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Archived News Release--Caution:
information may be out of date.
For more information call: (215) 597-3947
Six men were indicted by a federal grand jury today for
their part in a scheme that left a Pennsylvania state agency holding $5.3
million in unpaid health and life insurance claims.
The men, all from western states, were operating sham
reinsurance firms that insured the World Life and Health Insurance Company
(World Life), an insurance firm that was liquidated by the Commonwealth of
Pennsylvania in 1991. Health and life insurance firms commonly purchase their
own policies from reinsurance firms to cover very large claims.
World Life was forced to close after investigations
revealed its assets were insufficient to cover policy holders' claims. The
assets it listed were rented from the shell reinsurance firm run by the six men
indicted by the federal grand jury for the Eastern District of
Pennsylvania.
The six defendants established an organization that
provided stocks, under leasing agreements, to artificially enhance World Life's
balance sheets to show it could pay claims when in fact it could not.
The sham operations were discovered after World Life was
liquidated. Pennsylvania Life and Health Insurance Guarantee Association, a
state agency responsible for protecting Pennsylvania insurance policy holders
from insolvent insurance firms, was left with $5.3 million in unpaid claims.
Investigators then began looking into the reinsurance firms that had covered
World Life and found they were sham operations.
The men indicted today are Jeffrey C. Hays, David R. Yeaman
and Nolan L. Mendenhall, Salt Lake City; George R. Jensen, Riverton, Utah;
Philip A. Rennert, Las Vegas and Michael L. Miller, Beverly Hills, Calif.
The complex case was investigated by the U.S. Labor
Department's Office of Inspector General, the U.S. Attorney's Office for the
Eastern District of Pennsylvania, the Organized Crime and Racketeering Division
of the Justice Department, the Postal Inspection Service, the Securities and
Exchange Commission and the FBI.
The department's Office of Inspector General maintains a
hot-line to receive allegations of fraud, waste and abuse in Labor Department
programs. The hotline also accepts complaints regarding criminal activity with
labor unions, employee benefit plans and labor management relations. The
toll-free hotline is 1-800-347-3756.
Archived News Release--Caution:
information may be out of date.
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