Insurance Fraud and Tax Evasion—Raimund Wersching

A federal grand jury in San Francisco has indicted Raimund Wersching on six counts of insurance fraud, tax evasion, and “hiring a convicted felon to handle insurance business at his agency, including the deposit and transfer of premium money.”^[1] According to the indictment, Mr. Wersching “embezzled and misappropriated over $8 million in premiums that should have been paid to the Farmers Insurance Group of Companies” between 1997 and 2000, and that he evaded taxes “on $3.6 million in corporate income for 1999 and 2000.”^[2] Mr. Wersching was a kicker in the NFL from 1973 through 1987, playing for the San Diego Chargers and San Francisco 49ers.^[3]

Mr. Wersching was also the co-owner of the Ray Wersching Insurance Agency.^[4] His former co-owner, Mary Ann Locke (a.k.a. Mary Ann Diaz), was charged in a ten-count indictment on August 25, 2005 with insurance fraud, wire fraud, and money laundering.^[5] The insurance fraud involves allegations of falsifying and altering “documents and records of his business in order to steal premium money owned to Farmers”; he also allegedly “transferred premium money to the operating account of his company, instead of remitting the funds to Farmers.”^[6]

The charges facing Mr. Wersching are 18 U.S.C. § 1033 (misappropriation and embezzlement of premium), 18 U.S.C. § 1033 (permitting a convicted felon to participate in an insurance business), 26 U.S.C. § 7201 (tax evasion), and 26 U.S.C. § 7203 (failure to file a corporate tax return).

18 U.S.C. § 1033(e)(1)(A), the provision covering convicted felons willfully engaging in the insurance business, does not require a specific intent to violate the law.^[7] “The stature gives a person of ordinary intelligence reasonable notice that after a felony conviction involving dishonesty or a breach of trust, he may not broker the sale of or issue insurance policies or hold himself out as an insurance broker or collect insurance premiums.”^[8] Furthermore, the Government is not required to prove that the defendant had “actual knowledge of the prohibition in the statute.”^[9] All that is required for the statute to apply to an individual is that a “defendant ‘willfully engage[] in the business of insurance.’”^[10] However, Mr. Wersching is charged under section 1033(e)(1)(B), which prohibits allowing a person with a felony conviction to engage in the insurance business; the person who is named in the indictment as the convicted felon is Ms. Locke, who has allegedly been convicted of forgery.^[11]

To prove a violation of 26 U.S.C. § 7203 (failure to file a tax return), the government must prove that the individual “was a person required by law to file a return for the taxable period”; that he “failed to file a return at the time required”; and that “the failure was willful.”^[12]

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[1] US Attorneys Office, Ray Wersching Indicted on $8 Million Insurance Fraud and Tax Evasion, Mar. 22, 2006.
[2] Id.
[3] Ray Wersching, Wikipedia.org, last visited Mar. 23, 2006. Because it is a user-edited resource, information available from Wikipedia is subject to change.
[4] USAO, supra note 1.
[5] Id.
[6] Id.
[7] United States v. Peterson, 357 F. Supp. 2d 748, 754 (S.D.N.Y. 2005).
[8] Id.
[9] Id.
[10] Id.
[11] United States v. Wersching, No. 3:06-CR-0183, Indictment at 4 (C.D. Cal. 2006).
[12] United States v. Londe, 449 F. Supp. 590, 593 (E.D. Mo. 1978).