Timothy Derham and Donald Derham, Long Island insurance executives, charged in $250M scheme

A Jericho-based insurance company and two of its executives were indicted on multiple grand larceny charges after they defrauded clients of $250 million via unauthorized insurance policies, Manhattan District Attorney Alvin Bragg announced.

Inter-Insurance Agency Services Ltd., along with chairman and owner Timothy "Tim" Barry Derham, 60, and his nephew, chief technology officer Donald "Trip" A. Derham III, 32, were charged in a New York State Supreme Court indictment unsealed on Tuesday with issuing more than 40 unauthorized insurance policies that ranged between $1 million and $25 million each within an eight-year period. Prosecutors said the policies were issued while the company’s equity was less than $600,000.

Their clients included companies at Port Authority of New York and New Jersey airports, construction firms and homeowners, Bragg said.

"New Yorkers trust that when they purchase insurance, whether to safeguard their home or operate on an airport tarmac, they are paying for protection in times of crisis," Bragg said in a statement. "As alleged, these defendants flagrantly lied and issued worthless insurance policies from their offshore company while pocketing thousands in premiums and fees."

From March 2014 through April 2022, the company was not authorized to conduct business in New York State, Bragg said.

During that period, they issued unauthorized and fraudulent insurance policies from Barbados-based International Underwriting Insurance Company, which was owned by Tim Derham.

Bragg said International Underwriting needed at least $45 million of equity to conduct business in the United States as a business not based in the country.

But at that time, the company had a net worth of less than $600,000.

The scheme was uncovered when the company failed to provide basic information to a third-party verifying insurance requirement for a contract on Port Authority property, Bragg said.

"The Port Authority takes misconduct like this seriously and acted immediately when this fraudulent scheme was uncovered," Port Authority Inspector General John Gay said.   

According to an investigation, Tim Derham determined policies were issued and the prices of those policies while managing the company’s affairs.

Trip Derham assisted with operational and management decisions of International Underwriting.

He also created business records, including policy documents and company invoices, that frequently contained information he knew to be false, Bragg said.

The uncle and nephew did not disclose to clients that the company was not an admitted or authorized insurer in New York, Bragg said.

Inter-Insurance Agency Services, Tim Derham, and Trip Derham were each charged with two counts of second-degree grand larceny, one count of fourth-degree grand larceny, first-degree scheme to defraud, and four counts of first-degree offering a false instrument for filing, Bragg said.

Inter-Insurance Agency Services did not immediately respond for comment.