four years and four months for masterminding an insurance fraud scheme that swindled victims out of more than $5 million.

The hustler, who was said to have deceived both the Bermuda Government and his Bermuda accountants Cooper & Lines/Coopers & Lybrand (Bermuda), was arrested April Fool's day two years ago by US officials.

Mr. Tony Habib was also ordered by US district Judge Robert P. Patterson of the Manhattan federal court on Friday to pay $2 million in restitution, and fined $10,000.

Mr. Habib, the former head of Bermuda-based Financial Services Insurance Ltd.

(FSIL), and International Investment Financial Services Corp. (IIFS), had pleaded guilty on November 28 to defrauding primarily California and Illinois motorists and small businesses which purchased liability insurance underwritten by FSIL between early 1991 and April 1993.

IIFS was reportedly a New York Corporation which offered to arrange financial guaranties, including stand-by letters of credit. FSIL, the Bermuda corporation, was purportedly in the business of underwriting financial guaranties and surety bonds.

Mrs. Mary Jo White, US Attorney for the Southern District of New York, said that until April 1993, when FSIL was seized by the US Government, FSIL was also an insurance carrier licensed under Bermuda law.

FSIL and IIFS also shared offices at 67 Wall Street in New York, while FSIL and its representatives shared offices elsewhere, including Miami and at Williams House, 20 Reid Street, Hamilton, Bermuda.

Habib was president of IIFS and treasurer of FSIL, although he was the dominant figure in charge of both corporations.

The indictment charged that Habib used a series of fraudulent misrepresentations to deceive FSIL's auditors at Coopers & Lybrand (Bermuda), and then to deceive in turn the Government of Bermuda and state insurance regulators in California and Illinois.

Assistant US Attorney, Mr. David Raymond Lewis, who together with associate US Attorney, Mr. John M. McEnany, are in charge of the prosecution, said that according to the charges, Habib defrauded FSIL's own insurance brokers and policyholders by falsely claiming that FSIL held a portfolio of more than $50 million in US Treasury notes and bonds, and therefore held sufficient capital to stand safely behind its insurance.

In fact, the indictment had charged that FSIL held no such capital and FSIL's unpaid insurance claims arising from the fraud exceeded FSIL's minimal assets by more than $5 million.

Habib, 39, who lived in Manhattan, was arrested on April 1, 1993 and has been imprisoned since that date, held without bail.

Ms White praised the efforts of the US Postal Inspection Service, which investigated the case.

When the guilty plea was entered last November, Ms White said victims of the scheme were swindled out of about $7 million, while other victims were defrauded out of about $3 million through an overlapping "advance-fee'' scheme.

Habib, she said, pleaded guilty to two counts charging wire fraud and conspiracy to commit mail and wire fraud, in which he used his two companies to orchestrate the scheme.

He was eligible for a maximum 10 year sentence, a fine up to twice the amount of any gains or losses that resulted from the fraud, and an order directing full restitution to the victims.

The indictment had complained that Habib had worked in a scheme with co-conspirators including associate, Bud Heller, after Heller set up Heller Management in the same Wall Street building.

The scheme involved collecting insurance premiums, and, according to the indictment, the conspirators "caused false and fraudulent representations to be made to FSIL's brokers, agents and policyholders, among others, that FSIL held sufficient assets to safely act as an underwriter of insurance, when in fact it did not hold such assets.

"Through this insurance fraud scheme, the policyholders of FSIL Insurance paid an undetermined amount of insurance premiums, in excess of approximately $10 million.'' The indictment claimed that through this scheme and the advanced fee scheme for financial guaranties the conspirators falsely and fraudulently represented to FSIL's auditors and accountants, Coopers & Lybrand (Bermuda) that FSIL held a portfolio of US Treasury notes and bonds with a value upon maturity of $52.5 million.

No such portfolio existed. But based upon these misrepresentations, and at the instructions of Habib and his fellow conspirators, Coopers produced an audited balance sheet, audited financial statements and various other representations on FSIL's behalf, all reflecting that FSIL held the purported bond portfolio.

Habib and his people would then take the audited balance sheet and other financial statements from Coopers and falsely and fraudulently represent to banks, customers, insurance brokers and agents of FSIL and IIFS that FSIL held the purported bond portfolio.

They also arranged for FSIL's insurance brokers and agents to pass along such misrepresentations to officials at the Departments of Insurance for the states of California and Illinois.

In carrying out the advance-fee scheme, they would have contracts executed between IIFS and customers and between FSIL and customers through which IIFS and FSIL would agree to attempt to arrange and provide financial guaranties, including stand-by letters of credit.

Typically, such contracts required the customer to pay a non-refundable portion of its fee in advance, and then satisfy a number of requirements. One such requirement would be to obtain a "financial guarantee policy'' or surety bond from an acceptable insurer.

FSIL was often that "acceptable insurer'', which would ultimately deny the financial guaranty or provide one that was of no value to the customer. That would then be the reason for the IIFS letter of credit to be denied.