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Insurance broker admits defrauding Philly Housing Authority

A politically connected insurance broker pleaded guilty Friday to defrauding the Philadelphia Housing Authority of $2.3 million and is now naming names for federal authorities of public officials and others who allegedly have accepted bribes or kickbacks in return for business. Kobie T. West, 39, who took over West Insurance Group from his father and the firm’s founder, Bernard T. West, has admitted to one count of wire fraud.

This story was updated on May 21, 2012

A politically connected insurance broker pleaded guilty Friday to defrauding the Philadelphia Housing Authority of $2.3 million and is now naming names for federal authorities of public officials and others who allegedly have accepted bribes or kickbacks in return for business.

Kobie T. West, 39, who took over West Insurance Group from his father and the firm's founder, Bernard T. West, has admitted to one count of wire fraud.

With the help of a PHA accomplice, Kobie West created a fake invoice of $2,141,523 for worker's compensation coverage, then included a commission of $181,202 for the money he stole.

At his plea hearing Friday, U.S. District Judge Joel Slomsky cited a confidential plea agreement that said West was "conspiring with another person to provide bribes and kickbacks to persons, including public officials known to the U.S. government, in order to maintain business for West Insurance."

Slomsky also said West was involved in "three to four other areas of cooperation with the government."

Joseph J. Khan, an assistant U.S. attorney, would not comment about the investigation after the hearing.

But eight years ago, West figured in the sprawling federal investigation of pay-to-play politics in City Hall that led to the indictment of the late Ronald White, a confidant to former Mayor John F. Street, and the conviction of former City Treasurer Corey Kemp.

In 1998, West Insurance gave a check for $10,000 to Street on the eve of the former City Council president's first successful run for mayor. The company later moved its headquarters to Philadelphia from Boston and received no-bid contracts from the city.

At the time, West said the check was payment for a presentation to the company's board. Street's associates gave conflicting accounts at the time of what the money was for, and one adviser said there had been no speech.

Street could not be reached for comment Friday. No one was charged with a crime regarding the payment.

In 2010, the minority-owned West Insurance sold most of its assets to a Havertown insurance company, PK Financial Group, which is run by a number of former West Insurance executives.

Prosecutors said West Insurance depended on political contacts and contracts from public agencies for most of its business. But since 2004, it had contracts totaling only $142,303 with the city, according to the City Controller's Office.

Kobie West and his father were major political donors, contributing $95,000 to Pennsylvania politicians from 2000 through 2009, according to campaign finance reports filed with city and state authorities. Kobie West also gave at least $11,000 to President Obama's 2008 campaign.

The biggest recipient was State Rep. Dwight Evans, who received more than $38,000 from the Wests while he was the ranking Democrat on the House Appropriations Committee. Other big beneficiaries of the Wests included then-Gov. Ed Rendell ($16,500), then-Mayor Street ($8,250), Mayor Nutter ($5,000), and two powerful legislators now doing prison time: former State Sen. Vincent J. Fumo ($4,500) and former House Speaker John M. Perzel ($5,000).

Released on bail of $25,000, West is scheduled for sentencing Sept. 19 and faces a maximum sentence of 20 years.

Leaving the courtroom, West would not say where he worked. One way he earns money is through poker. Last July, West placed 167th in the World Series of Poker 2011 No Limit Hold'em event, winning $3,088, according to PokerPages.com, which tracks the game. He did much better in 2006, winning $19,765, part of $30,723 won since 2005, according to the site.

At PHA, West conspired with Edgar Bridges, a risk manager, according to court documents. At one time, Bridges was the brother-in-law of Ronald White, the Street fund-raiser who was charged with corruption but died before his case went to trial.

Street was PHA chairman at the time but has not been mentioned in the West dealings.

According to court documents, West Insurance was the broker matching PHA with worker's compensation insurance from AmeriHealth Casualty Services Inc. of Philadelphia.

In May 2006, a state regulatory agency changed how it calculated a surcharge tax on PHA's insurance policy that would have required a payment of $169,933.

West used the situation to concoct an inflated fake bill. In an e-mail to Bridges, he warned of "bad news" — AmeriHealth would bill "close to $3 million" extra for its coverage. He suggested that premium could be negotiated down.

In the end, PHA paid $2.3 million, which was deposited in West Insurance's bank account on Oct. 6, 2006.

West hired Bridges as vice president with a $5,000 signing bonus and after three months, paid him a $30,000 bonus.

An audit at PHA turned up the payment to West Insurance. Still trying to cover up the fraud, around May 29, 2008, West wired the money to AmeriHealth.

Khan, the assistant U.S. attorney, said AmeriHealth returned the money to PHA.

Bridges pleaded guilty to a misdemeanor tax charge of failing to file required information and admitted violating state ethics laws. He was sentenced to two years probation.

Contact staff writer Jennifer Lin at 215-854-5659 or jlin@phillynews.com, or follow on Twitter @j_linq.

Inquirer staff writer Bob Warner contributed to this article.