Attorney General Christopher S. Porrino announced that the former chief operating officer of a Morristown-based freight railway company was convicted at trial today of attempting to steal over $75,000 by falsely inflating an insurance claim that the company filed in connection with damage to a railroad switch caused by a truck accident in 2005.
Gordon Fuller, 76, of Plainfield, the former chief operating officer of the Morristown and Erie Railway, Inc., was found guilty by a Morris County jury of charges of conspiracy, insurance fraud, attempted theft by deception, and falsifying or tampering with records.
The jury verdict followed a trial before Superior Court Judge Salem Vincent Ahto. Sentencing for Fuller is scheduled for November 30.
The charges stemmed from an investigation by the Division of Criminal Justice Corruption Bureau, which also resulted in a second indictment charging Fuller and a former project manager for M&E, Willard Phillips, 65, of Langhorne, Pa., with defrauding the New Jersey Department of Transportation of over $800,000 by submitting false claims for grant funds for work on railway improvements that was never performed. The charges in that indictment are pending.
The Morris County Prosecutor’s Office assisted in the investigation of the fraudulent insurance claim.
“This verdict sends a warning to other dishonest corporate officials who think fraud is a good business model,” said Attorney General Porrino. “Fuller will be swapping his business suit for a jumpsuit, thanks to the excellent work of our attorneys, detectives and entire trial team.”
“Fuller shamelessly ordered subordinates to lie about a damaged railroad switch in an attempt to steal over $75,000 from an insurance company,” said Director Elie Honig of the Division of Criminal Justice. “Insurance fraud is always costly, but when crooked corporate executives like Fuller get involved, the cost to the insurer and ultimately other premium payers can be even greater.”
The state presented testimony and evidence at trial that Fuller, as chief operating officer, had M&E submit a fraudulently inflated claim and false supporting documents to New Jersey Manufacturers in connection with an accident on March 4, 2005, in which a truck went off the road in a snow storm and became stuck on a railroad switch on tracks owned by M&E in Morristown, N.J. New Jersey Manufacturers was the insurance company for the paper company that owned the truck involved in the accident.
The initial invoice prepared by M&E for the damaged switch was for $29,000, but Fuller ordered that the invoice be falsely inflated prior to submission to the insurer. Ultimately, M&E submitted a fraudulent invoice for $144,307 to New Jersey Manufacturers.
At Fuller’s direction, employees of M&E reported to New Jersey Manufacturers that initial repairs on the switch were ineffective and caused a train derailment resulting in the need for additional repairs. Those reports were false. In reality, little damage was caused by the truck and there was no derailment.
The work orders submitted by M&E in support of the claim listed work performed by M&E employees on the damaged switch, but some of the listed employees told investigators they did not work on the switch on the dates in question, while others were no longer even with the company at the time. The insurance company learned of the fraud, denied the claim, and alerted the Morris County Prosecutor’s Office.
The prosecutor’s office conducted an initial investigation and referred the case to the Attorney General’s Office.
Second-degree charges carry a sentence of five to 10 years in state prison and a fine of up to $150,000, while fourth-degree charges carry a sentence of up to 18 months in prison and a fine of up to $10,000.