Police: Insurance swindle involved big bucks
November 30, 2008
By JEFF AMY and RYAN DEZEMBER
Two former employees of the Starfish Insurance Agency in Gulf Shores stole hundreds of thousands of dollars, police believe, some of it by selling fake property insurance policies.
Pamela Wynona Schoen, who owns the agency and is its only licensed insurance broker, says that the former employees also stole from her. Schoen has refunded at least some of the money paid for fake insurance, according to two victims of the alleged swindle, which apparently peaked in midsummer and left some Starfish customers unprotected for a chunk of hurricane season.
In a Sept. 17 police report, Schoen accused Benton Gray Harvey and Jonathan W. Adams of stealing $176,317.81 from Starfish. Most of the thefts involved unauthorized purchases on company credit cards, according to Sgt. Skip Callaway of the Gulf Shores Police Department, who is handling the inquiry. Alabama's Insurance Department is also investigating.
The Press-Register was unable to locate Harvey or Adams. Neighbors say the two have abandoned a condominium that Harvey bought from Schoen; Callaway believes they may have left the country.
In south Baldwin County, where coverage for even a modest home can cost more than $2,000 a year, thefts of insurance premiums might be a lucrative enterprise.
Because traditional insurers are loath to write policies so close to the Gulf of Mexico, many property owners rely on agents to find coverage from unfamiliar companies unregulated by the state.
Callaway said that more victims could emerge and that losses from fake policies could reach $750,000. Kelly McGriff, Schoen's lawyer, disputed that losses could become so large, but declined to estimate the true amount or the number of victims.
Callaway said Schoen isn't currently a suspect, and McGriff said she is cooperating with police.
"She and the company are the victim of an embezzler and a forger," McGriff said.
May face penalties
Regardless, Schoen could face penalties from insurance regulators for not watching employees closely. Asked how Schoen failed to notice large sums allegedly being stolen from her by her two employees, McGriff said that Harvey "was good at juggling and hiding things."
Schoen once lauded the two employees. As the April 2007 issue of a publication called Ladies in Business put it, "... they move about like Wall Street brokers finding better quotes for clients."
Thus far, only two victims have filed police reports in Gulf Shores. Jim Hamby, a restaurant manager, is one. He said Insurance Department officials told him they had at least 12 complaints and have been investigating since June.
"We don't discuss ongoing investigations until they are completed," Ragan Ingram, deputy insurance commissioner, said last week.
Hamby, who has a house near the beach in Gulf Shores, said he went to Starfish for homeowner coverage after earlier buying federal flood insurance through the agency. He dealt with Adams and then Harvey.
"They got me a quote," Hamby said. "I gave them a check. They gave me a copy of a policy."
Hamby wrote that check for $2,972 on Aug. 26. By mid-September, a time of intense hurricane activity in the Atlantic basin, he was wondering why the Lloyd's of London syndicate hadn't sent his policy documents.
Callaway said that police believe Harvey, whom the detective called the "ringleader" in the scheme, created fake documents using the Internet.
"The policies weren't any good," Callaway said. "They were all forged."
By the time that Hamby was wondering about his policy, the scam had been detected. Schoen offered to write him a real policy, but Hamby turned elsewhere for coverage.
He went to police Oct. 1.
Two weeks later, Barbara Sparkman filed a report claiming she had paid Starfish $2,079 in early September for a bogus policy covering her Gulf Shores home.
"They had a rate that was just phenomenal," Sparkman said. She recalled Harvey's reply when she asked how he could sell a Lloyd's policy more cheaply than others: "He was charming. He said, 'We just don't take advantage of our customers.'"
Tipped to the scam by a former insurance agent, Sparkman said she called Schoen, who confirmed Sparkman's policy was fake and eventually refunded the money.
Hamby said Schoen repaid him earlier this month. "She is trying to do the right thing there in giving the money back," Hamby said.
Schoen ran ads in the Islander newspaper urging customers to call and verify policies. McGriff said the ads were placed at the suggestion of insurance regulators.
Schoen also appears to be taking pains to deal with customers directly. A sign on the door of the Starfish office near the corner of Ala. 59 and Fort Morgan Road states: "Pamela Wynona Schoen is the only licensed insurance agent in this office. Thank you!"
Former Starfish Insurance Agency bookkeeper had previous trouble, Mobile Press-Register, 11/30/08
Former SBC missionary accused of embezzling IMB funds now suspected in insurance scam, Associated Baptist Press, 12/1/08