WASHINGTON — New York state officials have indicted an Arizona man on charges he collected New York state pension benefits intended for his dead mother for more than 12 years, and a Florida man on charges that he collected benefits on behalf of his deceased brother for more than seven years.
The issue is important to insurers, especially in light of new insurance/unclaimed property laws and settlement agreements that prioritize unclaimed property reporting of life and annuity proceeds to the states over fraud prevention, according to Mary Jo Hudson, former director of the Ohio Department of Insurance and now a partner at Bailey Cavalieri in Columbus.
“Such losses should be monitored carefully,” she said.
John H. Eydeler III, 66, a resident of Glendale, Arizona has been charged with grand larceny in the Second Degree, a Class C felony, by the New York state attorney general and comptroller.
At Eydeler’s arraignment, he pleaded not guilty. If convicted, he would face “up to five to fifteen years” in state prison.
The indictment was announced by Eric T. Schneiderman, New York state attorney general and Thomas P. DiNapoli, state comptroller.
“When individuals illegally pocket pension funds that were intended for retirees, it harms all New Yorkers who count on their pension for a secure retirement,” Schneiderman said. “Comptroller DiNapoli and I will continue our partnership to protect the state pension system from theft and abuse.”
In a similar case, Attorney General Eric T. Schneiderman and New York State Comptroller Thomas P. DiNapoli announced the unsealing of an Albany County Court indictment charging Robert J. Schusteritsch, 71, a resident of Florida, with the crimes of second degree grand larceny and second-degree criminal impersonation. Schusteritsch is alleged to have stolen over $180,000 in pension benefits issued by the New York State and Local Employees Retirement System to his deceased brother, Martin Petschauer, between July 2008 and September 2015.
A growing problem
Joseph M. Belth, professor emeritus of insurance at Indiana University, has been dealing with the issue of unclaimed property since 1980. “Over the years,” Belth said, he has seen examples of legal actions against persons who allegedly stole annuity or pension benefits.
“However, I have not seen any discussions of the magnitude of the problem,” Belth said. He added that he thinks there “are large numbers of such incidents,” but many thefts may not be large enough to warrant criminal charges. Belth noted that he is not “mentioning this subject to defend life insurance companies who use the Social Security Death Master File (DMF) to try to minimize annuity theft while not using the DMF to try to pay unclaimed death benefits.
“Rather, I am mentioning the subject to point out that the companies may have had — and may still have — a major problem in dealing with the theft of annuity benefit payments,” Belth said.
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