The shocking news broke when Manhattan District Attorney Alvin Bragg, Jr. announced the indictment of Timothy Barry Derham, chairman and owner of Inter-Insurance Agency Services Ltd., and his nephew, Donald “Trip” A. Derham III, the company’s chief technology officer, on serious charges of insurance fraud. According to the indictment, the pair allegedly provided over $250 million in unauthorized insurance coverage over an extensive eight-year period. The fraudulent scheme involved the issuance of more than 40 unauthorized insurance policies from the Barbados-based International Underwriting Insurance Co., which was owned by Tim Derham. Remarkably, the equity of this insurer was less than $600,000, a far cry from the $45 million required for an offshore insurance company to legally operate in the United States.
From March 2014 to April 2022, Inter-Insurance, which was based both in Manhattan and Long Island, engaged in a systematic defrauding of its clients. These clients included companies operating at the airports of the Port Authority of New York and New Jersey, construction firms, and various homeowners. Despite the company’s severely limited assets, many of the issued policies promised coverage ranging from $1 million to $25 million. Moreover, the defendants failed to report these policies to the Excess Line Association of New York, further exacerbating their illegal activities.
The Masterminds Behind the Scheme
Tim Derham managed the overall operations of International Underwriting and was responsible for decisions regarding policy issuance and pricing. He was the key figure behind the scheme, orchestrating the illegal activities without disclosing the company’s non-admitted status in New York or its unauthorized excess line insurance operations. Under his directive, fraudulent insurance certificates were issued, misrepresenting the company’s authorization and coverage capabilities. These actions deeply undermined the trust and security that clients were seeking when purchasing insurance policies.
Trip Derham played a crucial role in assisting his uncle in the operational management of the fraudulent enterprise. His duties involved creating and maintaining business records, many of which contained false information. He was also implicated in failing to inform clients about the dubious status of the insurance company, thereby aiding in the concealment of their illegal activities. Prosecutors further highlighted internal communications that revealed an awareness of misconduct. For instance, in one email exchange, an employee sought confirmation from Trip Derham about their company’s authorization in New York State, to which he admitted having no such documentation.
Evidence and Communications Reflecting Awareness of Fraud
The extent of the fraudulent activities became more evident when additional internal communications were reviewed. In another revealing email, the company’s Chief Financial Officer expressed apparent concern over a $25 million liability policy. This email underscored the blatant lack of sufficient reserves to cover potential losses, pointing to the precarious nature of the business. These communications played a pivotal role in building the case against the defendants, highlighting their total awareness and knowledge of the egregious actions being taken.
The indictment detailed specific thefts from three Manhattan-based clients, each of whom had paid substantial sums for the fraudulent policies. In another instance, two agency clients operating in the aircraft areas of JFK Airport required $25 million in liability coverage for their specialized license plates. False insurance certificates were issued in at least four separate occurrences, each misrepresenting International Underwriting’s authorization and its ability to provide appropriate coverage.
Legal Charges and Investigation Support
The shocking announcement came from Manhattan District Attorney Alvin Bragg, Jr., detailing the indictment of Timothy Barry Derham, chairman and owner of Inter-Insurance Agency Services Ltd., and his nephew, Donald “Trip” A. Derham III, the company’s chief technology officer, on serious insurance fraud charges. The indictment alleges that the duo provided over $250 million in unauthorized insurance coverage over an eight-year span. They allegedly issued more than 40 unauthorized insurance policies from the Barbados-based International Underwriting Insurance Co., owned by Tim Derham. Astonishingly, this insurer’s equity was under $600,000, significantly short of the $45 million required for an offshore insurance company to legally operate in the U.S.
From March 2014 to April 2022, Inter-Insurance deceived clients, including companies at the airports of the Port Authority of New York and New Jersey, construction firms, and homeowners. Despite the company’s limited assets, its policies promised coverage between $1 million and $25 million. Furthermore, the defendants failed to report these policies to the Excess Line Association of New York, worsening their illegal actions.
