NCJ Number
63926
Date Published
1979
Length
210 pages
Annotation
FINDINGS AND LEGISLATIVE RECOMMENDATIONS ARE REPORTED FROM A CONGRESSIONAL SUBCOMMITTEE'S INVESTIGATION OF THE FRAUDULENT HANDLING OF INSURANCE PREMIUMS OBTAINED BY COMPANIES CONTROLLED BY OR ASSOCIATED WITH JOSPEH HAUSER.
Abstract
THE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS OF THE SENATE COMMITTEE ON GOVERNMENTAL AFFAIRS FOUND THAT OF SOME $39 MILLION IN LABOR UNION INSURANCE PREMIUMS OBTAINED BY THE HAUSER COMPANIES, $11 MILLION WAS DIVERTED TO OTHER FIRMS IN THE FORM OF QUESTIONABLE COMMISSIONS AND COMMISSION ADVANCES, WORTHLESS AND QUESTIONABLE INVESTMENTS, CONVERSIONS TO CASH, AND THE PAYMENT OF PERSONAL EXPENSES AND LEGAL FEES. AS A RESULT, THE HAUSER COMPANIES WERE FORCED INTO RECEIVERSHIP OR BANKRUPTCY, RESULTING IN LOSSES OF MILLIONS OF DOLLARS TO A NUMBER OF UNION TRUST FUNDS AND THEIR MEMBERS. THE SUBCOMMITTEE CONCLUDED THAT SCHEMES LIKE HAUSER'S ARE FACILITATED BY THE RELATIVE EASE WITH WHICH DIVERSIONS OF ASSETS OF BUSINESS ENTITIES AND PAYMENTS FOR INFLUENCE CAN BE DISGUISED AS COMMISSIONS, FEES, AND OTHER OSTENSIBLY LEGITIMATE TRANSACTIONS; AND THE DIFFICULTY IN DOCUMENTING AFTER THE FACT THE NATURE OF SUCH TRANSACTIONS AND RECOVERING FUNDS THAT HAVE BEEN IMPROPERLY DIVERTED. SINCE INSURANCE REGULATION IS PRIMARILY A STATE RESPONSIBILITY, THE SUBCOMMITTEE PROPOSALS FOR FEDERAL LEGISLATION AFFECTING INSURANCE ARE LIMITED TO THE PROVISION OF EFFECTIVE PROTECTION OF EMPLOYEE BENEFIT PLANS. OTHERWISE, THE SUBCOMMITTEE PROPOSALS URGE THE STATES TO TAKE EFFECTIVE ACTION TO STRENGTHEN GENERAL INSURANCE REGULATION. THE APPENDIXES CONTAIN EVIDENCE PRESENTED TO THE SUBCOMMITTEE. (RCB)