A woman who formerly operated an insurance agency in Northridge, Calif., was sentenced by the U.S. District Court to pay $1,880,237 in restitution and serve 50 months in federal prison for defrauding a lender out of $3.7 million by submitting bogus applications for fine art insurance policies for commercial clients but instead using the money for herself.

According to court documents, Tonja Van Roy owned and operated Pegasus Insurance, a company specializing in insurance policies for art collections.

From January 2021 to December 2023, Van Roy created and submitted dozens of fraudulent finance agreements to AFCO Credit Corp., a Lake Forest, Ill.-based provider of insurance premium finance, purportedly to finance insurance policies she claimed to have sold to art galleries.

Van Roy made up the insurance policy numbers she used and forged the electronic signatures for fictitious insureds. She used the borrowed money to fund her lifestyle, which included payments on dozens of credit cards. When the loans from AFCO came due, Van Roy submitted additional fraudulent finance agreements to AFCO, and used the proceeds from the new loans to make it appear as though the old loans had been repaid.

Van Roy pled guilty on Jan. 6 to one count of wire fraud.

“[Van Roy] embarked on a sophisticated, multiyear scheme to borrow fraudulently over 3.7 million dollars using her insider’s knowledge of the insurance industry,” prosecutors argued in a sentencing memorandum. “[She] has more than 25 years of experience working as an insurance agent, during which time she sold countless insurance policies and worked for many different insurance agencies before founding her own; she had an expert’s understanding of the industry, which allowed her to manipulate her victims and avoid detection for years.”

Homeland Security Investigations and the California Department of Insurance investigated this matter.