People’s Trust blocks public release of audit into criminal allegations against former CEO

June 27--People's Trust Insurance is blocking public release of an audit that investigated its current CEO's claims that its former CEO used company funds illegally before his January 2014 death.

As a result, it is not yet known outside of the company, the auditors, and the state Office of Insurance Regulation whether the audit backs up allegations by the firm's current CEO, George Schaeffer, that former CEO Mike Gold spent company funds at a casino and massage parlor, or whether it proves the allegations were groundless.

The audit was ordered by the state office after Schaeffer's allegations surfaced as part of dueling lawsuits between Schaeffer and Gold's widow, Eileen Gold. Last week, the state office extended to June 30 the company's deadline to submit the audit.

When it submitted the audit, People's Trust marked it "trade secret," which under state law bars it from release through a public records request, said Erin VanSickle, the state office's deputy chief of staff.

After the state office notifies an insurer of receiving a public record request to see a document flagged as trade secret, "the insurer has 30 days ... to file an action in circuit court to seek an order barring public disclosure of the document(s)," VanSickle said in an email. "The Office may not release the documents pending the outcome of the legal action."

In December, Schaeffer gave Eileen Gold a letter accusing his former partner of "mismanaging the company very badly" and hiding it, using company cash to go to a massage parlor and casino every day, and engaging in "criminal activity ... including the borrowing of funds" from the company.

In his letter, Schaeffer demanded that Eileen Gold rescind their 2014 agreement setting Schaeffer's purchase price at $30 million for the Golds' 50-percent share of the company. The letter also demanded that Eileen Gold release Schaeffer from his obligation to pay her the outstanding balance of $9 million. The letter said that if she refused his demand, he would sue her, which would cost her more than $9 million and result in public release of "information about Mike that will be embarrassing."

Schaeffer further said that he only recently learned the extent to which Mike Gold mismanaged the company before his death, and that a recent analysis determined it was worth only $34 million in 2014, and not $60 million as he and Eileen Gold had agreed.

Schaeffer's suit demands not only release of his obligation to pay $9 million more, but that Eileen Gold return $4 million he says she obtained through "unjust enrichment." Eileen Gold, who submitted Schaeffer's demand letter as an exhibit in her case, demands accelerated payment of the outstanding $9 million.

After the demand letter came to light in a story by the Sun Sentinel, the state office directed the Deerfield Beach-based company to document all payments made to Gold from the company's 2008 inception to Gold's death in January 2014. Also, the auditor was required to conduct "additional documentation and testing ... as necessary to determine if there is any evidence to support the allegations," according to a letter from the state office to People's Trust Chief Operating Officer Tom Gallagher.

VanSickle said the audit submitted by the company "provides a summary of payments made to Mike Gold from People's Trust Insurance Company, People's Trust Managing General Agency and corporate credit card records for charges made by Mike Gold on credit cards issued to People's Trust Holding Company, LLC."

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