A federal grand jury in New York has accused three men of participating in a “vortex of fraud” that included the plundering of an Oklahoma-licensed insurance company that went belly-up.
The grand jury accuses Wilbur Anthony Huff, a Kentucky businessman, Matthew L. Morris, a former New York City bank executive, and Allen Reichman, the former executive director of investments at Oppenheimer & Co., of insurance fraud and wire fraud in a scheme that left the insurance company insolvent. All three defendants are contesting the 13-count indictment, which was unsealed this week.
Oklahoma officials two years ago filed a lawsuit seeking more than $100 million in damages from the buyer and sellers of now-insolvent Park Avenue Property and Casualty Insurance Co., claiming they “looted” the firm with the help of the New York bank. That case still is in the discovery phase, and won't be tried in the near future, attorneys from both sides said.
John O'Connor, outside counsel for the state Insurance Department, said losses from Park Avenue's insolvency are expected to be between $105 million and $112 million. A pool of 28 states' guarantee funds, which pay policyholders' claims when insurance companies fail, have paid off on Park Avenue policies, O'Connor said.
The defendants in the Oklahoma case include the seller, Providence Holdings Inc., and seven of its owners or executives; and Oppenheimer & Co., its investments director and nine of the firm's board members.
Oklahoma Insurance Commissioner John Doak, the receiver of the insolvent company, “is aggressively pursuing those people,” O'Connor said.
According to the federal indictment, the buyers in 2008 told the Oklahoma Insurance Department that New York-based Park Avenue Bank was funding the insurance company's purchase. However, the indictment states that $30 million of the purchase price came from a loan from Oppenheimer & Co. that used the insurance company's own capital as collateral, which is illegal under Oklahoma law. The remaining $7.5 million of the purchase price was taken directly from the insurance company's assets, prosecutors allege.
Charles Antonucci, former owner of Park Avenue Bank, admitted that he participated in the illegal scheme to buy Park Avenue Property and Casualty. Antonucci's admission came in 2010 as part of a guilty plea in which he also confessed that he tried to grab more than $11 million in federal TARP bailout funds through his New York City bank. He also admitted giving false information to the Oklahoma Insurance Department and lying about his net worth while trying to win the agency's approval of the sale.