Archive for Saturday, June 14, 2003

Audit finds mismanagement, nepotism at insurance company

Corporate official says he’s being portrayed in wrong light

June 14, 2003


— State regulators have accused an insurance company official of numerous instances of excessive travel expenses, poor fiscal record-keeping and nepotism. The official, Rick Meyer, denied any wrongdoing.

The state audit on First American Capital Corp. is the latest development in a fight for control of the Topeka-based life insurance company that is being waged in court, at the Kansas Insurance Department and in a shareholder election.

Meyer, founder and former president, wants to depose the current board, which fired him as president, with a slate of candidates that he supports.

The current board, composed of numerous Kansas political insiders, has sought help from Kansas Insurance Commissioner Sandy Praeger's office to derail Meyer's attempt. The current board claims Meyer simply wants his group to take over the board to sell the company, a charge that Meyer denies.

Praeger's office has released an audit that alleges the company while under Meyer's administration showed a lack of fiduciary responsibility, "and nepotism was very apparent with the Meyer family."

There were no guidelines on what was acceptable travel, business trips were undocumented, travel expenses couldn't be substantiated and excessive travel expenses were paid out by the company, the Insurance Department report said.

For example, the department report said Meyer spent $35,716 at a convention in New Orleans, and that the company granted Meyer's son a $31,000 loan.

Meyer said some of the expenses reported by the audit were accurate, but that the Insurance Department was portraying them in the wrong way. "Is there any truth to this? Yes. Is it like it sounds? No," he said.

Meyer said many of the expenses complained about in the report were for agent rewards and incentives. Meyer has accused Praeger of helping the current board because many of its members are her friends and campaign contributors. She has denied the allegation.

The Meyer-supported group will have a chance to answer the audit at a July 28 Insurance Department hearing.

Meanwhile, the results of a recent shareholder election for the board of directors remain unknown.

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.

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