A.G. Schneiderman Announces Convictions Of Albany Insurance Broker In Securities Fraud Scheme And Wife In Life Insurance Scam

Lawrence D. Rosenbaum, Chairman Of Saratoga Cheese Corporation, Pleads Guilty To Securities Fraud And Tax Fraud; Will Serve Up To 9 Years In Prison

Rosenbaum’s Wife, Thomasine Henderson, Pleads Guilty Under Separate Indictment For Making Fraudulent Life Insurance Claim Following Their Son’s Suicide

Schneiderman: We Will Continue Fighting To Root Out And Prosecute Fraud And Hold Those Responsible Accountable

Attorney General Eric T. Schneiderman recently announced the convictions of Lawrence D. Rosenbaum, 65, of Albany, New York, and his wife, Thomasine Henderson, 66. On January 5, 2017, Rosenbaum pleaded guilty to Grand Larceny, Securities Fraud and Tax Fraud for fraudulently soliciting hundreds of thousands of dollars from investors for kosher and halal cheese factories in upstate New York and bio-energy companies in New York State and Costa Rica. As part of his plea, Rosenbaum agreed to execute nearly $1,000,000 in judgments in favor of his victims, and he will be sentenced to 3 to 9 years in state prison. Also on January 5, Henderson pleaded guilty to Insurance Fraud and Falsifying Business Records in connection with her submission of a false claim in an attempt to obtain payment on a life insurance policy after her son’s suicide last year.

“Exploiting others for personal financial gain is reprehensible, and for a parent to exploit the death of their child for the same reason is unthinkable,” said Attorney General Schneiderman. “My office will continue fighting to root out both securities fraud and insurance fraud and fully prosecute those responsible for it.”

According to the prosecution, Rosenbaum is an insurance broker who owned and operated Rosenbaum Financial Services in Albany, New York for decades. In approximately 2001, Rosenbaum formed a limited liability company, Saratoga Cheese Company LLC, which he claimed would develop a halal and kosher cheese plant in the Capital Region, using local dairy products and a cheese coagulator that he had learned about when he was an exchange student in Germany decades earlier. In 2006, Rosenbaum reformed this entity as Saratoga Cheese Corporation, with the stated purpose of developing a cheese manufacturing facility in Cayuga County.

Also according to prosecutors, Rosenbaum created additional related entities, including Saratoga Milk Corporation, which he claimed would oversee the milk production for his cheese facility, and Saratoga Bio Gas Corporation and Bioenergies of the Americas, which he claimed would develop alternative energy uses for the waste produced by cows in the cheese and milk facilities.

According to prosecutors, between April 2006 and October 2012, Rosenbaum solicited nearly $1 million in private investments in Saratoga Cheese Corporation and its related entities by promising investors substantial returns and shares of stock in his corporations. Rosenbaum then used his various corporate entities as personal bank accounts, diverting over $600,000 to himself by writing checks payable to himself, transferring funds to other accounts, and making numerous cash withdrawals, including withdrawals in both the Albany area and in Costa Rica. According to prosecutors, some of the stolen money was used to travel to and from Costa Rica, where for years he paid for a $1,000-per-month apartment for a girlfriend he had there. None of the production or processing facilities for which Rosenbaum solicited funds were ever built.

Rosenbaum was arraigned on a 27-count indictment on June 20, 2016 in Albany County Supreme Court, charging him with one count of Grand Larceny in the Second Degree (a class C felony), eight counts of Grand Larceny in the Third Degree (a class D felony), ten counts of Securities Fraud under the Martin Act (a class E felony), one count of Scheme to Defraud in the First Degree (a class E felony), five counts of Repeated Failure to File Personal Income Tax Returns under the New York Tax Law (a class E felony), and two counts of Criminal Tax Fraud in the Fourth Degree (a class E felony).

After Rosenbaum’s arrest on the securities fraud indictment, an ongoing investigation by the Attorney General’s Office uncovered evidence of a separate life insurance fraud scheme committed by Rosenbaum and his wife, involving the submission of false claims with respect to the suicide of their son, Andrew Rosenbaum, who intentionally stepped in front of a tractor trailer on I-87 on May 8, 2016. According to prosecutors, just two days after the suicide, Lawrence Rosenbaum allegedly called Transamerica Insurance Corporation, where he had learned his son had insurance policies, and pretended he was Andrew Rosenbaum to inquire whether being “hit by a truck” would be covered if it were deemed to be an accident. The couple then allegedly concealed material information related to their son’s death from the insurance company to wrongfully obtain over $12,000 in life insurance payments and attempt to obtain an additional $50,000 in insurance payments. On December 9, 2016, Rosenbaum and his wife, Henderson, were arraigned on a 10-count indictment in Albany County Supreme Court, charging Insurance Fraud in the Third Degree (a Class D felony) and Falsifying Business Records in the First Degree (a Class E felony), among other charges.

On January 5, 2017, Rosenbaum pleaded guilty before Hon. Roger D. McDonough, Albany County Supreme Court, to the crimes of Grand Larceny in the Second Degree, (a class C felony), Securities Fraud under the Martin Act (a class E felony), and Repeated Failure to File Personal Income Tax Returns under the New York Tax Law (a class E felony), under the securities fraud indictment. Rosenbaum admitted not only that he stole money from investors but that he failed to file New York State income tax returns, thereby evading taxes on the money he diverted to himself through the scheme. Pursuant to Rosenbaum’s plea agreement, he agreed to execute nearly $1,000,000 in civil judgments against himself in favor of his individual investor victims, the New York State Tax Department, and Transamerica Insurance Corporation. He will be sentenced on March 16, 2017 to 3 to 9 years in state prison, and the Attorney General’s Office has agreed the resolution will satisfy both indictments pending against him.

Also on January 5, 2017, Henderson entered a guilty plea before Hon. Roger D. McDonough, Albany County Supreme Court, to the crimes of Insurance Fraud in the Fifth Degree and Falsifying Business Records in the Second Degree (both Class A misdemeanors), and agreed to the entry of a civil judgment against her in favor of Transamerica Insurance Corporation. Henderson will be sentenced on March 16, 2017 to three years’ probation.

The Attorney General thanked the New York State Department of Taxation and Finance, Criminal Investigations Division, for their assistance in this case.

The criminal cases against Rosenbaum and Henderson are being handled by Assistant Attorneys General Benjamin S. Clark and Philip V. Apruzzese of the Criminal Enforcement and Financial Crimes Bureau. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chief Stephanie Swenton.

The Attorney General’s investigations were conducted by Investigator Dennis Churns under the supervision of Deputy Chief Antoine Karam. Forensic accounting was performed by Meaghan Scovello. The Investigations Bureau is led by Chief Dominick Zarrella. The Forensic Audit Section is led by Chief Auditor Edward J. Keegan.