Holland acts to recover fraud damages

CapitolBeatOK Staff Report

Published: 22-Oct-2010

Days after Charles Antonucci, Sr. pled guilty to attempting to defraud the federal government of bank-rescue funds and to involvement in a failed scheme to defraud the Oklahoma Insurance Department, Insurance Commissioner Kim Holland acted to recover more than $102 million in damages to an Oklahoma insurance company.

“We have uncovered a highly complex financial scheme of fraud and deceit that placed many policyholders in danger while enriching a few insurance company executives,” said Holland. “What is most reprehensible is the level of fraud and negligence that appears to have taken place at a prominent investment bank and financial services firm like Oppenheimer & Co.”

Park Avenue Property and Casualty Insurance Co. (Park Avenue), purchased by Antonucci last year, was placed into receivership by Holland’s agency in November 2009 after department examiners discovered the company was illegally purchased using the company’s own assets. The transaction also made the company insolvent.

Antonucci entered a guilty plea in federal court October 8, admitting he deceived regulators in order to obtain $11 million from the Troubled Asset Relief Program (TARP) for his New York bank. Antonucci purchased Park Avenue from a holding company owned by Jerry Lancaster and members of his family. The transaction was facilitated through Oppenheimer. According to the petition, Oppenheimer, Antonucci and the holding company conspired to pledge more than $30 million of Park Avenue’s bond portfolio to be used as collateral for a loan to finance purchase of the same company. When those funds became encumbered as collateral, the insurer became insolvent.

When Oklahoma regulators took over the insolvent company, Oppenheimer liquidated pledged assets to cover the loan. However, since the assets were illegally transferred, Holland is seeking to recover that money. Her petition asserts Oppenheimer had a fiduciary responsibility to its client and the firm should have known the transaction required Insurance Department approval.  They also should have known that the asset transfer would instantly make the company insolvent.

These assertions are based in part on Antonucci’s admissions, most notably that he conspired with others to submit false information to gain approval for illegal transactions. “The scope of the scheme is extensive and has required the efforts of both state and federal regulators to unwind, as well as to protect policyholders,” said Holland in a statement sent to CapitolBeatOK. 

While federal prosecutors pursued charges related to the TARP funds, Holland’s agency unraveled parts of the elaborate scheme. Holland noted that the Lancasters and others involved in this scheme displayed a complete disregard for the law, demonstrating full knowledge that their actions were illegal—while proceeding anyway.

In several emails documented in other court filings, associates demonstrated keen awareness that the companies were engaged in a widespread cover-up of their sale of Park Avenue, writing such lines as, “We are hiring an additional corporate lawyer […] he is the best….at helping Jerry lie.”

The department charges in court briefs that these internal communications among the defendants show “a pattern of complete and utter disregard for Oklahoma law.”

State insurance regulators maintain control of Park Avenue and another company that was owned by Jerry Lancaster. Holland expects Antonucci’s admissions will lead state and federal law enforcement agents to bring criminal charges against others involved in this elaborate scheme.