A River Forest insurance broker was sentenced to 7½ years in prison Tuesday after pleading guilty to defrauding more than 200 outdoor amusement vendors across the country out of millions dollars in insurance premiums.
Richard Brooks, 52, pled guilty in Circuit Court Judge David A. Skyrd’s courtroom to nine counts of theft over $100,000, all Class 1 felonies, and a single count of mail fraud. The nine theft cases alone account for $2.9 million in fraud, according to the Illinois Attorney General’s office. In all, 203 businesses in 22 states and Puerto Rico were scammed.
Among the nine amusement businesses Brooks admitted defrauding are Midwest Midways of Steger, Ill., which provides carnival rides to such clients as the Georgia State Fair, and Hawthorne Corp. in Grayslake, which provides exotic animals.
According to the Attorney General’s Office, which investigated the case along with the U.S. Postal Inspection Service, Brooks sold commercial general liability insurance, supposedly underwritten by Lloyd’s of London, to operators of carnival attractions, circuses and various extreme sports operations. He also sold automobile liability insurance, purportedly from Fire and Casualty Insurance Company of Connecticut. Brooks was, in fact, not authorized to sell policies from either company and had not been licensed to sell insurance in Illinois since 1997. He never obtained the insurance coverage he supposedly arranged for his clients.
“He’d send them counterfeit insurance certificates,” said Assistant Attorney General Edward Carter. Brooks operated out of his spacious two-story brick home in River Forest. Besides carnival and circus operators, Brooks sold bogus policies to clients operating everything from bungee cord jumps, artificial rock climbing walls and mechanical bulls to a mime troupe in San Francisco.
According to Carter, Brooks took advantage of the fact that the insurance industry largely stopped writing policies for outdoor amusement vendors in the late ’90s. A cursory check of accidents related to amusement park rides turned up hundreds of incidents in the past several years, ranging from minor injuries to deaths, including the July, 2005 death of a 9-year-old boy who fell from a ride owned by Midwest Midways.
“They’re hard to insure,” said Carter. “The fact that [Brooks] purported to be able to offer coverage [filled a need].” Brooks’ business, said Carter, spread largely through word of mouth throughout the industry.
Doug Colbert and his wife, Jo Ann, who own Fun Time Amusements of Danville, Va. were quoted in a now-defunct trade magazine, Amusement Business, in an August, 2005 article. Colbert said he never met anybody from Brooks and Associates, but had heard about them from others during a trade show in Florida.
“We did our business by phone and mail,” Colbert is quoted. “Somebody had recommended him, and I heard he had been around a long time. I sent stuff in, got a quote and paid a premium. I got caught in the middle. When I filed a claim, I found I was not covered.”
Many of those to whom Brooks sold bogus coverage never had to file claims on their supposed policies, and therefore suffered no extra financial losses.
When claims were made on the phony policies, Brooks often paid them out of pocket to keep his scheme afloat, said Carter, who noted that on at least two occasions Brooks actually hired an attorney to represent him in cases under the pretense that he represented Lloyd’s of London.
“Once in Indiana, he hired local legal counsel,” said Carter. She won the case without ever knowing who she was actually representing.
“She truly believed she was representing Lloyd’s of London,” said Carter.
Carter said Brook’s illegal activity first came to light after a petting zoo in Florida filed a claim in May 2005. Officials from the Florida Department of Insurance contacted Lloyd’s of London, who said they’d never heard of Brooks, and the U.S. Lloyd’s representative then contacted officials in Illinois. In June 2005 the Illinois Attorney General’s Office executed a search warrant at Brook’s home, confiscating computers and other evidence.
Around that time, routine site inspections by officials in Nebraska and Kentucky, which include asking for proof of insurance coverage, also determined that insurance certificates issued by Brooks were fakes. In July 2005 the Nebraska Department of Insurance issued a cease-and-desist order on Brooks banning him from conducting insurance business in the state. Richard Brooks & Associates was involuntarily dissolved as an Illinois corporation in April 2006.
The amusement operators Brooks bamboozled were not amused. In the wake of the fraud revelations, dozens of amusement operators were left scrambling to find other coverage or get under someone else’s insurance umbrella. Some had to simply shut down. At least one has been unable to obtain any coverage after canceling a previous policy to go with Brooks.
Brooks was not required to pay restitution as part of his plea deal. However, he is currently involved in litigation in a number of jurisdictions, including Cook County.
“He has a lot of lawsuits pending against him,” said Carter. The Security Insurance Company filed suit against Brooks in Chancery court in July, 2005, seeking an injunction against Brooks.
In addition, Brooks has been slapped with $273,000 in federal and over $11,000 in state income tax liens over the last three years.
The greatest hardship caused by Brooks’ fraudulent conduct may have befallen an individual not associated with the amusement business. In April, 2006 in a Peoria courtroom, Brooks settled an injury lawsuit involving a Colorado man who was severely injured in a motorcycle/car accident in Wyoming.
“He settled before trial for $1.2 million,” said attorney William R. Kohase, who represents the Colorado man in Illinois.
Kohase said that Brooks began making payments on the settlement, but soon stopped. Kohase went back into court and got the balance due plus punitive damages totaling $1.72 million due to Brook’s reneging on the settlement agreement.
With Brooks in prison, however, it’s doubtful whether his client will see any more of that settlement.
Asked if the lack of payments is a hardship for his client, Kohase replied, “Oh yes. Absolutely.”