N.Y. Comptroller Drops Subpoena As Insurance Department Agrees to Begin Liquidation Bureau Audit

April 5, 2004

New York State Comptroller Alan Hevesi said he has withdrawn his subpoena of a state office that had refused to submit to an audit of its books.

The state insurance department has agreed to participate in the first step of the audit of its obscure Liquidation Bureau that employs 452 workers and handles the affairs of 64 companies with $3.4 billion in assets, according to a statement issued Friday by the comptroller and the state Insurance Department.

The department and auditors will meet at a yet unscheduled date for an entrance conference, the first step of an audit. Typically, that’s where the scope and concerns about the review will be discussed.

Insurance Department spokeswoman Terri Marchon and Hevesi spokesman Jeffrey Gordon refused comment beyond the brief statement. The subpoena was withdrawn last Thursday, Gordon said.

In March, the bureau charged with protecting policyholders and claimants when an insurance company goes bust was subpoenaed for refusing to submit to a routine public agency audit by Hevesi. State Insurance Superintendent Gregory Serio had maintained the Liquidation Bureau is a private agency using private funds and not subject to public agency audits.

State comptroller’s office auditors have examined the Liquidation Bureau’s books five times since the 1970s, until their auditors were refused access to records in February.

Hevesi, a Democrat, said the subpoenas were a warning to the Republican Pataki administration. He has declined to identify another state agency with which he said he is negotiating access to records.

The Liquidation Bureau reports to Serio, and administers a failed insurance company’s assets and pays claims. In 1999, the last year for which data was available, the bureau paid $131 million to settle nearly 4,000 claims.

Copyright 2004 Associated Press

Topics New York

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