The bank accounts of a Grand Island insurance agency under investigation for an alleged Ponzi scheme and the accounts of a related company have been frozen.
An attorney representing First Americans Insurance Service in its bankruptcy says First Nations Compensation Plan has been pulled into the fray, despite its status as a viable insurance company. That has halted claim payments.
Attorney Bob Craig said that the company is operated out of the same Grand Island offices as First Americans and the same people are involved, but it has not filed for bankruptcy.
Authorities are investigating how First Americans lost more than $100 million.
First Americans filed for Chapter 11 bankruptcy protection on Jan. 12, claiming between $100 million and $500 million in liabilities.
The agency, incorporated in 1980, touts services to American Indian tribes in more than 20 states on its Web site.
First Nations Compensation Plan serves sovereign nations and is aimed at giving tribal organizations “cost-effective access” to a national workers compensation plan, according to the Web site.
Accounts have been frozen at Five Points Bank in Grand Island, but an effort is under way to move them to another bank and resume payments soon, said Craig, who couldn’t offer a more firm timetable.
“First Nations Compensation Plan is a viable company, and once it straightens out this banking issue will continue to provide the products and make the payments,” he said.
Bob Dodendorf, chief financial officer for Five Points, said he couldn’t comment because the bank does not disclose details involving its clients.
First Americans is mired in a complex bankruptcy case, Craig said, and it’s too difficult to say when hundreds of people who invested in promissory notes could see payments.
“I can guarantee we are very actively involved in trying to move that forward as quickly as possible,” he said.
The bankruptcy filing lists more than 200 creditors, with the top 20 including mostly individuals and couples from Nebraska. Individual creditors from Montana and Georgia also made the list.
First Americans owes a statement of financial affairs to the U.S. Bankruptcy Court by March 21, although that deadline has been pushed back previously. Craig said the complexity of the case, plus the ongoing investigation, have slowed the effort.
State and federal authorities are investigating First Americans Insurance Service and its three principals.
In January, those principals — James Masat, Stella Levea and Kenneth Mottin- agreed to have their insurance licenses revoked. By doing so, they did not admit or deny allegations they face.
Levea and Masat have each filed for personal bankruptcy protection.
Nebraska Attorney General Jon Bruning has said the First Americans situation has characteristics of a Ponzi scheme.
A Ponzi scheme, or pyramid scheme, is a scam in which people are persuaded to invest in an operation that promises unusually high returns. The early investors are paid their returns out of money put in by later investors.
If investigators find that the agency engaged in a Ponzi scheme, it would be one of the largest in U.S. history. The largest such scheme is being investigated and allegedly involved New York investor Bernard Madoff, whose clients have claimed losses of $50 billion.
On the Net:
First Americans Insurance Service, http://www.fais.com
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