Subpoena Shows Feds Want E-Mails, Contracts Related To Hartford Insurance Controversy [The Hartford Courant]

Oct. 30--HARTFORD -- Federal agents have requested all city documents related to Hybrid Insurance Group as part of their grand jury investigation into hundreds of thousands of dollars of missing premium payments.

The subpoena served on city hall last week states that the city must provide all e-mails, records of financial transactions, contracts, complaints and reports from Jan. 1, 2011 to the present relating to Hybrid and its chief executive officer, Earl O'Garro Jr.

Authorities also want all e-mails sent by Mayor Pedro Segarra, city Treasurer Adam Cloud and former city Finance Director Julio Molleda that mention Hybrid or O'Garro. The e-mails sought also include mentions of Starr Indemnity and National Casualty, excess liability insurers for the city.

The city released the subpoena Wednesday after media requests.

Segarra said Wednesday that he has had limited contact with O'Garro -- including a brief introduction at the downtown restaurant Salute and an invitation to attend a ribbon-cutting ceremony that would mark Hybrid's 2012 opening in Hartford.

Segarra said Cloud introduced him to O'Garro. E-mails obtained by the Courant indicate that Cloud introduced the men in late 2011.

The mayor said he wasn't sure if he mentioned O'Garro or Hybrid in subsequent e-mails to city hall staff, and that he was cooperating with investigators.

"I don't believe I've had any other meetings or communications with him," he said of O'Garro.

A memo by the Hartford schools department stated that $669,997 in insurance premiums has been unaccounted for since the city treasurer's office wired the money to Hybrid on July 18. The same memo said that the missing money makes it appear the city's "standard operating protocols" were violated and that "there may be a conflict of interest" involving Cloud.

Federal authorities on Friday notified O'Garro Jr. that he is a target of the investigation, a source said.

In early 2012, the schools memo said, Cloud transferred a liability policy to O'Garro from another company without the need to "compete."

Cloud has denied that a personal relationship had anything to do with the city's hiring of Hybrid, saying the company was recommended by an insurance agent, Wentworth DeAngelis & Kaufman Inc. He said he passed along that recommendation to the city, but had no oversight in hiring Hybrid.

The city's internal audit commission said last week that it found no criminal or fraudulent activity on the part of Cloud or Molleda with regard to the wire transfer. Auditors said they don't have the power to investigate conflicts of interest, and that the mayor must refer the matter to the city's ethics panel.

The audit commission was also required to produce documents as part of the federal investigation.

Segarra said Wednesday that he was dismayed by the commission's decision not to investigate the possible conflict of interest. He said he is still considering whether he will refer the matter to the ethics panel.

In 2012, O'Garro moved his insurance company from Windsor to a building Cloud and others in his family own at 30 Lewis St. in Hartford. O'Garro obtained about $126,000 in state economic develop loans and grants to help pay for the move.

O'Garro has been unavailable for, or has declined, comment since the insurance controversy became public earlier this month. Cloud could not be reached for comment Wednesday.

John Griffin, the city's director of risk management, filed a complaint with the state's insurance regulator on Sept. 19, alleging that Hybrid did not pay $669,997 in premiums to Starr Indemnity and National Casualty.

As of early October, both insurers confirmed to the city that they never received the premium payments from Hybrid. The city's excess liability coverage remains in place, city officials have said.

O'Garro, 30, now appears to be in a dire financial position, according to a review of mortgage and other records.

Insurer AmTrust North America has complained to state insurance regulators that Hybrid tried to dupe another company into paying insurance premiums for four purported Connecticut businesses that "exist in name only," according to a complaint by the Connecticut Insurance Department.

After about six months in business, O'Garro was forced to close a restaurant he owned and operated in Middletown and a handful of former employees are pressing him for about $4,000 in back wages. The town of Marlborough, where he lived until recently, is seeking $2,637.28 in overdue automobile taxes.

The financial problems stand in stark contrast to the remarkable access O'Garro appears to have had to substantial sums of money just months ago.

Public records show that O'Garro had access to more than $1.5 million last summer, at about the same time the city wired him more than $800,000, a part of which was to pay the premiums. In addition to the city money, O'Garro obtained three loans in quick succession against one of his homes, a stunning, six-bedroom house on 7 acres in Marlborough. Town records show he apparently paid $539,000 in cash for the house in May 2012.

Fourteen months later, beginning in July 2013, Marlborough land records show, O'Garro took out three mortgages on the house -- loans that were worth, collectively, far more than the house. The mortgages were in the amounts of $235,000 on July 9, $530,107.96 on July 24 and $65,000 on August 23.

One of the lenders targeted the house in a foreclosure action on Oct. 15.

Hybrid defaulted on the relocation loan it received from the state and owes $105,792.46, including $73,858 for the loan principal and $26,320 to repay the state grant, according to the state Department of Economic and Community Development.

The insurance firm AmTrust E&S Insurance Services has filed a lawsuit against O'Garro, seeking $300,000.

The suit against O'Garro and several other defendants, including Hybrid, charges that Hybrid received at least $299,972 for premiums on several policies, but failed to send the money to insurance carriers.

AmTrust also alleges that O'Garro posed as one of the company's underwriters and "created bogus proposals or quotes for insurance coverage" to try to obtain payments on policy premiums for four of O'Garro's companies that exist in name only.

On Oct. 18, the Connecticut Insurance Department filed an 11-count complaint against O'Garro and Hybrid that included AmTrust's allegation that O'Garro attempted to persuade Capital Premium Financing to pay insurance premiums for the "fake" businesses.

O'Garro has been asked to appear at the department's public hearing Nov. 21. If he fails to appear, the state could revoke his license to conduct insurance business in Connecticut, and possibly issue a fine.

AmTrust's lawsuit also states that the Internal Revenue Service filed a notice of tax lien against Hybrid Insurance on Sept. 12 for failing to pay certain taxes between Dec. 31, 2011 and June 30, 2013.

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