The former owner of a Hammonton, N.J., insurance agency was sentenced to 40 months in federal prison and must pay $618,480 in restitution for his part in selling false insurance policies.

John J. Petrillo, 56, of Mays Landing, N.J., received the sentence July 20 in U.S. District Court. He also must serve five years of supervised release following his prison term, according to Acting U.S. Attorney Ralph J. Marra, Jr.

Petrillo is the former owner of Aconorate Insurance Agency in Hammonton, N.J., licensed in New Jersey, Pennsylvania and New York, which sold commercial insurance mostly to bars and nightclubs.

In January, Petrillo pleaded guilty to single counts of conspiracy to commit mail fraud and conspiracy to obstruct justice. He admitted that from June 2004 to July 2006, he and another employee began a scheme to defraud clients by substantially overcharging them for premiums, sometimes as much as 800% over the actual policy cost, according to Marra.

Petrillo also admitted that most of the policies were placed through a Texas broker and agency and after realizing they were false and fraudulent, he continued to issue extensions as well as new, false policies. He also continued to collect monthly payments and in an effort to collect the funds, created invoices sent via U.S. mail.

Thomas D. Kulig, 33, of Little Egg Harbor, N.J., pleaded guilty for his role as an employee of Aconorate in manipulating and creating declaration pages of the policies to match what policyholders were being charged.

Petrillo admitted that he, Kulig and another co-conspirator also created the appearance that United Assurance Co., on behalf of which the majority of the fake policies were sold, was a legitimate carrier, in part by creating a company website, opening a mailbox at a mailing center and setting up a toll-free number as part of their scheme.

A third Aconorate employee, Thomas Grubb, 55, of Voorhees, N.J., is also linked to a cover-up of the scheme, Marra said, and remains a fugitive.