Former Tampa Mayor Bill Poe Sr. and 19 others, including his wife and five children, have been sued by Florida regulators for engaging in what the state alleges was an elaborate scheme to divert more than $140-million from three property insurance companieseven as the companies hurtled toward bankruptcy.
The 94-page lawsuit filed by the Florida Department of Financial Services alleges that as the Poe companies were taking huge losses from the eight hurricanes that struck Florida in 2004 and 2005, management began to move money around to protect itself from potential creditors.
The suit, filed in Leon County Circuit Court, alleges the managers paid themselves about $143.5-million in dividends during 2004-05, a large portion of that flowing out of the company after its liabilities exceeded its assets.
The Poe companies were hit with more than $2.5-billion in wind damage claims from the storms of 2004-05 and suffered a net loss of $369-million. Those losses triggered a series of assessments on all Floridians' insurance bills that are still in effect.
Poe affiliates Atlantic Preferred, Florida Preferred and Southern Family were liquidated by the state in May 2006 as part of the largest insurance insolvency in Florida history. The companies were the core of Poe Financial Group, an insurance company founded by Poe Sr. a decade ago.
Poe grew quickly by taking homeowners policies in high-risk areas out of the state-run Citizens Property Insurance. Until the storm spree that began in 2004, the strategy paid off.
By August 2006, Poe Financial Group had filed for Chapter 11 bankruptcy reorganization.
As the court-appointed receiver of the Poe companies, the state Department of Financial Services took over the Poe operations and liquidated their assets to pay outstanding claims.
Left in the wake of the insolvency was more than $790-million in unpaid claims, a debt that all Florida policyholders have been paying off through assessments on their premiums the past two years. The insolvency also stranded some 320,000 Poe policyholders who were dumped into Citizens Property Insurance.
Regulators last fall signed off on a 2 percent assessment to cover Poe's debt - the third such levy in the past 16 months. With the latest assessment, which began last month, everyone in Florida who buys homeowners or auto insurance is paying an extra $20 for every $1,000 in premium.
The suit alleges that top Poe executives on dozens of occasions transferred millions of dollars out of the insurance operation in the form of dividends and capital contributions to top executives and Poe family members. Bill Poe Sr. alone accounted for a total of $25-million in dividends.
Besides dividends to management, the suit also alleges "preferential repayment of loans, improper retention of unearned commissions and premiums, and misrepresentation of the financial status of the companies for the purpose of prolonging the life of the insurance companies so that additional fees could be collected.''
Poe managers also "intentionally and/or recklessly manipulated at least three areas of reporting to state regulators - admitted assets, loss and loss reserves, and capital contributions - for the purpose of deceiving the public, state regulators and/or creditors regarding the financial status of the companies,'' the suit says.
It also alleges that Poe management made "numerous misrepresentations and/or fraudulent omissions'' concerning the financial strength of the companies.
The Florida Office of Insurance Regulation, which monitors the solvency of insurance companies, has been criticized by lawmakers for not taking a greater role in preventing the demise of the Poe companies. But regulators have maintained they could act only on the information they were provided.
"Based on the allegations in the complaint, it appears great efforts were made to conceal the Poe companies' true financial position,'' said OIR spokesman Ed Domansky.
Neither the Department of Financial Services nor the office of state Attorney General Bill McCollum would discuss whether they would seek criminal charges.
Poe Sr., 76, who served as Tampa's 53rd mayor from 1974 to 1979 and has a downtown Tampa plaza and parking garage named in his honor, could not be reached for comments Tuesday afternoon.
But in an interview with the St. Petersburg Times in November, Poe, who lives with his wife in a 5,000-square-foot Davis Islands home valued at $3.2-million, said he wanted to tap into the state's $250-million Insurance Capital Build-up Program, which offered loans of up to $25-million to insurance companies.
"If I had gotten $20-million of that, I would have been in good shape," Poe said. "I'd gone through 12 storms. We were fine after the 2004 storms. The one that killed us was Wilma (in October 2005).
"I lost every dollar of profit I ever made in Wilma."
Poe remains chairman and CEO of Poe & Associates LLC, a Tampa insurance agency that was not part of the bankruptcy proceedings.
Because consumers were forced to foot the bill when the Poe companies became insolvent, Florida's chief financial officer, Alex Sink, said she will "aggressively pursue any opportunity to recoup additional funds to reduce the assessments.''
The first priority is to pay the more than 46,000 outstanding claims, said Department of Financial Services spokeswoman Tara Klimek.
"There is still about $123-million in outstanding claims,'' Klimek said. "Our receiver has also worked to have forensic accountants comb through past transactions and detail the companies' operations.
"This lawsuit reflects the information uncovered as we worked to liquidate the Poe companies and identify assets that should be used to pay claims.''
Times staff writer Stephanie Garry contributed to this report. Tom Zucco can be reached at email@example.com or (727) 893-8247.
Regulators: Where the money went
Florida regulators allege that from 2004 until shortly before the Poe companies were liquidated two years later, management drained the companies of premiums that would have otherwise been available to cover claims through "capital contributions" that were based on future earnings and "improper dividend distributions.'' The following list includes who received a payout, the year of the transfer, and the amount of the dividend or capital contribution the state says the manager received.
William F. Poe Sr., 2004 and 2005, chairman of Poe Financial Group Inc., $25,498,425.04
Poe Family Investment Co., 2004 and 2005, $9,340,324.60
Marilyn P. Lunskis, 2004 and 2005, director of Poe Financial Group Inc., daughter of Poe Sr., $8,304,657.78
Janice P. Mitchell, 2004 and 2005, owner of 11.82 percent of voting securities of Poe Financial Group Inc., daughter of Poe Sr., $8,229,657.78
Keren Smith, 2004 and 2005, director of Poe Financial Group Inc., daughter of Poe Sr., $8,154,540.25
William F. Poe Jr., 2004 and 2005, vice chairman of Poe Financial Group Inc., son of Poe Sr., $7,680,096.51
Charles E. Poe, 2004 and 2005, vice chairman of Poe Financial Group Inc., son of Poe Sr., $4,420,518.62
Charles E. Poe Trust, 2004 and 2005, $3,721,520
James E. Wurdeman, 2004 and 2005, an owner of Poe Investments Inc., $3,368,500.74
W.F. Poe Foundation, 2004 and 2005, $928,000
Jan Meder, 2004 and 2005, CFO of Poe Financial Group Inc., $116,536.61
Bobby C. Dollar, 2004 and 2005, COO of Poe Financial Group Inc., $101,862.71
Eric Poe, 2004 and 2005, owner of voting securities of Poe Financial Group Inc., a relative of Poe Sr., $27,214.66
Michelle Poe, 2004 and 2005, owner of voting securities of Poe Financial Group Inc., a relative of Poe Sr., $27,112.66
James Romerill, 2004 and 2005, owner of voting securities of Poe Financial Group Inc., $26,497.25
Thomas Krzesinski, 2004, owner of voting securities of Poe Financial Group Inc., $23,490
Peggy Poe, 2004 and 2005, owner of voting securities of Poe Financial Group Inc., a relative of Poe, Sr., $20,876.75
Rafael Abreu, 2004 and 2005, owner of voting securities of Poe Financial Group Inc., $6,714.37