Fraud Inquiry Into Insurer of Capsized Boat
By ANAHAD O'CONNOR
The New York Times
February 24, 2006
Officials with the Texas Department of Insurance said yesterday that the company that had issued a policy on the tour boat that capsized last October on Lake George in upstate New York, killing 20 passengers, has a history of fraud and is not licensed to sell insurance in the United States.
With questions mounting about the insurer, the boat's owner, Shoreline Cruises, was scrambling yesterday to figure out how to address claims filed by relatives of the dead and by those who were injured in the accident. More than a dozen people have sued Shoreline, seeking compensation for hospital bills, funeral costs and other damages.
"I just can't believe this is a one-time thing and all this stuff can be explained, short of it being an elaborate scheme," said Michael D. Allweiss, a lawyer for Shoreline. "We have to talk to the plaintiffs' lawyers and see if there is an accommodation that can be reached here."
Shoreline Cruises paid the insurer, Global Property Owners Association, $15,000 in 2004 for what it thought was a $2 million marine liability policy, according to the company's owner, Jim Quirk. He said he was recently told by a Global Property agent that the policy did not apply to the capsizing because it covered accidents only on land, not water.
But Ed Salazar, a lawyer for the Texas insurance department, said yesterday that the policy was in all likelihood a sham. He said that Global Property is not authorized to sell insurance policies in the United States, and that his office has been investigating the company since 2003, in connection with an elaborate scam to sell fraudulent insurance policies to nursing homes and real estate owners in Texas.
The company was issued an order to cease and desist by the Texas insurance commissioner in 2003. But instead of shutting down, Mr. Salazar said, the company changed its name, its address and began selling insurance again, this time to bars and clubs. At one point the company had its main address listed in Miami, Mr. Salazar said, which turned out to be little more than a post office box.
"These people are purporting to be an insurance company, but they're not," Mr. Salazar said. "It's a scheme to get into people's pockets. There's many people involved and many people are taking a cut at different levels from marketers, to agents, to attorneys."
Charles H. Wegman, an agent for Global Property in Texas who Mr. Quirk said had sold him the policy for the boat, the Ethan Allen, declined to comment, and directed questions to a company spokesperson. The company did not respond to several messages seeking comment yesterday.
The insurance problem has angered survivors of the accident and relatives of the dead.
One survivor, Carol Ann Marsh, 54, of Sterling Heights, Mich., said she is still trying to pay off medical bills and is fighting a lingering infection that she believes she developed while she was in the frigid waters of Lake George, waiting for rescuers.
"This is like one bad thing after another, it never gets any better" she said. "I've been trying to forget what happened, but it's like a bad sore that keeps coming back to get me. I can't heal."
According to Mr. Quirk, the policy that Mr. Wegman sold him in 2004 was written by another company, United ReInsurance Group Ltd., which is based in London. But Mr. Salazar said yesterday that United ReInsurance is also not licensed to sell insurance in the United States. Requests for comment left with the company's London office were not returned.
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