First Nations Customers Urged to Seek New Insurance Company

The trustee of a troubled Grand Island, Neb., insurance agency has warned customers of an affiliated company to find a new insurer.

In letters sent this week to First Nations Compensation Plan customers, Thomas Stalnaker said the company does not have “sufficient liquidity to continue operations.”

First Nations is operated out of the same offices as First Americans Insurance Company, a property casualty insurer for tribal organizations and businesses that has filed for bankruptcy. Authorities are investigating how it lost more than $100 million.

First Nations has not filed for bankruptcy. But, First Americans attorney Bob Craig said some of First Nations profits were diverted to First Americans.

First Nations serves sovereign nations and is aimed at giving tribal organizations “cost-effective access” to a national workers compensation plan, according to its Web site. Its policyholders include the Omaha Tribe’s Lucky 77 Casino in Walthill and the Winnebago Housing Authority.

In his letter, Stalnaker said: “You should consider obtaining replacement insurance coverage immediately.”

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.

State and federal authorities are investigating First Americans 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
Information from: Lincoln Journal Star, http://www.journalstar.com