TALK OF THE SOUND EXCLUSIVE: New Rochelle Chamber of Commerce Under Investigation by New York State Department of Financial Services Criminal Investigation Unit

NEW ROCHELLE, NY — The New Rochelle Chamber of Commerce has been under investigation by the New York State Department of Financial Services Criminal Investigation Unit for almost a year, Chamber President Rosemary McLaughlin has confirmed to Talk of the Sound in an exclusive interview on Friday.

McLaughlin stated that the Chamber was cooperating fully with state investigators and turned over all records requested by investigators from the Department of Financial Services CIU.

The man at the center of the investigation is insurance broker Norman J. Michaels Jr., 61, who was arrested Tuesday on charges stemming from an investigation of the Otego Chamber of Commerce in Otego, NY.

Michaels was led out of his White Plains, NY office in handcuffs last week by officers from the New York State Police.

The New York State Department of Financial Services has charged Michaels in a scheme to defraud an upstate insurance company through the Otego Chamber. The scheme is similar to a program that was offered by both the New Rochelle Chamber of Commerce and the The Business Council Of Westchester — bundling hundreds of randomly acquired insurance customers and placing them as “members” of a business association like a chamber of commerce. Similar schemes have proliferated in over two dozen states including Vermont, Missouri and North Carolina.

Benjamin M. Lawsky, Superintendent of Financial Services, announced Wednesday that Michaels was charged with grand larceny for taking $62,000 in commissions from the enrollment of more than 400 people in a phony category of insurance that did not exist.

Talk of the Sound first became aware of the investigation that led to Michaels arrest in May 2012 after preparing a story on the unprecedented growth of the membership of the New Rochelle Chamber of Commerce after Eli Gordon was hired as Executive Director.

Talk of the Sound obtained and began investigating the membership list, contacting “members” from New Jersey, Connecticut, Long Island, even as far away as California. Of those who would speak to Talk of the Sound, few had even heard of the New Rochelle Chamber of Commerce or could even name their insurance provider.

Talk of the Sound became aware that the Chamber had grown from less than a hundred members to over 700 members in a matter of months prompting inquiries to understand the unprecedented growth. The 700 figures was roughly the same level of growth previously seen at the Business Council Of Westchester. The President and CEO of the Business Council ff Westchester is Dr. Marsha Gordon, wife of Eli Gordon. Gordon was hired by the New Rochelle Chamber largely on the strength of his presumed ability to leverage his wife’s success with the WBC, sources within the Chamber tell Talk of the Sound.

An inquiry made with the Department of Financial Services as to the possible significance of the 700 figure led to a series of discussions with David Neustadt, Deputy Superintendent of the New York State Department of Financial Services.

Talk of the Sound has since cooperated with the New York State Department of Financial Services by providing information and withholding publication of our reporting until Michaels was arrested.

The story on the growth of the New Rochelle Chamber of Commerce was held until January 2013 and ran as New Rochelle Chamber of Commerce’s Rapid Growth Brings Benefits and Some Controversy.

Current and former members of the board of the Chamber of Commerce were interviewed by Douglas Libertucci, Criminal Investigator for the New York Department of State Criminal Investigation Unit.

In August 2012, Eli Gordon, Executive Director of the New Rochelle Chamber of Commerce, was subpoenaed as part of the DFS investigation based on information provided to the Department of Financial Services by Talk of the Sound.

In October 2012, the Executive Board of the New Rochelle Chamber of Commerce was informed of the ongoing criminal investigation of the organization.

Eli Gordon did not not respond to requests for comment.

President Rosemary McLaughlin told Talk of the Sound on Friday that the New Rochelle Chamber of Commerce terminated their relationship with Michaels and Associates in 2012, and that he was retroactively removed as “broker of record” for the Chamber going back to June 2012.

McLaughlin was recently elected the Chairperson of the New Rochelle Republican Party.

In the Otego, NY case, Michaels has been, according to a DFS statement, accused of stealing the commissions from MVP Health Care of Schenectady as the result of the “improper enrollment of individuals into small group and sole proprietor health plans insured by MVP and offered through the Otsego County Chamber of Commerce.”

The DFS complaint alleges that insurance policies were sold to downstate residents who were purportedly enticed to buy them on the basis that the coverage was less expensive than health insurance in the New York City area. However, in most cases, individuals must reside or work in the geographical area where a health insurance plan is offered in order to be eligible. The insurance policies of all of the 400 people were cancelled after it was discovered they were ineligible to join the plan.

Michaels had business dealing with a wide variety of business associations and chamber of commerce in New York State, most prominently with the Business Council Of Westchester where he was on the board of directors. Michaels was also previously listed as a member of the New Rochelle Chamber of Commerce.