Former Louisiana Deputy Insurance Commissioner Convicted of Racketeering

United States Attorney Donald J. Cazayoux, Jr. announced that a former Louisiana deputy insurance commissioner has been convicted on racketeering charges.

Richard L. Chambers, Sr., age 67, of LaPlace, La., pled guilty to charges brought under the Operation Blighted Officials investigation, according to the announcement released by Cayoux’s office.

Chambers pled guilty to using an interstate facility in aid of racketeering, the U.S. Attorney’s Office said. He faces up to five years in prison, three years of supervised release following imprisonment, a fine of $250,000, and forfeiture of all proceeds from the offense. Sentencing is scheduled for Nov. 14, 2012.

Chambers admitted that, while serving as deputy commissioner for the Louisiana Department of Insurance, he engaged in two bribery schemes in which he took bribes in exchange for using his official position to (1) steer insurance business, and (2) support a conceptual trash can cleaning concept known as the Cifer 5000, according to federal officials.

Insurance Kickback Scheme

Cazayoux reported that Chambers admitted he created a scheme whereby he would use his official position to steer insurance business from municipalities and other sources to a licensed insurance agent in exchange for bribes. Chambers admitted that, after attempting the scheme with an undependable agent, Chambers enlisted the participation of a different insurance agent to execute the scheme. Chambers, however, was unaware that the insurance agent he enlisted was an undercover special agent with the Federal Bureau of Investigation.

In February 2009, Chambers arranged to take bribes amounting to 40 percent of the commissions earned on business Chambers steered to the insurance agent. Chambers admitted that he received a $2,000 cash bribe on July 21, 2009, a $3,000 cash bribe on Oct. 16, 2009, and a $500 cash bribe on March 10, 2010, according to the U.S. Attorney’s Office.

In exchange, Chambers admitted that he used and agreed to use his official position to, among other things, steer insurance business to the insurance agent from municipalities such as St. Gabriel, Louisiana and White Castle, La. Chambers admitted that he even wrote a fraudulent letter in his official capacity to the Mayor of Cleveland, Ohio, in an attempt to steer the City of Cleveland’s insurance business to the insurance agent.

Cifer 5000 Bribery Scheme

The U.S. Attorney’s Office reported that Chambers also admitted to engaging in a bribery scheme with an individual he believed to be a venture capitalist affiliated with the insurance agent and involved with a conceptual trash can cleaning product known as the “Cifer 5000.”

The Cifer 5000 was a product marketed as an automated waste container cleaning system using specially designed and equipped trucks to clean and sanitize commercial and residential waste containers. Its potential customer pool was represented to be governmental entities.

Unbeknownst to Chambers, the venture capitalist was an undercover FBI agent and the Cifer 5000 was a fictitious product created by the FBI, Cayoux’s announcement said.

Chambers admitted that, in May 2009, he agreed to provide an official letter of support for the Cifer 5000 in exchange for two cash payments totaling $5,000, federal officials reported.

Chambers believed the letter would be used to generate significant private investor funding for the Cifer 5000. Chambers admitted that he took $2,000 in cash from the venture capitalist on May 12, 2009, and the remaining $3,000 in cash the following day. In exchange, Chambers admitted that he provided the venture capitalist with the official letter of support, according to U.S. Attorney’s Office.

This ongoing Blighted Officials investigation is being conducted by the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Middle District of Louisiana, with assistance from the U.S. Department of Housing and Urban Development, Office of Inspector General, and the U.S. Department of Homeland Security, Office of Inspector General.

Operation Blighted Officials is being prosecuted by Assistant U.S. Attorneys Corey R. Amundson, M. Patricia Jones, and Michael J. Jefferson.

Source: U.S. Attorney’s Office for the Middle District of Louisiana