Report: Behind Florida's latest insolvent insurer lurks Bill Griffin of Riscorp scandal
Wake up and good morning. When Florida regulators last week ordered the liquidation of the insolvent American Keystone Insurance Co. of Jacksonville, a home and condominium insurer with about 7,600 policyholders, little did we know who was helping to pull the insurer's strings.
Bill Griffin. Yes, the one-time Sarasota entrepreneur who built up a worker's compensation insurance busines called Riscorp, only to see it collapse. The same Bill Griffin who somehow became part of the original ownership group of the Tampa Bay Devil Rays. and the same Bill Griffin who landed in prison for orchestrating illegal political contributions. (Photo of Griffin by AP's Mark Foley.)
The same Bill Griffin whose felony conviction, under federal law, is supposed to prevent him from such involvement in the insurance industry.
Public records uncovered by reporter Paige St. John at the Sarasota Herald-Tribune show Griffin's family members and business associates financed American Keystone Insurance and controlled its holding company. Griffin himself later became a director at the holding company that owned a controlling stake in the insurer, though the newspaper says his role was not clear. Here's the complete story worthy of a close read in the Herald-Tribune. But here's a CliffsNote version of the tale connecting Griffin's Riscorp to American Keystone:
* Riscorp's crash represents the second-largest insurance failure in Florida history.
* Griffin started Riscorp in 1996, taking it public in a $200 million offering and pocketing more than $60 million in bonuses in the process.
* Less than a year later, Riscorp was little more than a shell, its books indecipherable, its assets sold and five of its officers, including Griffin, indicted on campaign finance abuse charges.
* Federal indictments alleged they had funneled over seven years more than $360,000 in illegal contributions to politicians. Among them: Former insurance commissioner Tom Gallagher; then-lawmaker Katherine Harris, and then-insurance commissioner (now U.S. Senator) Bill Nelson.
* Griffin, at the time worth more than a half-billion dollars, pleaded guilty to a single felony conspiracy charge and spent five months at a Panhandle prison camp.
* In 2006, a Sarasota company called Riscorp of Florida, which no longer listed Griffin as an officer and had formally changed its name to Greenstreet, lent the start-up American Keystone $7.2 million.
According to the Sarasota coverage, the new company applied to Florida insurance regulators for permission to operate. State regulators knew Griffin had indirect ties to the company but approved American Keystone's application because Griffin was not a director or officer in any of the companies involved.
Who owned American Keystone? A holding company called Sarasota Investor Group controlled by Griffin's son-in-law, Randal Salser, and three Griffin family trusts in the names of his son, John F. Griffin, and daughters Anna and Charlotte Griffin. Bill Griffin was not officially a part of American Keystone until later when, in 2008, Keystone told regulators that control of Sarasota Investors Group was being assumed by Greenstreet. Then, six weeks later and unknown to state regulators who had approved the transfer, reports the Herald-Tribune, Greenstreet filed corporate documents declaring Griffin as a new director.
Why do we care? Because for those who were around in the Riscorp days, the political scandal was significant. Because Tom Gallagher (read more of his involvement here), Katherine Harris (read more of her involvement here) and Bill Nelson (read more of his involvement here) were (and are) prominent political figures in Florida. Because Griffin briefly owned a piece of the Major League Baseball franchise in Tampa Bay. Because state insurance regulators were not properly policing the ownership role by a convicted felon of an insurance company. Because there's been little pick-up of the Herald-Tribune report, as the Florida media seems to lose more of its institutional memory to recall the fiasco that was Griffin's Riscorp.
Because a Florida insurance company affiliated with Griffin, American Keystone, had to be declared insolvent and ordered liquidated by the state.
-- Robert Trigaux, Times Business Columnist