Insurers in Ethan Allen boat case probed

Companies may be part of a scheme

Detroit Free Press
February 25, 2006

The Ethan Allen tour boat is towed to shore Oct. 3 on Lake George in upstate New York. The boat capsized Oct. 2, killing 20 people, 19 from Michigan.

Regulators in three states are looking into whether companies in London and Florida sold a fraudulent $2-million insurance policy to the owner of the Ethan Allen, the tour boat that capsized last fall, killing 20 people, 19 from Michigan.

Investigations have begun in Texas, New York and Florida into questions about whether the owner of the Ethan Allen was duped in an international insurance scheme.

The Free Press reported this week that Jim Quirk claims he paid for a policy that may be bogus and cannot pay the bills of survivors or the estates of the people who died on Lake George, N.Y., in October. Texas regulators say associates of the companies that sold Quirk the policy are suspected of peddling millions of dollars in nonexistent insurance to small businesses.

Quirk's company, Shoreline Cruises, said it bought the policy for the Ethan Allen and four other tour boats in 2004 through Charles H. (Chuck) Wegman of Houston.

Wegman was working with the Global Property Owners Association, which around that time listed its address as a suite in a Miami office building -- a suite where virtual office services such as answering phones or collecting mail are provided for a fee.

Global Property said the policy would be written with United ReInsurance Group Ltd. of 29 Harley St. in London, another place where businesses can rent a virtual office.

Wegman has said Shoreline's policy does not cover accidents on the water because the company didn't purchase marine liability because of the cost.

Regulators say that may be irrelevant if the policy was bogus. Investigators are looking into what happened in the three states. Here's why:

  • Florida: Shoreline sent two checks to Global Property's offices for the five boats, totaling $14,140 for the 2005 policy. Michael Allweiss, a St. Petersburg, Fla., lawyer for Shoreline, said he was contacted by an insurance fraud investigator from the Florida Department of Financial Services about the situation.

  • New York: The accident occurred in New York, and the boat's owner bought a policy from companies not licensed by the state. "We had a major catastrophe within the boundaries of the state, and now there's an apparent inadequacy of the insurance coverage and we're obviously concerned about it," the New York State Insurance Department said in a statement.

  • Texas: Wegman is licensed in Texas, and regulators with the Texas Department of Insurance have long had an interest in some of the men tied to Global Property and United ReInsurance -- Christopher Purser, Steve Mills and Roger Kron.

    Purser lost his license in Texas for selling nonexistent liability insurance to nursing homes, and he was ordered to stop selling bogus insurance to apartment owners and condominium associations.

    Mills and Kron are officers of a publicly traded company in Dallas, Viking Capital Group Inc., which is or had been connected to United ReInsurance through a stock deal. Viking has said in filings with the U.S. Securities and Exchange Commission that Mills is chief executive and chairman of United.

    Jerry Hagins, a spokesman for the Texas Department of Insurance, said that "because of the recent interest with the boat sinking, we're investigating to see whether there's any activity that falls under our jurisdiction."

    Hagins said the department has investigated various schemes targeting high-risk businesses that have trouble finding reasonably priced insurance.

    Copyright © 2006 Detroit Free Press Inc.

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