Jury Sinks N.J. Couple’s Fake Drowning Scam

After 15 minutes of deliberations, a federal jury recently convicted a Tinton Falls, New Jersey couple of conspiracy and false distress in their scheme to report the husband’s fake drowning at a Long Branch beach for the purpose of collecting on a $1 million life insurance policy, U.S. Attorney Christopher Christie announced.

Deliberations began at 4:15 p.m., and by 4:30 the jury announced that it had reached its verdict, convicting Derek Nicholson, 31, a/k/a “Jacob Milsner,” a/k/a “Michael Way,” and “Anthony Jackson,” and Nikole Nagle, 25, a/k/a “Nikole Nicholson,” of both counts in the two-count Indictment. The Indictment, which was returned on Aug. 19, 2004, charged both defendants with one count of conspiracy to defraud State Farm Life Insurance Company and one count of false distress.

During the eight-day trial, jurors heard testimony from 18 government witnesses and reviewed evidence that detailed a scheme by whereby Nicholson and Nagle attempted to collect on a $1 million life insurance policy covering Nicholson after falsely claiming that he had disappeared while swimming at the New Jersey beach.

In convicting the defendants, the jury reportedly found that on June 11, 2003, Nicholson applied for a $3 million life insurance policy naming Nagle as the beneficiary. Nicholson then obtained two prepaid cellular telephones in the fictitious names of “Jacob Milsner” and “Michael Way.”

During the trial, testimony and evidence were presented that reportedly showed on July 24, after State Farm issued a $1 million life insurance policy, Nicholson used the Milsner telephone to make travel arrangements aboard Amtrak to California in the name of “Anthony Jackson.” Two days later, on July 26, Nicholson and Nagle traveled to a beach located in Long Branch in order to stage Nicholson’s disappearance.

While at the beach, Nagle falsely reported to a lifeguard, and subsequently to law enforcement, that Nicholson had disappeared while swimming in the ocean. That same day, Nicholson, using the train tickets that he had obtained in the name of “Anthony Jackson,” boarded an Amtrak train to California.

On Aug. 1, Nagle reportedly made a false claim for the proceeds of the life insurance policy to a representative of State Farm. At that time, Nagle was informed by the representative that without Nicholson’s body it may take years to settle the claim for benefits. The next day, Nicholson used the “Milsner” cellular telephone, while in Illinois, to call the Sea Bright Police Department and falsely reported the sighting of a body in the ocean that matched his own physical description, according to testimony and phone records introduced as evidence.

State Farm did not make payment on the life insurance policy, according to Assistant U.S. Attorney Lee Rudy, who prosecuted the case.

U.S. District Judge Garrett Brown, Jr., who presided over the trial, continued Nicholson’s federal detention and Nagle’s bail pending sentencing.

The defendants were arrested on May 12, 2004, after the government obtained complaints and warrants.

Each defendant faces a maximum penalty of 5 years in federal prison on the conspiracy count. The conspiracy count also carries a maximum fine of $250,000. Additionally, both defendants face a maximum penalty of 6 years in federal prison on the false distress count, which also may include the cost associated with all search and rescue efforts.

Parole has been abolished in the federal sentencing system. Defendants who are sentenced to custodial terms must complete nearly all of the sentence before being released.