Gallagher, Posey Announce Felony Charges Against Operators of Unlicensed Entity

Teresa Orr, of Monteverde, Fla., traveled to Tallahassee Monday to hear the news firsthand that the operators of an unlicensed health insurance plan that left her and her late husband with more than $250,000 in unpaid claims are facing felony charges of selling insurance without a license and racketeering. The unlicensed entity, TRG Marketing, LLC, has also reportedly refused to pay claims totaling millions of dollars for more than 7,200 other Floridians.

Since February 2001, investigations by the Department of Financial Services have led to the shut down of 10 unlicensed entities in Florida, administrative actions initiated against about 80 agents and criminal charges against six operators or marketers of unlicensed insurance entities. The latest criminal charges are against Carmelo Zanfei and William Paul Crouse, who operated Indiana-based TRG Marketing, LLC. Bond for Zanfei and Crouse has been set at $1 million each.

The charges are being prosecuted by the Office of Statewide Prosecution. If convicted on all charges, Zanfei and Crouse could each face up to 60 years in prison in addition to fines and restitution.

Also on Monday, the “Pete Orr Bill,” SB 1680, which increases criminal penalties for individuals who operate an unlicensed insurance entity, was to be merged into the Senate’s anti-fraud bill, SB 1694, and was to have been heard in the Senate Government Oversight and Productivity Committee. Under the Pete Orr Bill, sponsored by Sen. Bill Posey, R-Rockledge, those who peddle their products in Florida would face a first-, second-, or third-degree felony charge of insurance fraud based on the amount of premiums collected. The bill is named after Mrs. Orr’s late husband. A former NASCAR-circuit driver, Pete Orr died of cancer last year as TRG reportedly refused to pay his health care bills totaling more than $250,000. Rep. Gus Billirakis, R-Palm Harbor, is sponsor of the bill in the House.

“Those responsible for Pete Orr dying with unpaid medical bills piling up around him should be prosecuted to the fullest extent of the law,” Posey said. “Passing the ‘Pete Orr’ bill will ensure that other scammers and thieves face severe penalties for selling Floridians a false sense of security.” The bill also would provide a procedure for policyholders to civilly sue these operators and their unlicensed entities, Posey added.

The insurance agent who led the Orrs to buy the unlicensed insurance, along with 24 other Florida agents who sold the TRG product, were to have notices in hand Monday that they are facing disciplinary action, including possible revocation of their licenses. Among 20 actions sent out last week was one to Anthony Frank Merlino, prinicipal agent of the Miami-based Dardick Agency. State investigators contend that the Dardick Agency was one of the largest promoters of TRG in Florida. Merlino is charged with 42 violations of state law governing his license. An investigation continues into other agents suspected of selling TRG.

The 2002 Legislature passed a law increasing the penalty for a licensed agent selling unlicensed insurance from a first-degree misdemeanor to a third-degree felony, punishable by up to five years in prison. Under Florida law, if an unlicensed insurer fails to pay claims, agents who sold the unlicensed coverage may be held responsible for unpaid claims.

More than 30,000 Floridians have reported being left with unpaid claims as a result of being duped, many by their agents, into buying coverage from unlicensed entities. Because these entities are not licensed in Florida, there are no assurances of their ability to pay claims.