A politically connected, family-run insurance broker on Long Island ran a sweeping fraud and charity kickback scheme for 21 years that “hoodwinked” St. John’s University, Fordham University and hundreds of other Catholic schools and charities into buying billions of dollars of dubious policies, according to a shocking lawsuit filed yesterday by state regulators.
The fraud allowed the broker, Waldorf & Associates, of Huntington, to reap bloated commissions on more than $300 million in unlawfully obtained premiums, as well as fix prices, the 41-page lawsuit filed in Suffolk County charges.
The suit, filed by the Excess Line Association of New York, or ELANY, a little-known state regulator, also charges the firm’s principals — William G., Stephen M., Pamela J. and Christopher V. Waldorf, Jr. — with attempting to cover up their scam through fraudulent filings.
Under the alleged scam, Waldorf & Associates sold policies not covered by the state’s insurance fund without alerting their customers to the suspect nature of their coverage, court papers allege.
As a result, the colleges and charities overpaid for their policies, it is charged.
The Waldorf family brokerage was able to keep their “victims in a stranglehold of an illegal monopoly” of shoddy insurance, the court papers say, by funneling to their clients hefty kickbacks disguised as “donations.”
The alleged kickbacks were made through a family foundation, in order to deceive and keep unsuspecting Catholic institutions across the US hooked on annual kickbacks they believed to be legal gifts, documents said.
The Waldorf policies are “potentially worthless” now and in the future, and in fact cost more that rival, lawful coverage, the suit charges.
Waldorf’s client roster also includes Boston College, Covenant House, and scores of religious orders and dioceses across the US, including the Diocese of Wilmington (Del.), which went bankrupt after massive sex-abuse litigation losses.
The suit seeks to shut down the operation, and to collect unspecified damages and penalties .
The suit follows an exposé about the Waldorf brokerage in The Post five months ago. At the time, The Post reported a behind-the-scenes, $3.4 million settlement between the firm and the New York State Insurance Department.
Under the settlement, the Waldorf firm did not admit any wrongdoing.
Yesterday, William Waldorf said: “We haven’t reviewed the complaint with counsel and have no comment.”
The sweetheart settlement was made with help from lobbyist Greg Serio, a former superintendent of the Insurance Department, who also headed all its legal affairs for 14 years.
The new accusations yesterday by ELANY came in the wake of a reform overhaul at the state insurance department.
Gov. Andrew Cuomo last month disbanded and merged the state insurance and banking departments into the new Department of Financial Services, headed by veteran federal prosecutor Ben Lawsky.
Separately, state Attorney General Eric Schneiderman in June set up special task force on rampant charity frauds, and was aware of the suit. Neither agency had any immediate comment.