Feds sue Gene Stipe over insurance dealings

The lawsuit alleges Stipe's companies engaged in the insurance trade for 19 months after he was sentenced in a campaign fraud scandal.

Each violation carries a possible $50,000 fine. The two-page lawsuit doesn't say how many insurance transactions are involved, nor how much his potential liability might be.

"My preliminary view, a lot," U.S. Attorney Sheldon Sperling said of Stipe's potential exposure. "It could be a large number."

The filing could indicate prosecutors have resolved themselves to the idea that Stipe will never serve prison time on either a probation revocation case or a new criminal indictment, both of which were filed last year.

Stipe is in a federal prison hospital in Missouri, undergoing mental competency testing in the probation violation matter. A prison psychiatrist originally reported last found that Stipe was incompetent from recurrent swelling of the brain. A federal judge agreed, prompting Stipe's return to the prison hospital in May for up to four months of treatment.