U.S. Attorney Lauds Pa. Commissioner for Help in Fraud Case – Receives $9.2M

Pennsylvania’s Insurance Commissioner, Diane Koken received praise from Patrick Meehan, United States Attorney for the Eastern District, for the help her Department gave federal prosecutors investigating Allen W. Stewart for fraudulent actions taken during his leveraged buy-out of Summit National Life Insurance Company and Equitable Beneficial Life Insurance Company.

Even better, Meehan gave Koken a check for $9.2 million, part of the forfeited assets the AG has recovered, which will be used to pay policyholder claims.

Meehan said that PID investigators’ help was crucial in its efforts to marshal the assets of the liquidated insurance companies and hold the responsible parties accountable for their actions. The funds reflect money the U.S. Attorney’s Office has recouped through criminal forfeiture proceedings brought against Stewart. “Without the leg work and the investigation the Insurance Department initially undertook, we would not have been able to achieve the result we have today,” he indicated. “Cooperation among agencies was the key in bringing Stewart to justice.”

Koken noted, “Today’s event is the culmination of a massive U.S. and Pennsylvania investigation that involved hundreds of thousands of pages of evidence and scores of witnesses. The aim was to recover as much as possible for Summit National and EBL policyholders who lost their savings and their dreams for retirement.

“So I do feel I am here accepting this check on behalf of those policyholders. With this check, the amount that we have been able to recover from federal prosecution and our third-party recovery actions for these estates now stands at more than $75 million dollars. That means that more than 94 percent of policyholder losses have been recovered.”

The bulletin indicated, “Stewart was convicted of 135 counts of RICO, wire and mail fraud, and money laundering after a six-week trial in December 1997,” and is currently serving a 15-year prison sentence. The U.S. Attorney’s Office previously paid the Pennsylvania Insurance Department $7.6 million for the prior recovery of some of Stewart’s forfeited assets. So far the PID has recovered a total of $16.8 million from the forfeitures.