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Court refuses challenge by jailed risk retention group founder

Court refuses challenge by jailed risk retention group founder

The Delaware Chancery Court has refused to permit the founder of a risk retention group who is serving a 37-year jail term for fraud to challenge the group’s insolvency.

Sparks, Maryland-based Indemnity Insurance Corp., which wrote commercial liability insurance primarily for businesses in the hospitality and entertainment industries, was founded by Jeffrey Cohen, according to Thursday’s ruling by the Delaware Chancery Court in Wilmington in In the matter of liquidation of Indemnity Insurance Corp., RRG.

In 2013, the Delaware insurance commissioner “uncovered troubling evidence of IIC’s precarious financial position and years of fraud conducted by Cohen,” said the ruling. 

The commissioner began delinquency proceedings under the state’s Insurers Liquidation Act, and the risk retention group was put into liquidation in April 2014, according to the ruling.

In June 2014, federal prosecutors secured an indictment against Mr. Cohen “for various alleged fraudulent schemes and other criminal activities,” including those related to the risk retention group, according to the ruling.

Mr. Cohen was accused of defrauding some 5,000 commercial customers of more than $100 million, according to prosecutors. At his sentencing, he was ordered to repay $137 million in restitution to the thousands of entertainment industry victims who thought they had purchased general liability, liquor liability and excess liability coverage for their businesses from 2008 to 2013.

After he signed a plea agreement admitting to fraudulent conduct related to IIC, he was sentenced to 37 years in prison. He unsuccessfully appealed his convictions and sentences.

Mr. Cohen has filed his fourth motion to intervene and challenge the 2014 findings that the company was insolvent, according to the ruling.  The court ruled he was not entitled to do so.

The motion “is untimely, fails to assert a valid interest impaired or impeded by the company’s continued liquidation, and is precluded by this Court’s rulings on previous motions to intervene,” says the ruling, in denying Mr. Cohen’s motion.

“His inexcusable delay in bringing the Motion, coupled with the potential prejudice to parties who have relied for years on the Liquidation Order and its claims administration process, render the Motion untimely,” said the ruling,

It also held Mr. Cohen has not claimed an impaired or impeded interest in the action that has not be foreclosed by previous court rulings and that he is seeking intervention “only on foreclosed solvency issues.”




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