Thursday, August 19, 2010

Owner cashed out accounts after insurance raid

Twenty-five minutes after an early August federal raid on the offices of United States Benefits, a Nashville company targeted in a probe of bogus health insurance sales, owner Timothy Thomas headed to his stockbroker to clear his accounts of more than $123,000.
Thomas followed the visit to brokerage firm Morgan Keegan with an afternoon trip to a bank to withdraw more than $10,000 in cash and seek a $9,100 cashiers check. The next day, Thomas signed over a check for $411,000 to a friend, while his wife, Kennan Dozier Thomas, cashed out $7,800 from another bank.

The series of events, described by a U.S. Federal Trade Commission attorney in a court hearing on Wednesday, amounted to a brazen "bank run" even after Thomas was served with a federal judge's order freezing all his assets after the Aug. 5 raid on his company's Murfreesboro Road office.

Altogether, in a two-day period after the federal shutdown of United States Benefits, even as a court-appointed receiver sent faxes to a number of banks informing them of the court-sanctioned asset freeze, Thomas and wife tried to cash out or withdraw more than $670,000 from numerous financial institutions, federal agents say.

RelatedHealth insurers to face more scrutiny over rate increasesJudge appoints trustee for Sommet Group after federal raidFederal crackdown on bogus health insurance closes Nashville operation

Meanwhile, the couple spent lavishly on food, boating and booze: $1,400 in restaurant tabs, $2,000 on boat fuel and hundreds of dollars at TJ Maxx, Costco and the Puffy Muffin in the two weeks that followed the raid.

Federal and state authorities presented the timeline of events in federal court in a bid to hold the couple in contempt for what trade commission attorney Arturo DeCastro described as a "flagrant and egregious violation" of the court order freezing Thomas' assets.

The FTC is involved in the case because it involves complaints of consumer fraud.

"Consumers who have been duped by their deceptive practices will never see that money." DeCastro said. "Mr. Thomas essentially went on a bank run, a spending spree."

United States Benefits has been accused of selling bogus health insurance policies, becoming the second Middle Tennessee firm shut down for allegedly duping consumers into thinking they were buying full insurance policies when, authorities say, they got much less.

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