continued on, however, marketing and selling the health insurance plans to participants under the RBA name, Carpenito said. Customers eventually caught on, and started complaining to local insurance departments that their medical claims were not being paid, which prompted cease and desist orders and led to the an investigation, Carpenito said.

From December 2008 to July 2011, Clark collected some $1,789,596 in premiums for RBA health insurance coverage, Carpenito said. Of that, $962,027 was diverted for Clark's personal use.

Clark used the money to fund personal debit and credit card purchases, college tuition payments and made deposits into a relative's bank account, Carpenito said.

Reporting By Jason Koestenblatt

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