HARRISBURG -A Lancaster County insurance agent was arrested by agents from the Attorney General’s Elder Abuse Unit and Insurance Fraud Section for allegedly defrauding his elderly clients out of approximately $284,000.
Attorney General Tom Corbett identified the defendant as Steve A. Brubaker, 55, 253 Ammon Ave., Elizabethtown. Brubaker is the owner of the insurance business TWC Resources, 218A W. Governor Road, Hershey, and was also a registered representative for Woodbury Financial Services, Inc., headquartered in Oakdale, MN.
The investigation, which began in October 2008, focused on an investment scheme Brubaker devised in order to convince elderly clients to invest in unregistered securities, in the form of “private bearer bonds” issued by TWC Philanthropic Pool.
Corbett said that bearer bonds are a type of unregistered stock, which no records are kept of the owners or transactions involving ownership. Whoever physically holds the bearer bond papers owns the stock or corporation. Federal law has prohibited the issuance of bearer bonds since 1982.
The charges state that Brubaker allegedly created a concept of the “TWC Philanthropic Pool et alia” (and others) to help people in financial difficulties. Brubaker allegedly told clients that the Philanthropic Pool consisted of a number of businessmen who were pooling financial resources to aid other businessmen in financial need.
According to the criminal complaint, Brubaker sold unregistered securities to nine clients, who ranged in age from 57 to 83 years old. Each client was sold $30,000 worth of private bearer bonds, which Brubaker was supposed to invest on their behalf.
“The tactics that Mr. Brubaker used on his clients were unprofessional and dishonorable,” Corbett said. “Brubaker took advantage of unsuspecting seniors by creating a scam where seniors believed they could make a healthy profit on their investments while at the same time helping those in need. We allege that Brubaker simply stole their money and used it for his own personal gain.”
Corbett said that Brubaker allegedly marketed the bearer bonds as having a 36-month term on a $30,000 investment. In one instance, Brubaker allegedly contacted a client by phone about his “new investment opportunity,” told them he was attempting to raise $120,000 for a charity fund and guaranteed that it would pay 8.25 percent interest after three years.
Agents said that another elderly client was allegedly told that the investment opportunity was only available to a limited amount of investors and one investor had recently backed out.
Corbett said that Brubaker allegedly warned the clients that he already had other clients ready to invest if they didn’t agree to the investment opportunity.
According to the criminal complaint, Brubaker also allegedly received more than $104,500 from an elderly woman whose deceased daughter had an insurance policy through Brubaker. Following the death of his client’s daughter, Brubaker contacted the woman and allegedly offered to handle the outstanding financial affairs and invest the remaining money.
Agents said that Brubaker never provided the woman with financial statements regarding her “investment,” but deposited approximately $380 into the woman’s account each month from his own personal account.
Additionally, Brubaker never provided the elderly woman with copies of anything she signed or certificates for her investments. Other elderly consumers were allegedly provided official looking “certificates of investment”, which Brubaker created.
Brubaker is charged with six counts of theft by deception, six counts of theft by failure to make required disposition of funds received, five counts of sales and purchases under the securities act and one count of insurance fraud. He faces a maximum penalty of up to 124 years in prison and a $120,000 fine.
He will be prosecuted in Lancaster County by Senior Deputy Attorney General Mark Bellavia of the Attorney General’s Insurance Fraud Section.