Log In

Reset Password
BERMUDA | RSS PODCAST

Insurance firm under investigation

insurance company whose owner has been accused of embezzling insurance premiums in the United States.

Fund Insurance Company, which insures US high school athletes against catastrophic injury, is controlled by Kansas-based businessman Mr. Doug Ruedlinger.

The investigation began after Mr. Ruedlinger's alleged business malpractice was highlighted by CBS television station and some US newspapers, including The Wall Street Journal.

Bermuda's Inspector of Companies Mr. Kymn Astwood said yesterday: "Fund Insurance is under our jurisdiction and we are looking into the matter.

"We're aware of the accusations that have been made against Mr. Ruedlinger overseas.'' In a new development, The Royal Gazette has discovered that the ownership of Fund Insurance was transferred earlier this year, shortly after bankruptcy proceedings were brought against its parent, Wheatland Group Holdings.

This move would make it more difficult for creditors to get their hands on Fund Insurance's assets if Wheatland is eventually forced into liquidation.

The transfer is part of a court action brought by All-American Life Assurance, a Chicago-based underwriter of some of Mr. Ruedlinger's non-catastrophic policies, against Mr. Ruedlinger, alleging breach of contract and fraud.

Mr. James Ringer, an attorney for All-American, said: "Clearly, the transfer by Doug Ruedlinger was made to preserve the assets and protect them from his creditors.

"Mr. Ruedlinger signed the contract for Wheatland and for The Ruedlinger Company transferring the stock.

"We are seeking to have the transfer annulled on the grounds that it was fraudulent.'' Fund Insurance, which is managed by Symphony Management, of The Continental Building, Church Street, Hamilton, is believed to be the only Ruedlinger insurance company still operating.

Two of his firms in the US have gone into voluntary liquidation and the rest are fighting bankruptcy proceedings brought by creditors.

The multi-million dollar collapse has left many seriously-injured student athletes without medical coverage.

Several lawsuits and claims from injured students have been filed in the US, including one that accuses Mr. Ruedlinger of misappropriating premiums.

The Federal Bureau of Investigation is also believed to be investigating possible mail fraud, according to The Wall Street Journal.

Mr. Ruedlinger admitted on CBS' Eye to Eye with Connie Chung programme last week that he used company cheques for his personal use, including buying feed for his horses and paying for construction work to his Florida home.

And, while his business empire was collapsing, he continued to pay himself a salary which he admitted was "between $600,000 and $1 million'' per year and ran a company jet at an estimated annual cost of $500,000.

Mr. Ruedlinger has also been accused of allegedly trying to procure insurance contracts by falsely claiming to have a reinsurance agreement with Bermuda-based Centre Re.

A spokesman for Centre Re said yesterday: "We have never provided coverage or had any contractual relationship with any of Mr. Ruedlinger's companies.'' Fund Insurance did try to enter into an agreement with Centre Re but was turned down.

An underwriter with Centre Re, Mr. Robin Hamill, wrote to Mr. John Neal, who owns Symphony Management 13 months ago saying: "We are specifically concerned about the assets that make up the company's surplus and the fact that the Fund is issuing per occurrence limits that are 200 percent of its surplus.

"Generally, the industry guideline is that a single policy limit should be no more than one tenth the size of surplus.'' Mr. Ruedlinger appears to have also lied when he told Eye to Eye that his only involvement with Fund Insurance was as a director.

He further claimed on the programme that the company was wholly-owned by his son, Shannon.

However, Fund Insurance's share register shows that, on March 22, 1993, the ownership of the company was transferred from Wheatland to The Ruedlinger Company, of Kansas, which was set up in June, 1992, as his other businesses began to crumble.

And the president and treasurer of The Ruedlinger Company is none other than Mr. Doug Ruedlinger, according to the Secretary of State's office in Kansas.

Mr. Shannon Ruedlinger is not listed as one of its officers in their official records on the company.

Fund Insurance made losses of $113,948 and $24,970 for 1990 and 1991, respectively.

At June 30, 1991, the company had assets of $511,226 and liabilities of just $9,000.

Mr. Ruedlinger failed to return a phone message yesterday. Mr. Neal, of Symphony Management, was on holiday and could not be reached for comment.