Colorado Department of Law — Annual Report 2009
In 2009, significant cases for these clients included:
The revocation of the C.P.A. certificates of two Coloradans who also were defendants in one of the largest tax shelter cases ever prosecuted by the U.S. Department of Justice.
The revocation of the C.P.A. certificate of an individual who solicited tax clients and others to invest in “prime bank” instruments, which is a Ponzi scheme.
The Insurance Unit acts as general and litigation counsel to the various divisions of the Division of Insurance. Unit attorneys assist and advise on a wide variety of subject areas in rulemaking related to the regulation of insurance companies and their agents, and provide legal advice regarding changes and amendments to the insurance laws. Attorneys conduct litigation on behalf of the Division of Insurance against unauthorized companies and individuals and insurance companies and their agents offering numerous types of insurance including, health care, health maintenance organizations, long-term care, Medicare supplement insurance, life insurance, property and casualty insurance, and preneed funeral contracts.
Unit attorneys successfully determined that the Neptune Society, a national company, underfunded the trust for their preneed funeral contracts. State law provides that 75 percent of the money paid into preneed funeral contracts must be deposited with a trustee. The Insurance Unit assisted the Division in negotiating a settlement requiring the Neptune Society to place approximately $1.5 million in trust to fund the underfunded accounts, change the Neptune Society’s business model to comply with Division of Insurance
regulations, and pay a civil penalty of approximately $1.2 million, plus a surcharge.
Unit attorneys also handled a similar case against Drinkwine Family Mortuary. The Division of Insurance’s investigation found approximately 30 accounts in which Drinkwine had failed to properly trust funds for preneed contracts. The unit assisted in negotiating a settlement in which Drinkwine was assessed a civil penalty of $34,500. Drinkwine also agreed to properly fund its preneed contracts within 60 days, requiring approximately $122,800 to be trusted to properly fund the account and agreed to suspension of its preneed license until an auditor had validated that the violations had been rectified.
Unit attorneys also successfully obtained a permanent revocation of a man’s insurance producer license after he was found to have diverted his customer’s health insurance or long-term care insurance premium checks for his own use. An administrative law judge determined permanent revocation was warranted given the predatory nature of the insurance producer’s conduct.
Unit attorneys also successfully negotiated a settlement with a company that issued title commitments on properties while the named entity did not hold vested title in the subject property on the date of the title commitment. The licensee also commingled title insurance premiums with business funds. As part of the settlement the company in question and its principals were required to pay a $11,000 civil penalty and agree not to seek any insurance licensure for 10 years.
Public Utilities Commission
The Public Utilities Commission regulates the rates, charges, services and facilities of public utilities within Colorado. The Public Utilities Litigation Unit primarily represents the litigation staff of the Public Utilities Commission. The unit appears before the Public Utilities Commission in litigated matters on behalf of the public interest to