Ex-insurance broker pleads guilty to scamming at least 50 people
A former insurance broker has pleaded guilty to swindling at least 50 people out of $12 million in a scheme that Nassau prosecutors compared with one masterminded by ex-financier Bernie Madoff.
Kevin Brody, 55, of Stroudsburg, Pennsylvania, entered guilty pleas Friday to two felony charges, second-degree grand larceny and fourth-degree conspiracy, prosecutors said Monday. In exchange for his pleas, Brody will serve 2-1/3 years to seven years in prison and will repay his investors $5 million, they said. Sentencing is set for Sept. 12.
Brody ran the scam through Conmac Funding Corp. in Hicksville, which he co-owned with Matthew Eckstein, prosecutors said. Charges against Eckstein are still pending, they said.
Brody and Eckstein misled their clients into thinking their funds were being invested in something similar to a certificate of deposit, which would have a guaranteed interest rate, or that they were financing premium insurance loans, prosecutors said.
The men instead used the money to do three things — pay personal expenses; buy other businesses, including restaurants; and repay other investors caught up in the scheme, prosecutors said.
As part of the scheme, prosecutors said, Brody and Eckstein handed out user names and passwords to their clients for conmacfunding.com so they could watch their fictitious account balances grow.
Brody had intended to make big money for both himself and his clients by buying businesses with high returns, said his defense lawyer, Jim Druker. But he took the money out of the company and put it under his own name to invest, rather than through Conmac or another corporation with the investors as shareholders, Druker said.
Brody's case was one of "the road to hell is paved with good intentions," Druker said.
Brody's investments in real estate, gyms and restaurants, including a Smashburger franchise, were paying off — and Brody was repaying his clients — until one or two of the fast-food businesses failed, Druker said Monday.
"That kind of threw everything out of sync and killed the ability to repay," Druker said.
The investigation into Conmac began in 2017 after an older client reported the company to the Securities and Exchange Commission, which referred the case to the Nassau District Attorney's office, officials said.
The client had invested about $385,000 under the condition that the principal would be returned after two years with 4 percent interest, authorities said. After two years, the client received only $26,699, and repeatedly asked for the rest of the principal but never heard from the company again, officials said.
Eckstein's attorney, Dennis Lemke, declined to discuss the case, but said, "We still vehemently, aggressively deny the charges."
Brody "lured hardworking men and women with a web of lies, duping them into paying thousands of dollars for the promise of a high return of investment,” District Attorney Madeline Singas said in a statement. “Now, thanks to the dogged work of my prosecutors and investigators, $5 million will be returned to the victims of this reprehensible scheme.”
Brody has started liquidating the businesses to pay off $5 million and is pledging to repay another $6 million through any future earnings and assets, Druker said.
