Friday, December 03, 2004

More coming out on the Gov. John G. Rowland Scandal

Fraud Case A Family Affair

Hot Tub Donor's Brother Guilty In Insurance Scheme

December 2, 2004

By EDMUND H. MAHONY,, DAVE ALTIMARI And JON LENDER

Courant Staff Writers In a macabre case disclosed in federal court Wednesday, a Prospect man admitted to a scheme in which he collected millions in insurance benefits from the death of a drug-addicted sister in a scam with a curious link to former Gov. John G. Rowland's infamous hot tub.

James Corey admitted in federal court (Connecticut) Wednesday that he collected more than $2.4 million on 28 life insurance policies after his sister Joyce died in 1999 of a drug overdose. Prosecutors said that he obtained the policies by fraud, lying about his sister's drug history, her arrest record and the existence of the duplicate coverages. When she died, he said it was of natural causes.

Federal agents, alerted by a flurry of large financial transactions, began investigating James Corey and the insurance fraud about two years ago. But by early last winter, it had led them to an unexpected place: Another Corey sibling, Paul, a high-level Rowland appointee, had become entangled in the investigation of the former governor's lakefront cottage in Litchfield. Paul Corey and his wife, Christine, gave Rowland the hot tub that became emblematic of the governor's ethical woes.

After initially lying about the origin of the tub a year ago, Rowland finally acknowledged that it came from the Coreys.

"It is my understanding that they purchased the hot tub after receiving a large sum of money when a relative passed away," he said then.

According to legal documents connected with the fraud case, Paul Corey was the beneficiary of a 29th - and apparently legitimate - policy on Joyce Corey's life. About the time legal documents show that Paul Corey was collecting an undisclosed sum as his sister's beneficiary, he and his wife, Rowland's former executive assistant and scheduler, were buying the former governor the $3,604 hot tub.

Although James Corey's lawyer said that the hot tub investigation was not connected to the criminal case, Paul Corey resigned as chairman of the Connecticut Lottery's board of directors, effective Wednesday. In his resignation letter, submitted early last month, Corey cited "personal reasons" for leaving. He and his wife did not return calls Wednesday. Under the terms of an agreement negotiated with the U.S. attorney's office, James Corey pleaded guilty Wednesday to a federal charge of mail fraud in connection with the insurance scam.

He admitted devising the scheme, but said that he had the fraudulent policies written to list his elderly and infirm parents as beneficiaries. He is scheduled to be sentenced by U.S. District Judge Ellen Bree Burns on Feb. 17 and, according to his plea agreement, he could be ordered to prison for up to 37 months and fined up to $4.8 million.

Assistant U.S. Attorney Christopher W. Schmeisser said in court Wednesday that James Corey also will be ordered to make restitution for about $2.4 million that he obtained after his sister's death from dozens of insurance companies. In addition, the U.S. attorney's office is moving in court to seize a new house, stocks and three automobiles that James Corey obtained for family members with the insurance payouts.

Prosecutors could move to seize additional property from Corey or members of his family; a substantial portion of the insurance settlements remains unaccounted for, Schmeisser said in court.

"There is a sizable portion of these funds that we haven't been able to locate," he said.

Schmeisser said investigators suspect that parts of the settlements were spent on purchases that have yet to be tracked and on gambling losses by the father of the Corey siblings. Federal prosecutors would say little about the insurance fraud case this week beyond what is contained in legal documents and the brief remarks made during James Corey's plea hearing in federal court. But they said that the case would end with James Corey's guilty plea and sentencing.

"Based on a careful review of the relevant evidence gathered to date, James M. Corey is the sole defendant that has been or will be charged in this investigation," said Thomas Carson, a spokesman for the U.S. attorney's office.

Other officials, who spoke on the condition that they not be identified, said that investigators were alerted to the insurance scam in part by a flurry of currency transaction reports that financial institutions were required by law to file in connection with the large sums of money that James Corey began moving after his sister's death. Investigators' interest increased after they learned that one of James Corey's brothers was linked to improvements at the Rowland cottage.

The first of the 29 policies on Joyce Corey's life was taken out by Joyce Corey herself in the summer of 1986, according to legal documents associated with the insurance investigation. The documents show that Joyce Corey listed her brother Paul as her beneficiary and that her father Fred Corey paid the premiums.

Beginning in 1993 and continuing through 1997, James Corey, who then was licensed by the state as an insurance broker, sought an increase in the benefit on Joyce's initial policy and then, by a series of fraudulent applications, obtained another 28 policies ranging from $40,000 to $150,000, documents show. The subsequent 28 policies list the Corey parents as beneficiaries.

Fred Corey paid the premiums on the 28 policies until his daughter's death.

James Corey, 43, is a tall and unprepossessing man. He spoke rarely in court Wednesday and when he did, it was usually to politely inform Burns that he understood the proceedings. His lawyer, Richard R. Brown, said that James Corey is devoted to his parents. Brown said that he lives with his parents, manages their finances and cares for his mother, who is debilitated as the result of a medical procedure that resulted in her winning a malpractice settlement.

James Corey's state insurance license expired in 1999. Since then, Brown said that his full-time occupation has been his parents' care.

Brown said that James Corey concocted the insurance fraud to guarantee his parents' financial security. There is no connection, Brown said, between the FBI investigation of James Corey's insurance scam and the investigation that linked his brother to renovations to Rowland's vacation cottage.

"There is none, zero connection," Brown said.

"The investigation involving Jim Corey is about 2 years old, which preceded by several months any investigation of the governor. It is nothing but sheer coincidence."

Court records show that James Corey began collecting on his sister's life insurance policies in 2000, setting in motion a series of bank transaction reports that attracted the interest of federal investigators.

In subsequent months, he established trust accounts and investment accounts and, by writing checks and ordering wire transfers, moved more than $2 million. Among other things, he bought a BMW, an Audi and a Chevrolet Blazer; made a substantial stock purchase; and spent more than $1 million building a new house for his parents in Prospect.

The above came from the Hartford Courant website.

Fair use of copyrighted material

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