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News Release

Archived News Release — Caution: Information may be out of date.


Office of the Inspector General


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.

Office of Inspector General
February 7, 1996
Media Contact: David Roberts
Phone Number