Story of the year 2021: Shurwest bankruptcy reveals suspected fraud
When Shurwest, an independent Arizona marketing organization, filed for bankruptcy on August 31, it drew little attention beyond a single line in a local trade newspaper.
In the weeks that followed, court documents revealed the IMO’s alleged role in a fraudulent scheme to boost indexed universal life insurance sales.
InsuranceNewsNet published two articles in October on Shurwest and its various legal issues. Based on reviews and website traffic, the Shurwest saga was an easy choice for our Story of the year 2021.
Courts in several states continue to arbitrate an outcome of the saga with a team of attorneys representing at least 142 plaintiffs in Arizona bankruptcy court. A March 3 hearing is scheduled in this case.
Our October 14 article reviewed 28 exhibits totaling approximately 1,200 pages filed by counsel for the plaintiffs.
“Our clients have suffered significant losses and if we don’t speak up for them, no one will,” Robert Rikard of Rikard & Protopapas, a Columbia, SC law firm, told InsuranceNewsNet. “As lawyers, we have to follow the rules and live by the rules. In these cases, it looks like Shurwest has decided that they have a different set of rules that they want to play by.
Shurwest filed for Chapter 11 bankruptcy in an attempt to settle dozens of lawsuits, while firmly maintaining that company executives knew nothing about a pension fraud scheme suited to hundreds of IUL sales.
According to bankruptcy documents, Shurwest faces 38 pending lawsuits in state and federal courts.
“We had a dishonest employee who started a business we knew nothing about,” Michael McGrath of Mesch Clark Rothschild, a Tuscon, Ariz. Law firm, who handles Shurwest’s bankruptcy filing, told InsuranceNewsNet.
Our October 5 article revealed details of the boarding scam carried out by Scott Kohn, 67, who remains at the Spartanburg County Detention Center in Spartanburg, South Carolina, where he has been held since November 2019. His trial on federal charges of conspiracy to engage in mail and email fraud has been delayed by the COVID-19 pandemic.
Kohn faces 20 years in prison for federal offenses. In March, a federal judge ordered a $ 501 million judgment against Kohn in a civil case.
Minnesota Life sued Shurwest on July 12 in the U.S. District Court for the District of Minnesota. Minnesota Life, which also faces several lawsuits from policyholders, has refunded premiums and canceled more than 200 sales of IUL policies after discovering the fraud.
Ronald L. Shurts, co-founder of Shurwest, recently filed a motion to dismiss the case. A judge has yet to rule on this request.
InsuranceNewsNet editor-in-chief John Hilton has covered business and other events in more than 20 years of daily journalism. John can be reached at [email protected]. Follow him on Twitter @INNJohnH.
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