Amscot admits duping customers

Amscot Insurance pleaded guilty Friday to racketeering charges for duping auto insurance customers into buying unwanted extra coverage and services.

Ian MacKechnie, a Scottish immigrant who founded the low-cost Tampa insurer and grew it to 18 locations in the state, will be banned for life from selling insurance. As part of a plea agreement, he also said he would sell Amscot and a sister company to an unrelated third party within six months.

In return, state prosecutors agreed not to pursue criminal charges against MacKechnie, though he may be called to testify against 25 of his former and current employees still facing charges.

Four Amscot agents and a manager already have pleaded guilty and agreed to testify for the prosecution in the state's largest crackdown on "sliding," so named because unscrupulous insurers at one time "slid" papers containing unwanted extras into stacks of paperwork signed by consumers.

In Amscot's case, the agency was accused of systematically sliding services like towing charges and legal services into policies, ballooning the cost by an average of $100 a year. Amscot caters primarily to high-risk drivers who already must pay more for insurance.

About 175 drivers whose sliding cases were included in the indictment will be reimbursed for the overcharges.

As part of the agreement, Amscot agents who sell an auto policy are banned from selling ancillary products, such as auto club memberships. Rather, they must refer customers to other Amscot employees after dealing with their auto insurance needs.

Florida Insurance Commissioner Bill Nelson hailed the settlement as dealing "a heavy blow to anyone in the insurance industry who would contemplate ripping off auto insurance consumers."

As the state's insurance regulator, Nelson has targeted the practice of "sliding" as one of his key anti-fraud efforts, with Amscot at the bull's-eye of his crusade. As part of the year-and-a-half investigation into Amscot, Nelson went undercover to buy car insurance from an agent in Tampa. The agent, among those still facing charges, allegedly sold Nelson a towing and car rental add-on after Nelson asked for the minimum coverage required by law.

Amscot attorneys fired back that if Nelson had concerns about some of the company's agents, the commissioner should have taken action shortly after an April 1997 raid of its offices. Rather, Amscot said, Nelson waited until March to announce indictments against the company as a calculated move to help his re-election bid.

MacKechnie and his lead attorney in the case, John Anthony, portrayed Friday's outcome as a victory.

The decision to drop charges "reflects an honorable recognition by the prosecuting authorities that Mr. MacKechnie was wholly innocent as he adamantly maintained from the outset," Anthony said. He said MacKechnie has been intending to sell the company anyway, with discussions under way with several parties.

Anthony also described the infractions as sparse, saying Amscot only admitted to sliding in 30 isolated cases out of thousands of auto insurance policies sold since last year.

Both the state prosecutor's office and Department of Insurance disagreed with Anthony's assertions. "Amscot is obviously putting its own spin on it as a business," said Ron Poindexter, director of the state division of insurance fraud.

Poindexter said that in the settlement MacKechnie stipulated there was probable cause to arrest him on racketeering and organized fraud charges.

Suzy Rossomondo, deputy chief assistant with the statewide prosecutor, said prosecutors don't think MacKechnie is innocent _ only that it is worth avoiding a trial in return for his agreement to stay out of insurance forever. The state was never told he planned to sell the business anyway, she said.

Also, the settlement calls for Amscot to pay back about 150 customers in the original indictment _ a total restitution of about $21,015. In signing the plea bargain, Amscot only cites 30 of the cases in its plea; Rossomondo said that is because the state legally only had to prove two instances in order to support racketeering charges.

Poindexter maintained that the state found cases of auto memberships, towing charges and other ancillary services in at least 97 percent of the thousands of Amscot policies it seized last year. Investigators selected about 150 cases at random since they didn't have the staff to check whether all the policyholders were aware of what they had paid for.

In his statement, Anthony said Amscot independently implemented a consumer protection program last year after it learned of "possible employee wrongdoing."

Anthony also downplayed the violations, saying "some of the largest insurance companies . . . have previously pled guilty to various insurance infractions, have learned and improved from the experience and have gone on to thrive.

"The client is confident that Amscot Insurance will be no different in these regards."