An insurance agency founder was recently placed on four years of supervised release and fined $10,000 in Washington, D.C., after earlier pleading guilty to insurance fraud, according to officials.
Washington, D.C., Department of Insurance, Securities and Banking announced last week that Bret Van Leeuwen, former president of Utah-based Stratus Insurance Services, pled guilty in the U.S. District Court for the District of Columbia. Van Leeuwen, 52, who has been working in the insurance industry for more than 30 years, pled guilty to one count of insurance fraud in the second degree.
He was given a suspended sentence of six months of incarceration. As part of the plea agreement, he also agreed to pay up to $995,000 as a civil monetary penalty. As a consequence of the plea, he no longer is a licensed insurance professional.
Van Leeuwen was the founder, president, and majority owner of Stratus Insurance Services, a company focused on specialty insurance programs provided to associations and purchasing groups. Van Leeuwen and his business colleague, Rodney Ayer, placed association groups with insurance carriers.
Four association groups served by Van Leeuwen and Ayer were Wright and Co. (which provides supplemental employees liability programs for federal government employees) as well as the IMA Group, Inc., the Hands-On Trade Association and the International Association of Reike Professionals. (associations for yoga, reflexology and other alternative therapies)
Van Leeuwen admitted that he and his colleague intended to insure association groups with insurance carriers, known as “cells,” established through Hannover Re. Van Leeuwen and Ayer intended to co-own the cells, which would be associated with Hannover Re. Based on their knowledge of the claims histories for these insureds, Van Leeuwen and Ayer recognized the potential of realizing substantial underwriting profits through their use and ownership of the cells.
Van Leeuwen admitted that he did not tell the association groups about his ownership interest in the cells that would serve as the insurance carriers.
After Van Leeuwen and Ayer paid the claims and expenses associated with the programs, they were able to retain the underwriting profits associated with those programs for themselves, according to authorities.
Officials said that Van Leeuwen also admitted that he understood in 2005 that Hannover Re was backing out of coverage for the programs. Van Leeuwen admitted that he and his colleague did not inform the associations and insurance regulatory agencies that Hannover Re would not allow the cells to insure the association groups.
In 2006, his business colleague filed a request with the D.C. Department of Insurance, Securities and Banking that would allow another major insurance company to take part in the program. But the request forms allegedly omitted the fact that Hannover Re had already backed out of the program, according to authorities.
Source: District of Columbia Department of Insurance, Securities, and Banking
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