Oxendine’s office investigation found company insolvent [The Macon Telegraph, Ga.]

Feb. 11--Editor's note: Telegraph staff writer Travis Fain is not related to Clark Fain. This article originally misidentified Rob Baskin as one of Clark Fain's attorneys. He is managing director of a public relations firm that represents Fain, and not an attorney.

ATLANTA -- A powerful retired Middle Georgia lawmaker and a former Bibb County judge took a trip to Italy in 2005, largely courtesy of a Georgia insurance company that has since been taken over in a Georgia Department of Insurance investigation.

The company, Southeastern U.S. Insurance, is being liquidated by the department. But tendrils from the case have worked their way into the Georgia governor's race, with U.S. Rep. Lynn Westmoreland saying that Insurance Commissioner John Oxendine was making more than a courtesy call late last year when he contacted the congressman to say Westmoreland's name kept "popping up" in Southeastern's files.

The congressman's office has said Oxendine's call was a political shakedown, meant to keep Westmoreland, R-Ga., from actively supporting fellow U.S. Rep. Nathan Deal in the Republican gubernatorial primary this year.

Oxendine denies that claim, saying he simply called Westmoreland as a courtesy.

Deal, Oxendine and several other Republicans are seeking the governor's office.

And Westmoreland once served on a Southeastern advisory board that seems to have had little responsibility beyond giving friendly advice to company owner Clark Fain.

But Westmoreland wasn't the only powerful Georgian on that board. Former state Rep. Larry Walker, former Superior Court Judge Bryant Culpepper and former University of Georgia football coach Ray Goff also were on the board.

And those three men accompanied Fain on a trip to Italy in March 2005, several years before Southeastern caught the attention of Oxendine's department and spiraled into forced liquidation -- and a criminal investigation.

Walker retired from the Legislature in 2004 and now sits on the Board of Regents, which oversees the state's university system.

He served briefly on the State Transportation Board before Gov. Sonny Perdue made him a regent. Culpepper retired from the bench in 2007 and is now with the Macon law firm James, Bates, Pope & Spivey.

He served in the Georgia House of Representatives from 1975 to 1982.

Not a focus of investigation

No one is saying that Walker, Culpepper or Goff did anything illegal. They are not a focus of the Insurance Department's investigation, nor is the trip they took with Fain to Italy, department spokesman Glenn Allen said.

In fact, the advisory board they served on seems to have been ancillary to Southeastern's business and was made up largely of Fain's friends.

"There was never a point in time that any member of the advisory board was under investigation," Allen said recently.

Walker, an attorney in Perry, declined to comment for this article because he is one of Fain's attorneys, as well as a friend.

Culpepper said the advisory board was "sort of a group that (Fain) just bounced ideas off of."

It didn't have voting or fiduciary powers, and it didn't make decisions on company policy, Culpepper and others said. In fact, Culpepper said last week that he "didn't know a whole lot about worker's compensation," which was the company's primary business.

Rob Baskin, managing director of a public relations firm that represents Fain, bore that out. He said the board was a group of "people who were either prominent in business or the law, who (Fain) would turn to periodically."

Culpepper said he attended a handful of advisory board meetings over a period of about 10 months. One was to Dublin, Ireland, in May 2004, Culpepper said. In March 2005, Fain took Culpepper, Walker, their wives, Goff and others to Italy.

The group flew to Rome, where they stayed for several days. Fain paid for much of the trip, "but a lot of it was on us, too," Culpepper said.

"It was sort of unusual," Culpepper said recently. "But it was his company, we were on this board, and he said that's what he wanted to do."

Baskin confirmed that as well. He emphasized that Fain was Southeastern's sole owner and, in 2005, could easily afford the trip. But Baskin also acknowledged the lavish nature of taking a group of informal advisers to Italy.

"I certainly understand that kind of reaction," he said. "But what you have to remember is that, for a good number of years, Clark and his company were extraordinarily successful."

Asked if he ever thought Fain expected a quid pro quo -- to trade these trips for some sort of political influence -- Culpepper said no.

"It's absolutely preposterous for anyone to think ... somehow we had the motivation to get involved or the capacity to do anything financially with this company," Culpepper said. "It's absolutely absurd."

Baskin said much the same thing: "There was no quid pro quo whatsoever."

Culpepper said he met Fain through Walker when he and Walker were both in the state Legislature. Fain is from the Seminole County area in southwest Georgia, the same as Culpepper's wife. They knew some of the same people, the retired judge said. Fain also knows other prominent Georgians, including U.S. Sen. Saxby Chambliss and former Georgia Speaker of the House Terry Coleman, both of whom were Fain's college roommates at one point.

State Rep. Jim Cole, R-Forsyth, went turkey hunting on Fain's Seminole County preserve last year and called him "a genuine good person."

"I'm proud to have him as a friend," Cole said. "Clark Fain has never asked me for one thing."

Court finds company insolvent

The March trip to Italy was the last advisory board meeting Culpepper could remember attending.

In June 2006, the company changed its format. It had been a "captive insurer," but it changed to a more traditional insurance company that still handled workers compensation policies, Allen said.

Hundreds of entities had policies through Southeastern, including 28 based in Macon, according to a database provided by the Department of Insurance.

In January 2009, Southeastern wanted to move $10 million to invest in a Seminole County hunting preserve that Fain had been piecing together over the years, Allen said.

They had to get permission from the Department of Insurance to do this and filed paperwork to do so, he said.

The department denied the request, but Fain did the deal anyway, Allen said.

"That made us extremely suspicious," Allen said.

The department looked closely at the company's next annual statement and, in spring 2009, an investigation was under way. Oxendine's department eventually decided that the company didn't have enough assets to cover all its policies.

Fain disputes that contention, saying through Baskin that he's been "unfairly maligned" by Oxendine. Baskin said the company never missed a claims payment until the Department of Insurance wrested the company away.

"We can only presume (Oxendine is) hoping to appear to get tough in time for his race for governor," Baskin said.

But a Fulton County Superior Court judge sided with Oxendine's office in October, finding the company insolvent. The judge ordered liquidation, with Oxendine's office taking control of the company's assets and records.

To contact writer Travis Fain, call 361-2702.

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