A federal judge has sentenced two men to six years in prison for their roles in the failure of a Tulsa, Okla. insurance company.
Besides prison terms for convictions on embezzlement, wire fraud and money laundering charges, U.S. District Judge Stephen Friot also ordered Wakon Iron Redcorn Jr., 47, and Bradley N. Frost, 36, on Oct. 4 to pay more than $1.7 million in restitution.
Frost had been president and Redcorn was treasurer and chief financial officer of Heritage National Insurance Co., which provided life, accident and health insurance in Oklahoma and Texas.
More than $20 million in claims to Heritage National initially went unpaid, according to last year’s indictment against the men. However, guaranty funds in Oklahoma and Texas ultimately paid as much as $22 million in claims.
Last year’s 31-count indictment accused Redcorn and Frost of embezzling $1.264 million from the firm between April 3, 2000, and June 7, 2001. Payments from clients allegedly were diverted into an account that was not used to fund future insurance claims.
The two are accused of then transferring these funds into their personal accounts and using the money for personal expenses.
Partly because of their diversion of money from the firm, the company was placed in receivership by the Oklahoma Insurance Department on March 15, 2002, and was designated an “impaired insurer” by the Texas Department of Insurance on Dec. 18, 2001, the U.S. Attorney’s Office in Tulsa reported.
Redcorn and Frost, who are free on bond, were convicted Dec. 16. Friot said Wednesday that they will be allowed to stay out of prison while they appeal their convictions.
Former Heritage National Board Chairman Steven B. Silverstein, 50, was indicted in November on embezzlement and money laundering charges, but those charges were dropped Sept. 13.
Prosecutors expect to refile them later.
Information from: Tulsa World, www.tulsaworld.com.
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