Ex-Citizens Execs Launch Firm, Violate Ethics

June 18--Two former Citizens Property Insurance Corp. executives violated the company's code of ethics by launching their own online software company and marketing a product similar to one another ex-employee helped design and develop for use by Citizens, according to the state-run insurance company.

An ongoing Citizens internal audit has confirmed that Edward B. Baldwin, former assistant director insurance operations, and Christopher H. Dunn, a past assistant director of vendor management, resigned May 17 after they were confronted with an investigation that found they violated the insurer's rules with their launch of ProfileGorilla, a Jacksonville-based business software firm.

A third former employee, Eric J. Ordway -- who had been claims director and left Citizens months earlier -- designed Citizens' Claims Administration Information System (CAIS), according to the company.

"The concepts between CAIS and ProfileGorilla are similar, but the specifics -- software platforms, compatibility etc. -- are not," said a Citizens spokesman via email. But "as a result of the findings to date and concerns over the apparent conflict of interest, [Citizens] will perform additional forensic audit procedures beyond those already completed ... to provide management with reasonable assurance regarding certain fraud risks."

Ordway helped found and is currently a manager at ProfileGorilla, according to documents filed with the state. He left Citizens as of December 31, 2012, according to a statement from ProfileGorilla.

"CAIS is a system that was developed under Mr. Ordway's leadership while at Citizens and was based on several other similar systems Mr. Ordway had developed prior to Citizens relating to Vendor Management," according to the statement.

"ProfileGorilla has very different capabilities, was written in a different software language, by different developers, using software code that is unique and proprietary to ProfileGorilla."

The ProfileGorilla trio of former Citizens executives presented their product at an April 18 Jacksonville expo for startups, posting photos on the ProfileGorilla Facebook page, leaving a trail of tweets on Twitter and a YouTube video interview starring Baldwin. Web-based searches identified Baldwin and Dunn as ProfileGorilla co-founders who worked some three years to develop the product, according to the Citizens report.

Baldwin said he had used vacation days from Citizens to attend the Jacksonville event that showcased entrepreneurs and innovators. His presence at activities there, along with Dunn and Ordway's, were what sparked the Citizens investigation, following an email from an informant who notified Deborah Kearney, ethics and compliance officer at Citizens.

Baldwin and Dunn "planned to submit resignations to [Citizens] in June to align with the launch of ProfileGorilla.com where they would become employees of ProfileGorilla.com," according to a statement from ProfileGorilla management.

Further, Baldwin and Dunn "believe that their activities relating to ProfileGorilla.com were in alignment with Citizens secondary employment policy and never received any income from ProfileGorilla.com while employed at Citizens," according to the statement.

However, according to the Citizens audit investigation, "secondary employment also includes actively marketing personal or professional services or the sale of a product, whether or not compensation has actually been received."

According to the report, which upon its completion will be shared with Citizens' Board of Governors, Baldwin filmed an interview promoting ProfileGorilla, which Ordway indicated "has features similar to those found in the Claims Administration Information System (CAIS) application developed and in use by Citizens."

Baldwin said he was "familiar" with CAIS, and he had used it at Citizens. Of ProfileGorilla, he said, "It's a completely separate system."

The probe by Citizens' Office of Internal Audit-Forensic Team determined Baldwin and Dunn had run afoul of the conflict of interest, secondary employment, proper use of Citizens' resources and financial and business interests sections of the state-backed insurer's ethical code.

They currently face no legal liability for their actions, according to Citizens.

Using testimony from two informants, Web-based searches and queries of Florida and Georgia governmental records and other sources, the insurer's auditors noted specifically the following Citizens code of ethics violations by Baldwin and Dunn:

--The formation of Silvershore Partners LLC in December 2012 by Baldwin, Dunn, Ordway and Ty Miller, senior vice president of sales with BrightClaim Inc., a vendor of Citizens with a contract worth $800,000 and managed by Dunn "represents a violation of the conflict of interest and financial and business interest" provisions. Citizens investigators identified Silvershore Partners LLC as the operating entity offering ProfileGorilla.

--Neither Baldwin nor Dunn had submitted requests for approval for secondary employment before their requests dated April 24, 2013Silvershore Partners months earlier. The forms have not received final approval prior to Baldwin and Dunn's at the report's drafting. Failure to complete the form at the time of Silvershore's founding "represents a violation of the Secondary Employment" provision.

--System records at Citizens indicate Baldwin and Dunn each used their Citizens computers to access the hosting domain for ProfileGorilla "in violation of the Citizens' Resources for Business Use" provision.

Baldwin, Dunn, Ordway and Miller were all listed as managing members and members of Jacksonville-based Silvershore Partners LLC, which Bradley registered with the state.

In meetings with claims employees May 20 in Jacksonville and May 22 in Tampa, Citizens' Chief Insurance Officer Yong Gilroy informed Citizens employees Baldwin and Dunn were no longer employed by Citizens, effective May 18. Baldwin and Dunn reported to Gilroy after Ordway's departure.

Unlike other employees who were fired for "unauthorized secondary employment," these executives were not terminated for their moonlighting but instead were given the opportunity to disassociate with ProfileGorilla or resign from Citizens.

A Citizens spokesman said company policies have changed with the new audit and human resources leadership brought in by CEO Barry Gilway following the controversial disbanding of the Corporate Integrity Office last summer.

Further, "while investigators found a breach in company policy, they had no evidence to indicate that the trio had breached any company integrity standards (stolen information, etc.)," said the spokesman. "Therefore, they were allowed to choose whether to stay or go."

Gilroy first learned of Baldwin and Dunn's involvement with ProfileGorilla after seeing a photo taken at the trade show mentioned in the report, the spokesman said.

Gilroy, Dunn and Ordway, who had all worked together previously at The Home Depot, have been investigated before at Citizens. Gilroy and Ordway appeared in a 2010 Sun Sentinel investigation of 33 Citizens contracts worth up to $49 million that were awarded without competitive bids.

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