Lawyer Is Indicted In Insurance Fraud Craig Sokolow, Who Had Sought A Judgeship In Chester County, Is Accused Of Selling Fake Policies.

Posted: September 02, 1993

A federal grand jury indicted a Strafford lawyer yesterday on charges that he sold $34 million in bogus health care insurance, raking off $3.8 million for himself while leaving hundreds of policy holders with unpaid medical bills.

Craig B. Sokolow, 42, who earlier this year was a candidate for Common Pleas Court judge in Chester County, was charged with 142 counts of mail fraud and money laundering.

The indictment also targets Sokolow's Strafford home and his wife's 15.5 acres in West Pikeland Township for potential seizure.

A statement issued by the U.S. Attorney's office accuses Sokolow of victimizing "over 4,600 individuals, including employers, employees and their dependents and others, in at least 16 states."

Sokolow's attorney, Neil Jokelson, said his client would plead not guilty at an arraignment scheduled for today. He declined to comment on the indictment.

In the late 1980s, Sokolow ran a network of "multiple employer welfare arrangements," which were supposed to act like insurance companies for small businesses.

The indictment said Sokolow, a lawyer licensed in Texas and Michigan, claimed falsely that the health insurance policies his network offered were backed by Blue Cross.

Sokolow did use premium money he had collected to pay some of his clients' medical bills - thus convincing them that the insurance was valid, investigators have said.

But $5.5 million in hospital bills were left unpaid, the indictment said.

In 1990, the Pennsylvania Insurance Department seized three of Sokolow's companies - the Pennsylvania Independent Business Association, National Independent Business Association and American Independent Business.

The federal investigation, conducted by the U.S. Department of Labor's Office of Labor Racketeering, appeared to cover the same ground as the state's probe of Sokolow's three companies.

There were 125 counts of mail fraud, saying Sokolow used the mail to market his business.

The indictment said that, of the $34 million Sokolow collected in premiums, he took $3.8 million for himself in the form of consulting fees, legal fees, commissions and payments of his personal expenses. It said he paid out another $6.6 million as commissions to insurance salesmen in Pennsylvania and 15 other states.

Seventeen money-laundering counts apply to property worth more than $1.5 million that Sokolow is accused of buying with money he received from the insurance scheme.

Earlier this year, Sokolow filed petitions to run for the Chester County judgeship both as a Republican and a Democratic candidate. But in March, after questions surfaced about his involvement in the insurance business, he withdrew his name from the ballot.

In a separate case, the federal grand jury in Philadelphia also announced yesterday that it amended its March indictment of Robert D. Danzman, 54, of Warrington, who is accused of operating phony health insurance plans.

Danzman, now a fugitive, operated Fidelity Mutual Fund, Universal Benefit Services and United Benefit Services, all of Fort Washington. The policies were sold in New Jersey and several other states, but not in Pennsylvania.

The new indictment adds charges that Danzman tried to obstruct the investigation by destroying documents and computer records of his companies.

He is also charged with mail fraud, wire fraud and interstate transportation of securities taken by fraud.

It said Danzman collected about $260,000 in premiums from employers and employees, but paid only $4,558 in claims.

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