A federal jury has convicted insurance executive Earl O’Garro on three counts of fraud after barely 90 minutes of deliberations, the U.S. Attorney’s office said Monday.
O’Garro first made news two years ago when he failed to pay hundreds of thousands of dollars in premiums on behalf of the city of Hartford. That drew the attention of federal prosecutors and began an inquiry that would involve, but not implicate, city Treasurer Adam Cloud. Eventually, prosecutors charged O’Garro – saying that he used the money he took for his business, Hybrid Insurance, and used it for things like a million-dollar beachfront condo in the Dominican Republic.
On Monday, both sides gave their closing arguments. While his public defenders said that O’Garro was a nice guy who just got in over his head, prosecutors clearly had a different interpretation of the evidence. Assistant U.S. Attorney Avi Perri told the jury that the cascading scheme of fraud and lies all came to be because O’Garro had just bought that condo -- and he didn’t have the money to pay for it.
“Everything that you’ve heard over the past week, every lie the defendant told, every dollar that he stole, goes back to that million-dollar beachfront condominium the defendant bought,” Perry said. “He didn’t have the cash...But there were huge amounts of money – fortunes – moving through his company.
“And all he had to do was reach out and grab some of that cash,” Perry said.
So, O’Garro decided to use money he got through Hybrid to pay for the condo, Perry said. To get the cash, he asked a Utah-based lender – Capital Premium Financing -- for more than $800,000 to pay insurance premiums for four different companies. But those policies never existed, prosecutors said. And when O’Garro got the money, he didn’t use it to pay the premiums on the non-existent policies – he used it to start paying down what he owed on the condo.
But then O’Garro got caught. Capital wanted to confirm the policies were true, and O’Garro then had to “cover his tracks,” Perry said. So O’Garro paid someone to make up a fake email address which he then used to contact the lender under a false identity. But in the end, the scheme broke down. Eventually, the company’s CEO testified that O’Garro confessed to him on the phone.
“Apologizing and admitting what you’ve done after you’ve already been caught doesn’t mean there’s no crime,” Perry said. “In fact, it’s pretty good evidence that there was a crime.”
O’Garro agreed to pay the money back, turning over a house he owned and transferring $300,000 to Capital, the prosecution said. But when it came to the cash, O’Garro was in a bind, the prosecution said. He again had a debt to pay but he didn’t have the cash to pay it.
“So now we have a new problem,” Perry said.
So O’Garro turned to his friend, city Treasurer Adam Cloud, Perry said. O’Garro’s company, Hybrid, was a broker for some of the city’s insurance policies – though it dealt with an agent, and not the city directly.
Nevertheless, in July 2013, O’Garro convinced Cloud that he needed the city to wire him money immediately to pay insurance premiums on its behalf lest those policies lapse. Cloud testified in the case but was not charged. But, fearing the city could lose its insurance coverage, he complied and wired O’Garro the money. A quarter of an hour after the city’s money landed in O’Garro’s bank account, he wired it to Capital – to pay it back the money he owed, Perry said. But he never paid the city's insurance premiums.
“The bottom line is that the defendant knowingly and intentionally lied about the city’s premiums being late because he had to get the city of Hartford to send him those premiums” as soon as possible, Perry said. “He ripped off Capital Premium Finance, and then when he got caught by them, he stole the city of Hartford’s premiums to partially pay” the company back, he said.
Finally, that same summer, O’Garro failed to tell the state about those liabilities in his application for funding from the Department of Economic and Community Development. Prosecutors said that when he eventually got paid $250,000 from the state to help grow his business and create jobs, O’Garro used that money to pay down his condo, pay for private school tuition for children, and make a $6,000 loan to his personal trainer.
O’Garro chose not to testify and did not call any witnesses. He was defended by federal public defenders. One of them, Tracy Hayes, told the jury that O’Garro never intended to defraud his lender, the city, or the state. Instead, Hayes said, O’Garro was a businessman whose company had a cash flow problem. He wasn’t getting timely payments from his clients.
“He was in over his head,” Hayes said. “It wasn’t just a one-man shop. He had bills to pay, premiums to pay, and employees. People who expected checks...It’s not as easy as, the money was taken and used for something else. The money just wasn’t coming in. So, how do you make payroll?”
Earlier in the process, O’Garro rejected a plea deal that would have landed him 33 to 51 months in prison. Instead of taking the deal, he opted for trial. The U.S. Attorney’s office said O’Garro was released Monday on bond but was ordered to have electronic monitoring. Sentencing is scheduled for March 7.
