BRAMA, November 14, 2002, 3:00 pm ET

Insurance Investigation Culminates in Indictment
Joint Effort Between the State of New Jersey and the Ukrainian National Association

PARSIPPANY, NJ - On November 8th the New Jersey Division of Criminal Justice, Office of Insurance Fraud Prosecutor, announced that it obtained an indictment against Joseph Binczak, a former insurance agent for the Ukrainian National Association, Inc. (UNA), charging him with theft, forging signatures and falsifying the records of seven clients in a scheme to fraudulently obtain a portion of their funds from their annuity accounts.

The indictment came after an almost two-year investigation by the State of New Jersey. The Ukrainian National Association initiated the investigation in early 2001, when the UNA uncovered suspicious activities on two transactions that involved Mr. Binczak.

The discovery led to a cooperative effort between the State of New Jersey and the Ukrainian National Association that resulted in the November 8 indictment. Ukrainian National Association President Stefan Kaczaraj stated, "These acts of theft and deception are deplorable! Thankfully, our efforts have succeeded in putting us on the road to justice."

The investigation began after a UNA policyholder questioned a transaction on her annuity statement. The Ukrainian National Association immediately notified the proper state insurance authorities. This irregularity prompted the UNA to conduct a painstaking internal audit, which led to the discovery that between November 1996 and November 2000 more than $600,000 was illegally transferred from the accounts of seven annuity policyholders by Joseph Binczak, who used shell companies and forged documents to accomplish the theft.

Mr. Kaczaraj emphasized that, "It is important to note that no Ukrainian National Association policyholder has suffered any financial loss as the Ukrainian National Association made full and immediate restitution to the impacted members. The Ukrainian National Association took this extraordinary step out of commitment to our policyholders, which is in keeping with the Ukrainian National Association's nature as a non-profit fraternal benefit society. We want to prevent losses from being incurred by innocent and loyal UNA members."

UNA President Stefan Kaczaraj also stated that all victimized policyholders cooperated fully in the state investigation. Finally, Mr. Kaczaraj emphasized that "This loss, while serious and regrettable, does not change the fact that the UNA is a sound and stable financial institution, with a high ratio of assets to liabilities and a healthy reserve account."

This case demonstrates the need for consumers to immediately take the time to carefully review the statements of all their checking, savings, investment and insurance accounts. All irregularities should be questioned and immediately reported. The consumer is the first line of defense against fraud of this type, advised the UNA president.

Insurance fraud is a very serious crime. Insurance industry experts report that the estimated cost of insurance fraud is over $90 billion annually in the United States. Like other insurance companies, the Ukrainian National Association adheres to established industry standards for fraud prevention. Internal audits, independent CPA audits and State regulatory agency examinations are regularly conducted. Nonetheless, after this investigation, the Ukrainian National Association immediately implemented additional security procedures to help ensure that no one in the future would be able to misappropriate funds belonging either to the UNA or its members.

In addition to the State of New Jersey 's criminal case against Mr. Binczak, the Ukrainian National Association also commenced legal action to recover the misappropriated funds. In 2001, the Ukrainian National Association successfully obtained a civil judgment against Joseph Binczak and two companies he owns that played a role in the theft in an amount equal to the misappropriated funds.

"Obtaining the civil judgment was a crucial step toward recovering the stolen funds. We have continuously worked with the State of New Jersey and its agencies. The Ukrainian National Association will continue in its efforts to seize Binczak's assets and will vigorously pursue the collection of its judgment, " said Mr. Kaczaraj. He indicated that this theft is believed to be the first loss of this kind experienced by the Ukrainian National Association since its establishment in 1894.

Mr. Binczak was employed by the UNA from 1992 to 2000 and in October 2000 was dismissed for reasons unrelated to this matter. Mr. Binczak's license to work as an insurance agent was revoked this past July by the New Jersey Department of Banking and Insurance.

"In order not to impede the ongoing investigation, the Ukrainian National Association did not make any formal statement on the case until after the indictment was handed down on November 8," UNA President Kaczaraj said. "We will continue to provide information to the public on the advice of our attorneys," he added.

The criminal case against Mr. Binczak has been assigned to the Morris County Superior Court and will be prosecuted by the deputy attorney general of New Jersey.

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