The president of Utah-based Status Insurance Services is facing insurance fraud charges in Washington federal district court in a scheme that prosecutors said involved false statements made to a regulatory agency here.
Bret Van Leeuwen, an insurance broker who founded Stratus, is set for a plea hearing June 1 in front of U.S. District Judge Ricardo Urbina, court records show.
The government filed an information (PDF) against Leeuwen on May 19 charging him with, among other crimes, insurance fraud and aiding and abetting. A criminal information is generally filed in cases where a defendant has agreed to plea deal with prosecutors.
Van Leeuwen?s attorneys, Zuckerman Spaeder partners William Taylor III and Eric Delinsky, today filed an emergency motion to postpone the plea hearing until later in June. Taylor, who is lead counsel, will be out of the country at the time of the hearing.
Taylor, an attorney for former IMF chief Dominique Strauss-Kahn in the sex crimes case in Manhattan, and Delinksy were not immediately reached for comment today about the Van Leeuwen prosecution. Court records do not indicate the terms of any plea deal.
The assistant U.S. attorney handling the case, Michael Atkinson of the fraud and public corruption section, declined to comment through a spokesman.
Stratus, prosecutors said, focuses on specialty insurance programs for associations and purchasing groups.
Van Leeuwen and another man, Rodney Ayer, president of New Jersey-based Phoenix Underwriting Managers, worked together to place Wright & Co.?s Federal Employee Professional Liability insurance program with insurance carriers.
Wright & Co. provides supplemental insurance programs to the federal government. The employees liability program provides insurance to, among others, FBI personnel against civil and criminal actions stemming from acts committed while performing professional duties.
Prosecutors said Van Leeuwen and Ayer worked with other organizations, including the IMA Group, an association for yoga, reflexology and aromatherapy, and the International Association of Reike Professionals, to place members with insurance carriers.
IMA Group, according to court records, formed a non-profit called the Health and Beauty Risk Purchasing Group, or HBRPG, which served as the insurance purchasing entity for IMA.
Beginning in 2004, Van Leeuwen and Ayer discussed with multi-national insurance carrier Hannover Rueckverisherung AG the creation of ?protected cell companies? to insure the health and beauty group and the federal employees liability program. Leeuwen and Ayer would co-own the cells.
Prosecutors allege Van Leeuwen and Ayer did not disclose to Wright & Co. and the other companies the ownership interest the two men had in the cells.
Van Leeuwen and Ayer, according to the government, received ?substantial? premium payments from members of the FEPL program and the HBRPG. The two men also paid claims and expenses associated with the programs, keeping the underwriting profits for themselves. Court papers do not indicate the amount of profit.
Van Leeuwen and Ayer ?recognized the potential of realizing substantial underwriting profits from the FEPL Program and the HBRPG through the use of the cells,? Atkinson said in charging documents.
In 2006, Hannover backed out of coverage for the federal employees liability program and the HBRPG.
Prosecutors said in charging documents that Ayer in April 2006 filed papers with the D.C. Department of Insurance, Securities and Banking approves seeking a certificate that would allow another company to serve as the insurance carrier for the FEPL program.
But the application, according to the government, omitted the fact that Hannover had backed out of the arrangement to insure the program. In May 2006, the D.C. insurance regulatory agency approved the Defense Shield Insurance Company?s application for a certificate to be a captive insurance company.
Ayer pleaded guilty in Washington federal district court on June 30 to his role in the insurance fraud scheme (PDF). Ayer, court records show, agreed to cooperate with the government in its ongoing criminal investigation.
Ayer is awaiting sentencing. His defense attorney, David Zinn, a Williams & Connolly partner, could not be reached for comment today.
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