Former bank president arrested in $10 million insurance scheme

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The former president of an eastern Pennsylvania bank has been arrested and charged with using his position as a contractor for a national life insurance company to defraud clients out of $10 million through phony investment schemes.

Richard Freer. Police photo.

Richard Freer. Police photo.

Richard Allen Freer, 67, is accused of continuing to use the name of Aviva USA after losing his appointment with the life insurer in 2009, to convince clients to invest savings in what they thought were real estate investment trusts run by Aviva.

According to Northampton County District Attorney John Morganelli, Freer instead operated a Ponzi scheme, paying high dividends to investors using money from subsequent investors, prosecutors claim.

Freer operated under the names “Financial Services Group” and “Freer & Associates” in Bethlehem, Pa., about 60 miles north of Philadelphia, after serving as president of Lafayette Ambassador Bank until 1991. Earlier this year, Aviva sent Freer a cease and desist letter ordering him to stop using the company’s name.

According to prosecutors, he continued with the scheme even after an investigation was started six months ago and his bank accounts were frozen.

Prosecutors say Freer did not remit about $10 million taken from clients for REITs, instead depositing the money into a private checking account also accessed by his wife Beverly Freer.

Freer faces 90 charges of theft by deception, 90 charges of theft by failure to make disposition of funds, 50 counts of forgery, 42 charges of deceptive business practices and two different charges for violating the Pennsylvania Securities Act.

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