U.S. Supreme Court Won’t Hear Hilbert Appeal in Conseco Case

October 4, 2006

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

While Hilbert has at least one other lawsuit pending over the deal, Conseco said Monday it would move quickly to seize and sell Hilbert’s assets to collect millions of dollars the insurer claims its former chief executive fraudulently transferred to his wife.

Proceeds from a 2005 auction of Hilbert’s household items have been held in escrow until the legal dispute was settled. The company also has tried unsuccessfully to sell Hilbert’s 23,000-square-foot Carmel, Indiana mansion.

The Indiana Supreme Court earlier had denied the same request, and Hilbert’s attorneys appealed to the U.S. high court.

Conseco attorney Reed Oslan told The Associated Press this week that the company was pleased with the high court’s refusal to hear Hilbert’s appeal and that the company would “vigorously pursue” collection of the judgment.

In a statement released through his attorney, Phillip Fowler, Hilbert said he was “extremely disappointed that issues I felt strongly about were never presented to a jury.” Hilbert also said he looked forward to presenting his case in a related lawsuit he filed in 2003 against Conseco in Illinois state court in Chicago.

The Indiana Court of Appeals in 2004 unanimously upheld a decision by Hamilton Circuit Judge Judith S. Proffitt ordering Hilbert to repay the money. 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 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 amount now exceeds $85 million, Oslan said.

The loan program was created in 1996 at Hilbert’s direction, 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.

Hilbert has said he is effectively broke. Conseco attorneys have argued that he sought to avoid repaying the debt by transferring assets to others, including his wife, Tomisue Hilbert.

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

Topics USA Indiana

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