The government charged O’Garro in a scheme that involved both wire and mail fraud.
Failed insurance executive Earl O’Garro took hundreds of thousands of dollars from the city of Hartford as part of an effort to enrich himself and buy a million-dollar beachfront condo in the Dominican Republic, prosecutors alleged during the first day of O’Garro’s federal trial Tuesday.
In opening statements before a jury in Hartford, Assistant U.S. Attorney Avi Perry said that while clients gave O’Garro’s firm Hybrid Insurance money to pay insurance premiums, in many cases, O'Garro didn’t follow through. In one case, the city of Hartford gave him more than $800,000 to pay such premiums.
Perry said that O’Garro kept the money for himself.
“Those premiums were never passed along to the carriers,” Perry told the jury. “The carriers never got them. And you’ll see why. You’ll see that the defendant diverted those premiums.”
Perry said that O’Garro diverted the funds for his own benefit, paying for things like private school tuition for his children, for restaurants, “fancy hotels,” and that beachfront condo in the Dominican Republic – a 4,000-square-foot, fully furnished, three bedroom pad.
This was the opening salvo in a trial that began two years ago when O’Garro failed to pay insurance premiums on Hartford’s behalf. City and school officials originally grew concerned about the relationship between O’Garro and city Treasurer Adam Cloud – the man who helped wire O’Garro the money that he allegedly kept for himself.
Cloud has not been charged. He is expected to testify.
In opening statements, prosecutor said O’Garro stole > $800k from the city of Hartford to buy a million dollar beachfront condo in the DR.
— Jeff Cohen (@jeffcohenwnpr) December 8, 2015
O’Garro’s public defenders had argued unsuccessfully against having opening statements earlier this year. When it was her turn to speak, O’Garro’s attorney Deirdre Murray gave only a brief, general statement to the jury.
“Listen carefully to the testimony of all witnesses,” Murray said. “Judge for yourself what credibility you give to the witnesses and wait until you’ve heard all of the evidence before you make up your mind.”
But it was Perry’s opening that set the stage for the government’s case. The government charged O’Garro in a scheme that involved both wire and mail fraud.
Perry told the jury that O’Garro had the look of a well-to-do businessman: he owned his own company, he wore custom suits, and drove a $120,000 car. But Perry said that O’Garro didn’t have the cash to pay for that condo in the Dominican Republic.
“The story that you’ll hear,” Perry told the jury, “is about what he did to get that money.”
Several witnesses were called before the lunch break, but it was the testimony of Susan Lombardo that was the most engaging.
Lombardo -- who had three decades of accounting experience -- told the jury that she worked for O’Garro as his assistant controller. It was her job to manage the books.
“Mr. O’Garro really took me underneath his wing,” Lombardo testified. “I felt very kindly that he was... taking the time to be a tutor to me, to help me understand it.”
But she also said that O’Garro never gave her real access to bank accounts and books.
“I did not see any of the bank information,” Lombardo testified, saying at one point that when she issued a check, she was “trusting” that it would clear.
And one instance stood out. It was a payday, and no one was sure if the paychecks were good.
“We became a family,” Lombardo testified about her colleagues at Hybrid. “We all got our checks, and we all walked down to the bank.”
Standing in the lobby, the group looked around at each other.
“Okay, who needs it first?” Lombardo recalled. “And somebody had a mortgage payment, and he went to the front of the line.... By the time the third person went up – there were six of us – there were no more funds. So the back of the line didn’t get paid.”
Lombardo was in the back of the line. She didn’t get paid that day, she said. “I couldn’t go first,” she said. “I felt a huge responsibility to take care of them.”
But two months ago – two years later, and after Hybrid shut its business down – Lombardo got paid.
Lombardo told the jury that working at Hybrid made her unemployable. “When I left, the best way that I can describe the way I felt was I felt dirty,” she said. “I felt no one was ever going to offer me a job again.”
Under cross examination, two significant points were made.
First: Lombardo told the jury that while O’Garro was late on many payments to insurance carriers, many clients were also late on their payments to him.
“And that’s the money that the business needed in order topa the pay roll, keep the lights on,” Murray, O’Garro’s attorney, asked her.
“That’s correct,” Lombardo said.
Second: through Murray’s questioning, it became clear that O’Garro may have had a reason to have that condo in the Dominican Republic.
“Isn’t it true that Hybrid operated an office in the Dominican Republic?” Murray asked. Lombardo said she didn’t know.
“So you wouldn’t specifically know that the employees in the Dominican Republic were working out of Mr. O’Garro’s condo?”
“No,” Lombardo said.
Testimony is scheduled to go on all week.
