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Commerce Charges Minnesota Insurer with Altering Documents

August 25, 2011

Commerce Charges Minnesota Insurer with Altering Documents 

For Immediate Release: Thursday, August 25

Commerce Charges Minnesota Insurer with Altering Documents, Deception
Austin-Minn.-based Co. Could Lose License, Have Contracts in State Cancelled

(ST. PAUL, MN) A Minnesota-based insurance company could lose its license, face a large fine and have all or some of its insurance contracts in the state cancelled, the Minnesota Department of Commerce said Wednesday.

On Monday, the Department of Commerce charged Austin -based Minnesota Surety & Trust Co. with altering files in anticipation of a regulatory exam by the Colorado Division of Insurance.  The company allegedly made at least 4,000 false entries in books, reports and statements in order to deceive examiners and make them believe the company was in compliance with the law.
"Minnesota Surety's allegedly fraudulent and deceptive behavior in Colorado makes the company unfit to do business in Minnesota," said Commerce Commissioner Mike Rothman. "The lengths to which executives at this company went to cover their tracks are shocking."

According to the department's statement of charges, in preparation for the Colorado regulatory exam scheduled for February 2011, Peter Plunkett, president of Minnesota Surety and a member of the board, devised an intricate scheme to doctor his company's records to make them look whole and in compliance with the law.

Plunkett traveled to Colorado in early January 2011, the department alleges, to visit with an executive from a similar company, Pioneer General Insurance Co., that had recently been fined $533,000 following an exam by the Colorado Division of Insurance. That executive, Dave Hyatt, allegedly gave Plunkett the examination report that outlined Pioneer's violations.

Concerned about whether his company could afford a similar fine, Plunkett, the department alleges, circulated the Pioneer exam report to Minnesota Surety agents working in Colorado. From there a "market conduct do list" was created to retroactively bring Minnesota Surety's files into compliance.

Plunkett created four sets of ink stamps and in January and February 2011, sent two agents, including Randall Eason, to Colorado to help agents there alter bail bond documents in advance of the Colorado market conduct exam. Though the forms held by Minnesota Surety were altered so that they appeared to comply with the law, the copies retained by customers who secured bail bonds from Minnesota Surety lacked the required stamping.

According to the Department of Commerce, in his "market conduct do list" Plunkett allegedly said, "I know it is after the fact, but it is very unlikely that the examiners will get a hold of the consumer's receipts to compare them to."

A prehearing conference will be held on October 4, 2011 at the Office of Administrative Hearings in St. Paul. After the administrative law judge issues his opinion in the case, it will be sent back to the Department of Commerce where a final order will be issued and penalties may be assessed.