Charges Filed Against Owners Of Oklahoma Insurance Company
May 10--Prosecutors this week filed at least 27 felony charges against principal owners of a former Oklahoma insurance company.
New York financiers Scott W. Hartman and Andrew B. Scherr on Tuesday were charged with crimes including fraud, filing false financial statements, failure to pay state taxes, conspiracy to commit a felony, conspiracy against the state, uttering forged instruments and issuing spurious certificates of stock.
Hartman and Scherr's attorneys did not return phone calls from The Oklahoman on Wednesday.
The two men in February 2013 agreed to buy BancInsure, which had the contract to provide temporary liability coverage for uninsured motorists in Oklahoma. The company later changed its name to Red Rock Insurance Co.
As part of the agreement with the state to buy the Oklahoma insurance company, Hartman and Scherr bought it for $1 and pledged to invest at least $30 million into the company.
More than a year later, the Oklahoma Insurance Department sued the company and its owners.
"As of this date, there has been no infusion of any cash whatsoever in the company," the insurance department said in August 2014 court documents.
An Oklahoma County District Court judge that month declared the company insolvent and ordered the state Insurance Department to permanently take control of the firm. The judge ruled Red Rock was in hazardous financial condition and its assets must be liquidated. The judge determined the company had a negative $9.4 million balance to policyholders at the end of June 2014.
This week's court filing claims Red Rock management used notes and bonds from four entities to infuse capitol to Red Rock.
"It was determined that none of the four entities actually existed and that none of the individuals who signed on behalf to the entities were actually officers of those entities," the court filing states.
The filing states that Hartman and Scherr initially were paid $50,000 annually from BancInsure and Red Rock, but that their salaries soon increased. Hartman received $100,000 annually while Hartman's annual pay jumped to $250,000, the filing states.
The state and the Oklahoma Insurance Department in January 2016 filed a civil action against Hartman, Scherr and other Red Rock principles in Oklahoma County District Court, claiming negligence and seeking more than $10,000.
That case is ongoing, and a pretrial conference is scheduled for Aug. 16.
CONTRIBUTING: Staff Writer Kyle Schwab
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