Lakewood Insurance Producer Accused of Defrauding Three Blue Cross Blue Shield Affiliates of More Than $10M

A Lakewood insurance producer was charged today with conspiring to defraud several Blue Cross Blue Shield health care insurance affiliates of more than $10 million, U.S. Attorney Craig Carpenito announced today.

Officials say Jonas Knopf, 63, of Lakewood, was charged by complaint with one count of conspiring to defraud three health care Blue Cross Blue Shields affiliates in Pennsylvania and the Washington, D.C., area. He is scheduled to appear today before U.S. Magistrate Judge Steven C. Mannion in Newark federal court.

According to documents filed in this case and statements made in court:

From 2009 to 2017, Knopf was the chief executive officer of Madison Financial Services (MFS) and a licensed insurance producer – a person who is licensed to sell insurance products. MFS was the parent company of 11 sham companies created by Knopf and others solely for the purpose of marketing health insurance coverage to people who were not, in fact, his employees.

Authorities say these companies purported to be located and doing business in Pennsylvania and/or Virginia, and created the appearance of employment status for hundreds of individuals, largely Lakewood residents who were seeking health care coverage through BCBS benefit plans. The conspiracy began in Pennsylvania, and lasted until 2013, when an internal BCBS investigation uncovered irregularities in the information submitted by Knopf and others through his sham companies. Ultimately, the Pennsylvania Department of Insurance initiated an investigation and Knopf surrendered his Pennsylvania insurance producer’s license and ceased operation in the state. The conspiracy, however, continued in Virginia.

Knopf’s clients or purported employees paid him inflated insurance premiums as well as providing him with monies for payroll; Knopf, in turn, issued fake payroll checks, giving the false impression that they were actually employees being paid for services rendered.

The conspiracy continued until January 2017. The conspiracy caused the health care insurers to pay out more than $10 million in fraudulent claims.

The count of conspiracy to commit health care fraud carries a maximum penalty of 10 years in prison and a $250,000 fine.