Archive for Friday, June 13, 2003

Control of insurance company creates political tiff

June 13, 2003


— The fight over control of a little-known, but politically connected insurance company exploded in accusations Thursday.

The founder of First American Capital Corp., who is trying to depose the current board of directors, accused Kansas Insurance Commissioner Sandy Praeger of taking sides to help her friends and campaign contributors.

"I always thought she had integrity. I don't believe that anymore," said Rick Meyer, who started the Topeka-based life insurance company and was its president until February.

Praeger, a former state senator from Lawrence, denied Meyer's accusations. Praeger's spokesman Scott Holeman said, "There are people who contributed to her campaign on both sides of this issue."

Meyer, who owns nearly 10 percent of the company's stock, is supporting a slate of candidates in a shareholder election to take over the board of directors. He has accused the current board of mismanagement, which the board denies.

That current board is represented by William Sneed, an attorney who raised money and worked to get Praeger elected insurance commissioner in November.

Political insiders dominate the board, including former state Senate President Bud Burke, of Lawrence, and former Lawrence Mayor Ed Carter. Also on the board is Ken Frahm, husband of former U.S. Sen. Sheila Frahm. The company is run by Harland Priddle, a former secretary of agriculture and commerce.

Meyer referred to Sneed as Praeger's campaign manager.

"Sandy has continued to give her campaign manager every break in the world," he said.

Holeman said Sneed was a volunteer for Praeger's campaign but not her campaign manager.

Last month, as the board election drew near, Sneed wrote Praeger's Insurance Department asking that it prohibit votes from the Meyer group to be counted in the election. Sneed said the Meyer group wanted to take over the board to sell the company to a group that First American had previously rejected.

Meyer denied that was the case, saying that he wants his slate of directors to save the company from the current management.

Assistant Commissioner of Insurance Robert Tomlinson told the Meyer group that Praeger thought the use of the Meyer group's votes would violate state law and that Praeger would sue if she had to in order to make sure those votes weren't counted.

A state district judge issued a temporary restraining order that allowed the election of board members to go forward but prevented the current board from certifying the results. The votes rounded up by the Meyer group are in possession of the court.

Both sides have claimed victory in the election.

Meanwhile, the Insurance Department has scheduled a hearing July 28 on the Meyer group's documentation of its plans for First American. In preparation for that hearing, the department outlined its findings against Meyer and his group.

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