(Bloomberg) -- A former QBE Insurance Group Ltd. executive and an accomplice embezzled $2.6 million by submitting phony invoices in which the name of the chief financial officer was forged, according to U.S. prosecutors.

James J. Shea, a former QBE vice president who was responsible for integrating the Australian insurer’s information technology systems, and Eugene Fallon, an outside consultant, defrauded QBEover two years, beginning in January 2012, the U.S. said. QBE isn’t named in the criminal complaint filed Tuesday in Manhattan federal court.

“We can confirm that QBE is the company in question, and we are cooperating fully with law enforcement in this matter,” said Amanda Taylor, a spokeswoman for QBE North America.

Shea, who was arrested by FBI agents early Tuesday, made an initial appearance before U.S. Magistrate Judge Gabriel Gorenstein in Manhattan. He was released on a $500,000 bond secured by $25,000 in cash.
His lawyer Sam Braverman said after the court appearance Shea would fight the charges.

QBE paid Shea about $1.9 million in salary and bonuses over six years ending in 2013, according to the complaint. Shea collected more than $1.8 million from the fraud, the U.S. said.

Forging Signature

Shea’s accused of forging QBE’s chief financial officer’s signature on contracts authorizing payments for sham consulting work done by two companies controlled by Fallon.

Of the $2.6 million paid to bank accounts of the Fallon companies, more than $1.8 million was routed back to Shea through his wife’s accounts, the U.S. said.

QBE’s chief financial officer, who had to authorize the consulting work, never heard of the companies involved and doesn’t remember any such work being done by them, the U.S. said.

Investigators followed a money trail that linked the two men to the scam, a Federal Bureau of Investigation agent said in court papers. They found bank accounts affiliated with Fallon’s companies and invoices which were submitted to e-mail addresses connected to Shea, the agent said.

House Purchase

During a six-year period beginning in Oct. 2008, Shea and his wife have spent more than $4 million, including $1 million in cash for a house, $102,000 in furniture, $38,401 at the Disney Resort and $18,233 at an Apple Store, according to the U.S.

Fallon isn’t in custody. Dawn Dearden, a spokeswoman for Manhattan U.S. Attorney Preet Bharara, declined to comment on his whereabouts. A lawyer for Fallon couldn’t be immediately located.

The case is U.S. v. Shea, 15-mag-1996, U.S. District Court, Southern District of New York (Manhattan).

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