Indiana Supreme Court Declines Appeal by Conseco Inc. Founder

The Indiana Supreme Court refused to hear Conseco Inc. founder Stephen Hilbert’s appeal of a judge’s order that he repay the insurance company more than $80 million in stock loans.

The refusal clears the way for Conseco to sell Hilbert’s former 23,000-square-foot mansion and try to collect millions of dollars in other assets the insurer claims Hilbert fraudulently transferred to his wife, attorneys said Monday.

The justices did not say why they denied Hilbert’s request. The case was included in a weekly list of similar requests issued Friday by the state clerk’s office.

The Indiana Court of Appeals in 2004 unanimously upheld a ruling by Hamilton County Judge Judith S. Proffitt ordering Hilbert to repay $72 million. The debt stems from company-backed loans Hilbert received in the late-1990s to buy Conseco stock, which became worthless during its bankruptcy reorganization in 2003.

Proffitt ordered Hilbert to pay back an amount equal to the interest that Conseco had paid on Hilbert’s behalf on more than $162 million he borrowed to buy company stock. That interest amount has now climbed to some $82 million, Conseco attorney Reed Oslan said Monday.

The Supreme Court refusal effectively affirmed the Court of Appeals opinion that he repay the money, Oslan said.

The loan program was created in 1996 at the direction of Hilbert, and more than 150 employees participated in it, with Hilbert the largest borrower. The loans are now prohibited by federal law. Conseco, since emerging from bankruptcy, has tried to recover the full debt of the largest 11 borrowers.

One of Hilbert’s attorneys, Phillip Fowler, said he plans to ask the U.S. Supreme Court to review a part of the case involving federal securities regulation, which the state courts did not address.

Hilbert founded the insurance company based in Carmel, Ind., and was the company’s chairman and chief executive until 2000. His mansion has been up for sale for $20 million since July.