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Thursday, February 4, 2010

Oxendine Opening one of the Biggest Fraud Investigations in GA History

Via Georgia Public Broadcasting:

ATLANTA — John Oxendine calls it one of the largest fraud investigations the Department of Insurance has ever conducted--- and now, he says several prominent Georgians are connected to the company at the center of the criminal probe.

Westmoreland: Oxendine Playing Politics with SEUS Investigation
The company is Southeastern United Insurance Company (SEUS). Last year it was liquidated under court order, after it was discoreved the company didn't have enough money to cover claims. SEUS sold workers comp policies mainly to municipalities well below market value. In all, it covered about 5,000 Georgians and scores of municipalities, when it was shut down for being financially insolvent. And at least six Georgia families can not pay for medical coverage related to workplace accidents due to SEUS's collapse.

The former CEO of that company, Clark Fain, is under criminal investigation. Oxendine alleges Fain, and the company, kept “Enron-style” books.

Insurance Commissioner Oxendine opened a formal criminal investigation into SEUS last month. At that time he told GPB that several prominent Georgians kept “popping up” in the company’s papers. They include former State Representative Larry Walker, and former University of Georgia Head Football Coach, Ray Goff.

According to the Insurance Commissioner, Walker and Goff had taken at least one trip to Europe as members of a SEUS advisory board, that included other influential Georgians. Oxendine says that trip, along with others, is being probed as part of the criminal investigation.

Two insurance agents who worked with SEUS tell GPB that Fain paid for “lavish” trips overseas while the company’s finances were starting to show signs of trouble.

Ray Goff dismisses those accusations, saying “Clark Fain has been, and is, my friend.” Goff says he served on the advisory board, and attended five or six meetings in Atlanta. He says he “doesn’t really remember” how many trips he took as a member of the board, which, he says included a trip to Italy.

“If the trips were lavish, they were putting me up some where else. I ate at a McDonalds almost every day because it was so dang expensive," Goff adds.

Yet, despite spending a week out of the country, Goff says he is unsure why the SEUS advisory board went to Italy, and says he can’t remember who they met with.

“I don’t know why it was necessary to go to Italy…Why does the Insurance Commissioner go hunting on other people’s land?” Goff asks.

Larry Walker, a once prominent state lawmaker who also served as an attorney for SEUS, has not returned repeated requests for comment over the past month.

After connecting Ray Goff and Larry Walker to SEUS, Oxendine hinted more powerful Georgians were connected to the company. Then, in an interview last week at a gubernatorial candidates forum in Atlanta, Oxendine says that he was sure Fain “was not the only person that knew [the books and records] were fraudulent," before naming Congressman Lynn Westmoreland, Former State House Speaker Terry Coleman, and Middle Georgia Judge Bryant Culpepper, as serving on the SEUS advisory board.

“They are not persons of interest…” Oxendine says, adding, “We are looking at anybody that had any involvement.”

No charges have been filed against any members of the advisory board.

Oxendine says he is not sure what role the advisory board served. For his part, Ray Goff says he does not recall what the exact role of the advisory board was, either. Congressman Westmoreland says he recalls the board to be "educational." And in a statement, Clark Fain, the former CEO, says that the board never had any voting rights, fiduciary, regulatory or formal oversight responsibilities.

In fact, so far no one, either on the advisory board, or the regulators that are legally obligated to monitor SEUS, can explain in detail what role the board played in advising the company.

GPB contacted Former Speaker Coleman, who now works at the Georgia Department of Agriculture, Judge Culpepper and Congressman Westmoreland about their roles.

Coleman did not return calls for comment. Judge Culpepper issued a statement to GPB, that reads:

"At Clark Fain's request, I served several years ago on an informal advisory board composed of some of his friends and business associates. To the best of my knowledge, this group met a total of three times in 2004 and 2005. The group had no fiduciary, regulatory or corporate responsibilities. I did not have access to anything other than general information regarding the operation of Mr. Fain’s businesses. I consider Mr. Fain to be my friend and have no reason to consider him anything other than an honorable businessman and person. I never have been nor would I be involved in any board or business that I believe to be engaging in illegal or fraudulent activity."

As for Westmoreland, his communications director, Brian Robinson says Oxendine called the congressman.

“Late last year, the commissioner called Lynn’s cell phone and said ‘There is an investigation into SEUS, and your name keeps popping up. We’re just giving you a friendly heads up,” Robinson says. He believes Oxendine is trying to smear Westmoreland because the Congressman is supporting U.S. Representative Nathan Deal for Governor.

Oxendine confirmed he made the call, but denies there was any political motivation behind it. He says he named Westmoreland, Coleman and Culpepper in order to be “open and honest.”

“Oxendine is being disingenuous if he insists this isn’t part of a political shakedown,” Robinson says. Westmoreland says he never went on an overseas trip and met with the group just a handful of times.

As for Clark Fain, his lawyers deny he committed any fraud, and issued a statement regarding the advisory board. It reads, in part:

"Like many people who network and conduct business outside of the office, Mr. Fain has entertained his advisory board, customers, prospective customers, business associates and others while hunting and on trips. It should be noted the time of the advisory board 's existence was a profitable time for SEUS. The advisory board has held no meetings since 2007. During the advisory board's existence, the company was solvent, and such travel and entertainment expenditures were commonplace in the sales and marketing of a company...Successful companies frequently use networking and travel as a way to generate business and engage new customers - such practices are lawful and not unusual."

This sounds big and I sure hope that Oxendine can get to the bottom of this as soon as possible! Fraud of any kind should not be tolerated in this Country! Your thoughts.

1 comment:

  1. GPB has been in the forefront in reporting this matter. The AJC has reported very little.