The Original Case
As controller of JarCo, a Florham Park-based insurance brokerage specializing in coverage for trucking, hauling, waste management, moving, and recycling businesses, Roetto occupied a position of trust. Between January 2008 and May 2010, she exploited the complexity of premium finance transactions to commit multiple schemes:
- Diverted financial insurance premiums intended for carriers to unauthorized uses
- Created and submitted unauthorized finance agreements
- Issued more than 200 bad checks totaling over $2 million across 10 different bank accounts
- Failed to forward borrowed funds from premium finance companies to insurance carriers
Roetto pleaded guilty to second-degree theft by unlawful taking, issuing bad checks, and misconduct by a corporate official. She was sentenced to nine years in state prison, ordered to pay restitution, and permanently barred from obtaining an insurance license in New Jersey.
Impact on Workers' Compensation Claims
This type of fraud creates cascading problems for injured workers and employers alike:
Coverage Gaps and Denied Claims: When premium payments never reach insurance carriers, policies may lapse or be cancelled without the employer's knowledge. Workers injured during these coverage gaps face claim denials, leaving them without medical benefits or wage replacement when they need it most.
Delayed Medical Treatment: Uncertainty about coverage status can delay authorization for necessary medical care. Injured workers may face weeks or months without treatment while coverage disputes are resolved, potentially worsening their conditions and prolonging recovery.
Financial Burden on Employers: Employers who believed they had paid for valid coverage find themselves liable for claims without insurance protection. This can lead to devastating financial consequences, particularly for small and medium-sized businesses that cannot absorb unexpected claim costs.
Litigation Complications: Coverage disputes arising from broker fraud add layers of complexity to workers' compensation cases. Determining who is responsible for claims when premiums were diverted creates legal battles that delay benefits and increase costs for all parties.
Premium Increases Industry-Wide: Fraud losses ultimately get passed on to all policyholders through higher premiums. Honest businesses end up subsidizing criminal activity through increased insurance costs.
Erosion of System Trust: When brokers abuse positions of trust, it undermines confidence in the entire workers' compensation system. Employers may become reluctant to work with legitimate brokers, and workers question whether their coverage is genuine.
Modern Parallels and Ongoing Risks
Since 2012, the insurance industry has implemented stronger controls, but broker fraud remains a persistent threat. Digital payment systems and increased regulatory oversight have made some schemes harder to execute, but creative fraudsters continue to find vulnerabilities.
The rise of the "underground economy" in construction and service industries, highlighted in related enforcement actions in California and other states, compounds these problems. Employers operating without proper workers' compensation coverage, often facilitated by dishonest brokers or consultants, create environments where injured workers have no recourse.
Protecting Against Broker Fraud
Employers can take several steps to protect themselves and their employees:
Verify Coverage Directly: Don't rely solely on broker assurances. Request certificates of insurance directly from carriers and verify policy details with the insurance company.
Monitor Premium Payments: Ensure premium finance payments are going to legitimate lenders and that carriers are receiving payments. Request regular confirmation from both the finance company and the carrier.
Check Broker Credentials: Verify that brokers maintain valid licenses through state insurance departments. In New Jersey, check with the Department of Banking and Insurance.
Review Bank Statements: Watch for unusual payment patterns, multiple checks to the same entity, or payments to unfamiliar companies.
Conduct Annual Audits: Have an independent accountant review insurance transactions annually to identify irregularities.
Respond to Carrier Notices: Take immediate action on any cancellation or non-payment notices from insurance companies, even if you believe you've paid your broker.
Use Segregated Accounts: Work with brokers who use separate trust accounts for premium payments, providing an additional layer of protection.
The Human Cost
Behind every fraud case are real people: injured workers denied benefits, honest business owners facing financial ruin, and families struggling with medical bills and lost wages. The Roetto case demonstrates that insurance fraud is not a victimless crime—it undermines the social contract at the heart of workers' compensation.
When someone in a position of trust exploits that position for personal gain, the ripple effects extend far beyond the immediate financial loss. Workers' compensation exists to protect injured employees and provide certainty for employers. Fraud undermines both objectives.
Enforcement and Accountability
The New Jersey Attorney General's prosecution of the Roetto case sent a strong message about accountability. The nine-year prison sentence and lifetime ban on insurance licenses reflected the seriousness of crimes that threaten the integrity of the insurance system.
Today, state insurance fraud bureaus continue to investigate and prosecute broker fraud. Joint enforcement task forces, similar to those used in California's "Operation Underground" sweeps targeting underground-economy employers, coordinate across multiple agencies to combat various forms of workers' compensation fraud.
Conclusion
The Kelly Roetto case remains relevant in 2025 as a cautionary tale about the vulnerability of the workers' compensation system to internal fraud. While the mechanics of insurance fraud may evolve with technology, the fundamental breach of trust and its impact on injured workers and employers remain constant.
Vigilance, verification, and enforcement remain essential tools for protecting the workers' compensation system from those who would exploit it. Employers must recognize that choosing an insurance broker involves more than comparing prices—it requires selecting a trustworthy partner who will protect their interests and ensure their employees have genuine coverage when injuries occur.
The ultimate victims of insurance broker fraud are not abstract entities but real workers who depend on legitimate coverage to protect their livelihoods and their families. Maintaining the integrity of the workers' compensation system requires ongoing attention from regulators, prosecutors, employers, and the insurance industry itself.
Related Resources:
For more information about preventing workers' compensation fraud:
- Contact your state insurance department to verify broker credentials
- Report suspected fraud to your state's insurance fraud bureau
- Consult with legal counsel about reviewing your insurance arrangements
Note: This post updates a 2012 article about the Kelly Roetto case. While specific URLs from 2012 are no longer accessible, the lessons remain current and applicable to today's workers' compensation landscape.
*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters).
Blog: Workers' Compensation
LinkedIn: JonGelman
LinkedIn Group: Injured Workers Law & Advocacy Group
Author: "Workers' Compensation Law" West-Thomson-Reuters
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© 2026 Jon L Gelman. All rights reserved.
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