A second man has pleaded guilty in Houston in a case involving the sale of insurance to a New York tour operator whose boat capsized in 2005 killing 20 elderly tourists, federal officials reported.
Edmund Hugh Benton, 63, of Scottsdale, Ariz., pleaded guilty to the federal felony offense of conspiracy to launder money before U.S. District Judge Sim Lake in Houston, U.S. Attorney Kenneth Magidson and Internal Revenue Service Criminal Investigations (IRS-CI) Special Agent in Charge Rodney E. Clarke announced.
Benton’s Oct. 7 plea followed a similar one in the case two days earlier by Houstonian Christopher Purser, 50.
Benton admitted to conspiring to launder the proceeds of a fraud scheme that sold fake liability insurance policies to a “benefit association” operated from Texas called Global Property Owners Association Inc. (GPOA), the U.S. Attorney’s Office for the Southern District of Texas said.
Benton obtained liability insurance for GPOA members in 2003 from Heritage Mutual Surety Limited (Heritage), a company in the Caribbean island of St. Vincent. Heritage was controlled by a fugitive in Barbados through another St. Vincent entity called Tri-Continental Exchange Ltd.
Benton admitted knowing that GPOA was not licensed or authorized to sell insurance in Texas, that Heritage did not have the ability to pay claims, that Tri-Continental Exchange Ltd. was subject to cease and desist orders from insurance regulators and that the fugitive, “Robert Lewis Brown,” was not using his real name. Benton also acknowledged receiving proceeds of the fraud in an account he maintained in The Bahamas.
The insurance was purchased by apartment complexes, condominium associations, bars, restaurants, as well as a company called Shoreline Cruises Inc. which operated a 40-foot tour boat called the Ethan Allen on Lake George, N.Y. The tour boat operator discovered its insurance policy was fictitious after the Ethan Allen sank on Oct. 2, 2005, in a tragic accident that claimed the lives of 20 elderly tourists.
Purser, who was banned in 2003 by the Texas Department of Insurance from any involvement in the insurance business, admitted to selling liability insurance policies through GPOA from 2004 to 2006 to apartment complexes, condominium associations, bars and restaurants while disguising his true identity and the existence of the ban.
Purser first sold marine liability insurance to Shoreline Cruises Inc. in May 2004, authorities said. The policy was renewed a year later.
The sinking of the Ethan Allen gave rise to substantial claims against the policy. Purser presented backdated documents to make it appear, falsely, that the policy did not cover the Ethan Allen while the boat was operating on Lake George. In fact, Shoreline Cruises Inc. had purchased that type coverage but none of the purported insurance companies had any ability to pay the claims, authorities said.
Benton faces a maximum of 10 years in federal prison without parole to be followed by a maximum three years of supervised release, a fine of up to $250,000 and an order to pay full restitution to victims.
Purser faces a maximum of 20 years in federal prison without parole to be followed by a maximum three years of supervised release, a fine of up to $250,000 and an order to pay full restitution to victims.
Sentencing for both Benton and Purser is set for Jan. 19, 2012. Both are thought to be flight risks and have been held in pre-trial custody since February in Purser’s case and March in Benton’s case.
Four other defendants were charged along with Benton and Purser, the U.S. Attorney’s Office said. Two others are set to begin trial before Judge Lake on Oct. 31, 2011, while the remaining two are pending extradition.
The IRS, U.S. Immigration and Customs Enforcement – Homeland Security Investigations, and the Texas, New York and California Departments of Insurance were involved in the investigation into the insurance fraud ring. Investigators said that the U.S. government also received extensive assistance from the governments of St. Kitts and Nevis, St. Vincent and the Grenadines, as well as from the governments of The Bahamas, Nicaragua, The Philippines and Australia.
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