Mr. Korngut said that the U.S. Attorney's Office in Newark, N.J., is also looking into aspects of the case. A spokesman for New Jersey U.S. Attorney General Christopher J. Christie said he would not comment.

Mr. Gruppuso, the owner of now defunct National Program Services, based in Cedar Knoll, N.J., placed insurance business for a number of very large commercial real estate management firms throughout the United States, according to Mr. Korngut.

The firms were involved in the management of such real estate complexes as condominiums, major apartment complexes and malls, he said.

The schemes began in 1998 when Mr. Gruppuso misrepresented an account to Wausau Insurance Co., not telling the insurer the full risk history of the client, according to the prosecutor. The client received a much lower premium and the initial scheme began to unravel when the claims started coming into the insurer, Mr. Korngut explained.

He also misrepresented to the policyholder the type of policy the insured was getting, telling them "they were going to get the gold policy, and they got the bronze," said Mr. Korngut.

He said this was Mr. Gruppuso's pattern for doing business that he used over the next four years. "He did this to get the business from the insured because he could not get the rate that they wanted with the type of risk they were," Mr. Korngut continued.

To cover his tracks, Mr. Gruppuso began paying the claims for what was not covered. To finance this enterprise, he began borrowing money from banks and keeping premiums. The money was used primarily to cover the claims, the prosecutor said.

To get additional loans from banks, Mr. Gruppuso, with a couple of accomplices who are yet to be indicted, began to fabricate bonds to cover loans, Mr. Korngut said.

Acting as a general agent for insurers, in addition to Wausau, he issued policies from other companies identified as Virginia Surety, XL Insurance and a subsidiary of AIG, National Union, the prosecutor said. Mr. Korngut noted that under the law, even though the companies did not receive their premiums, they still had to honor the client's policies because of the general agent relationship.

He said a subsidiary of Kemper Insurance provided bonds to cover loans Mr. Gruppuso obtained. In total, the insurance companies were said to be out more than $78 million.

Mr. Gruppuso faces up to 10 years in prison on the state charges and could face federal charges, Mr. Korngut said. Mr. Gruppuso should plead to federal charges within a month. He said the broker will probably serve both state and federal time concurrently.

Mr. Korngut said the broker's illegal activity was driven by his desire to become a major player in the industry."He wanted to be the guy," said Mr. Korngut.