A Bridgewater resident has pleaded guilty for his role in conspiring to defraud multiple companies out of more than $15 million, according to information from the U.S. Department of Justice
Stephen Locrotondo, 53, along with former Middlesex County resident Edward Dombrowski, now of Acworth, Ga., allegedly developed and marketed a fraudulent group life insurance policy to the city of Linden, as well as to several unions in New Jersey.
Locrotondo pleaded guilty to one count each of wire fraud and wire fraud conspiracy, and awaits sentencing. Dombrowski has been sentenced to three years of supervised release and must pay $993,589 in restitution.
According to the Department of Justice, the two men claimed the money to fund the policies would not come from the unions, their members, or city, but from a third-party financing company. They also claimed the financing company would recoup its investment at the time of an employee’s death by being made a beneficiary of the policy–along with the beneficiary designated by the employee, the union, and the city.
It wasn’t until employees died and no death benefits were paid that it was discovered no life insurance policies were ever bound.
The Department of Justice said a third-party financing company did pay $15 million to an account controlled by Dombrowski to fund a group life insurance policy for the city of Linden, but Dombrowski allegedly diverted nearly $2 million of the funds for his own use instead of paying the insurance company. The Department of Justice says he used the money to purchase real estate, stock and two luxury automobiles.
The pair also told New Jersey-based Pine Brook Funding that commissions were due to Locrotondo for his role in helping bind the group life insurance policies. However, since no commissions were actually due, Pine Brook Funding was never paid back. In total, Dombrowski and Locrotondo defrauded Pine Brook Funding out of more than $1 million.