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control, or possession of the insurer's assets. Finally, the court held that it was
not required to stay the civil action pending the outcome of the criminal
proceedings filed against various individuals, because to do so would prejudice
the liquidator's civil remedy against those persons.
Michigan
Missouri
Baldwin v. Hosmer, Circuit Judge, 101 Mich. 119, 59 N.W. 482 (1894). The court
refused to adjudge the officers of a local branch of an insolvent corporation
guilty of contempt for neglecting to relinquish to the receiver monies,
property, and effects in their control.
Relfe v. Spear, 6 Mo. App. 129 (1878). The Missouri insurance commissioner
brought suit against the receivers of five insolvent life insurance companies on
the question of who had the right to deposits made by each of the insurers.
The court held the Missouri commissioner was not the trustee of the securities
required by Missouri law to be deposited although the commissioner may be
the custodian. The equity court under the statutes of Missouri has supervision
and control over the insolvent insurer and therefore the court's receivers are
entitled to take possession of the deposits.
U.S. v. Riley, et al., Slip Op., No. 94‐00197‐01/03‐CR‐W‐8 (W.D. Mo Oct. 26,
1994). Three defendants were indicted for fraud, racketeering, and bribery
of government officials. The indictment alleged that one defendant
controlled several insurance companies, and operated with the other two
defendants to defraud several state insurance departments. They listed
assets of scam businesses. The assets were either nonexistent or
overvalued, and the defendants planned to obtain money and property
through sale of insurance policies within the several states. The Defendants
also bribed several state insurance officials.
Nebraska
New Jersey
Lange v. Orrico, Slip Op., No. 8:CV94‐00116 (D. Neb. March 1996). Liquidator
of two insolvent insurance companies awarded judgment against Bahamian
Company and other defendants for Rico violations. The defendants were
part of a conspiracy to divert premium dollars and other assets from the
now insolvent insurance company. The wrongful conduct included grossly
excessive management fees, grossly excessive commissions, undetermined
commissions, diversion of policy fees, diversion of funds, and conspiracy.
In the Matter of Integrity Ins. Co., 245 N.J. Super. 133 (Law Div.). The court held
that an action brought by the liquidator of Integrity under the New Jersey's
Racketeer Influenced and Corrupt Organization Act ("RICO") against, inter alia,
directors and officers of Integrity was timely filed. Although neither the RICO
Act nor state case law provided a statute of limitations, the court applied the
four year limitations period established in federal RICO case law. Thus,
although filed two years after the cause of action accrued, the RICO action was
properly filed within four years.
Matter of Integrity Insurance Co., 240 N.J. Super. 480 (App. Div. 1990). The
court set forth the extent to which the liquidator of Integrity may act in that
capacity and established the procedures to be followed when asserting claims
of the insolvent estate and other claimants against third parties. The action
involved a collateral suit on behalf of Integrity, its creditors, policyholders,
claimants and beneficiaries to recover damages from third parties such as the
insurer's accountant and auditor and directors and officers. The action alleged
theories such as negligence, fraud, breach of fiduciary duties and violations of
statutes such as anti‐racketeering and consumer fraud statutes.