New Rochelle Chamber of Commerce Issues Statement on Arrest of Insurance Broker

Written By: Robert Cox

NEW ROCHELLE, NY — The New Rochelle Chamber of Commerce issued its first statement since Talk of the Sound reported exclusively that the organization is under investigation by the New York State Department of Financial Services Criminal Investigation Unit.

Executive Director Eli Gordon sent the following message to board members. A copy of the letter was provided to Talk of the Sound.

April 10, 2013

Dear Board Members,

As you are aware Mr. Norman Michaels was recently arrested. This has no impact on the Chamber of Commerce of New Rochelle.

Our broker of record was changed in September of 2012 to Mr. Joseph Heckman of Joseph Heckman and Associates.

Mr. Norman Michaels has not been the benefits consultant to the Chamber since September 2012.

Additionally our broker does not do business with MVP nor does the Chamber solicit members for insurance. Our broker uses the Oxford Health Plan for current members.

Sincerely,
Eli Gordon

The statement confirms Talk of the Sound’s reporting that the New Rochelle Chamber of Commerce terminated its relationship with Michaels after Eli Gordon was subpoenaed the DFS CIU.

Yet, the carefully worded statement raises more questions than it answers and contradicts previous statements from the Chamber.

Gordon does not acknowledge the ongoing criminal investigation.

He says that the Chambers broker of record was changed in September, 2012.

On Friday, Chamber President Rosemary McLaughlin told Talk of the Sound in an exclusive interview that the Chamber that Michael was not the “broker of record” since June 2012 and that Chamber members in the plan set up by Michaels & Associates were transferred to a United Health care plan. United acquired Oxford Health Plan in July 2004 and, according to media reports at the time, all of United Healthcare’s New York-based small group contracts were converted to Oxford Health Plans products.

Benjamin M. Lawsky, Superintendent of Financial Services, in a statement last Wednesday, said 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.

In the Otego, NY case, Michaels was charged with stealing commissions from MVP Health Care of Schenectady, NY 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 head of the Otego Chamber was arrested in 2011 for charges related to the case.

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.

At about the time the first arrest was made in Otego, in 2011, Gordon told this reporter that an insurance company was “exiting the business” and turning over their book of business to him. He stated that it was intention to grow the membership of the Chamber by taking over this book of business.

In fact, the Chamber began growing by leaps and bounds, growing from a few dozen members to over 700 within a period of months.

One of the questions not addressed by Gordon’s statement is whether the MVP customers who had their MVP policies cancelled in 2011 were among the 700 new “members” that joined the Chamber soon after. Many of the new “members” of the New Rochelle Chamber of Commerce match the description of the 400 “downstate” customers described by the Department of Financial Services in their complaint.

Both McLaughlin and Gordon have sought to stress that the Chamber or its board members or employees “solicit” members for insurance. McLaughlin pointed out that this was why the head of the Otego Chamber Commerce was arrested, for selling insurance without a license.

Michaels, however, was not arrested for selling insurance. He was arrested for illegally bundling hundreds of randomly obtained customers and “parking” them at the Otego Chamber of Commerce in a scheme to defraud MVP insurance. Elements of that case are similar in many ways to the New Rochelle case.

One thought on “New Rochelle Chamber of Commerce Issues Statement on Arrest of Insurance Broker”

  1. So let this be a lesson to all..
    Make sure you check your sources out thoroughly and get the story straight the first time. Although, maybe the Chamber of Commerce could’ve given Bob a bigger donation to his site and he wouldn’t have run the story.

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