2021 Story Of The Year: Shurwest Bankruptcy Reveals Alleged Fraud
When Shurwest, an Arizona independent marketing organization, filed for bankruptcy on Aug. 31, it attracted little notice beyond a single line in a local business journal.
In the weeks that followed, court documents would reveal the IMO's alleged role in a fraudulent scheme to pump up indexed universal life sales.
InsuranceNewsNet published two October stories on Shurwest and its various legal problems. Based on feedback and website traffic, the Shurwest saga was an easy choice for our 2021 Story of the Year.
Courts in several states continue to referee an unraveling of the saga with a team of attorneys representing at least 142 plaintiffs in an Arizona bankruptcy court. A March 3 hearing is scheduled in that case.
Our Oct. 14 story examined 28 exhibits totaling about 1,200 pages filed by plaintiffs' attorneys.
“Our clients have suffered significant losses and if we don’t speak for them nobody will,” Robert Rikard of Rikard & Protopapas, a Columbia, S.C., law firm, told InsuranceNewsNet. “As lawyers, we have to follow the rules and live by the rules. In these cases, it seems Shurwest has decided they have a different set of rules they want to play by.”
Shurwest filed for Chapter 11 bankruptcy in a bid to settle scores of lawsuits, all while steadfastly maintaining that company executives knew nothing about a pension fraud scheme adapted to hundreds of IUL sales.
According to bankruptcy documents, Shurwest faces 38 pending lawsuits in state and federal courts.
“We had a rogue employee who set up a business we didn't know anything about,” Michael McGrath of Mesch Clark Rothschild, a Tuscon, Ariz., law firm handling Shurwest’s bankruptcy filing, told InsuranceNewsNet.
Our Oct. 5 story broke down the details of the pension scam led by Scott Kohn, 67, who remains in the Spartanburg County Detention Center in Spartanburg, S.C., where he has been held since November 2019. His trial on federal charges of conspiracy to engage in mail and wire fraud was delayed by the COVID-19 pandemic.
Kohn faces 20 years in prison for the federal offenses. In March, a federal judge ordered a $501 million judgment against Kohn in a civil case.
Minnesota Life sued Shurwest July 12 in the U.S. District Court for the District of Minnesota. Minnesota Life, which also faces several lawsuits by policyholders, refunded premiums and rescinded more than 200 IUL policy sales once it discovered the fraud.
Ronald L. Shurts, co-founder of Shurwest, recently filed a motion to dismiss in the case. A judge has yet to rule on that motion.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.
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