Colorado Insurer Faces Securities Lawsuit

Feb. 03--Colorado securities regulators have filed civil charges in Denver against a Colorado Springs insurance company and its owner for failing to fulfill a 2014 agreement to pay more than $800,000 in restitution to investors for selling unregistered promissory notes that are now in default.

The lawsuit, filed Jan. 28 in Denver District Court, alleges that Rio National Insurance Services and its president and CEO, Steven E. Kerbel, failed to pay $800.719.45 in restitution plus an unspecified amount of interest by a June 30 deadline to 15 investors in Colorado and Kansas under a 2014 cease-and-desist order from the Colorado Division of Securities. The suit alleges the investors bought $1.1 million in promissory notes, which carried annual interest rates ranging from 8 percent to 12 percent, from 2009 to 2012 that have since matured and are in default.

The notes are considered securities under Colorado law and should have been registered with the division, but weren't in violation of state law, according to the suit. Kerbel and Rio National also allegedly used an unlicensed sales representative to sell the unsecured notes, which were unsuitable investments for the retirees who bought them, the suit said.

The suit seeks a permanent injunction against Kerbel, Rio National and all officers, directors, employees and agents against further violations of Colorado securities law and a judgment against the defendants for restitution, damages, interest, costs and attorney's fees. No answer has been filed to the suit, Judge Shelley Gilman of the Denver District Court has scheduled an April 1 review of the case.

Rio National sold auto insurance in Arizona, Colorado, Iowa, Kansas, Missouri, Nevada and New Mexico, according to its website. The telephone number listed on the site is disconnected.

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Contact Wayne Heilman: 636-0234

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