CEO arrested in insurance fraud

By SCOTT HALL
Daily Journal staff writer, shall@thejournalnet.com
April 15, 2003
Johnson County, Indiana

A White River Township man was arrested Monday on Florida felony charges for running an unlicensed health-insurance plan that left thousands of clients facing unpaid claims.

William Paul Crouse Jr. was the chief executive officer of TRG Marketing, which operated for about a year from an office in Greenwood's South Park Business Center. The company vacated the office in July as Indiana insurance regulators were seeking court approval to freeze its assets.

Crouse, 34, 4181 Waterbrook Way, was held on $1 million bond Monday at the Johnson County jail awaiting extradition. He faces charges of racketeering, conspiracy to commit racketeering and unlawful transaction of insurance, which could carry a sentence of up to 60 years along with fines and restitution, according to Florida's Office of Statewide Prosecution.

Johnson County Sheriff's Chief Deputy Doug Cox, backed up by three other deputies, arrested Crouse at 11:30 a.m. Monday at his home in the Golden Grove subdivision. Cox said Crouse offered no resistance but seemed surprised.

“His wife was even more surprised,” Cox said.

Police also are seeking TRG's board chairman, Carmelo Zanfei, who was not at his home in Illinois on Monday.

“We haven't found him yet, but we have some leads,” said Nina Banister, spokeswoman for the Florida Department of Financial Services.

When Crouse was arrested, he told his wife to call Zanfei in Key West, Fla., according to Cox's report.

By its own admission, TRG collected premiums from at least 12,000 people in more than 40 states in 2000 and 2001. The company shut down its health plan in November 2001 under pressure from regulators in several states where clients reported unpaid claims.

TRG maintained that its core business was selling telecommunications services to small business, and that the health plan was merely an incentive offered to independent sales representatives. The company said its health plan was federally regulated and exempt from tighter state regulation. When complaints arose about unpaid premiums, TRG told clients and investigators that unscrupulous third-party administrators had kept the premiums and stopped paying claims.

Regulators in several states, however, said TRG's core business was charging large administrative fees while selling underpriced health plans to individuals and businesses desperate for coverage. The company acted without regulatory authorization, without the financial reserves or reinsurance necessary to cover claims over the long term and without paying into the guaranty funds that protect clients when legitimate insurers go broke.

Regulators said TRG's methods reflected a nationwide pattern of questionable insurers who collected a fortune in premiums while operating in the gray area between state and federal regulations. Stories in the national media have listed TRG among the largest such operations in the country.

In Florida alone, state officials said, the company left more than 7,000 clients with unpaid bills totaling in the millions of dollars.

One of them was Richard Baer, who was left with $60,000 in unpaid medical bills after coronary bypass surgery in 2001.

Baer took it upon himself to contact news organizations and keep TRG's name in the public eye, fearing that government agencies would not pursue the matter. He was surprised and elated Monday to hear that Crouse and Zanfei were facing charges.

“I hope in my heart of hearts that I was instrumental in getting these guys locked up,” the 61-year-old retiree said. “It's not going to change the $44,000 I still owe, but at least I know that these guys aren't living high on the hog while other people are suffering the way they are.”

The agent who sold the bogus health coverage to Baer is among 25 Florida insurance agents who now face disciplinary action and possible license revocation for their association with TRG.

Crouse began the business in Batesville in 1999 or 2000, later moving the company and his family to the Greenwood area. Several states obtained court orders to halt TRG's activities, but none pursued criminal charges until now.

The Indiana Department of Insurance investigated TRG and began a court action to shut down the operation and seize its assets to pay unpaid claims. The case proceeded slowly in court, however, because TRG had not aggressively sold its plan to Indiana residents. With nearly all the victims living in other states, Indiana regulators had difficulty proving their jurisdiction in the case.

Florida legislators are discussing a bill that would increase criminal penalties for people who operate unlicensed insurance companies. The legislation is informally known as the Pete Orr Bill, named for a former TRG client who died of cancer last year facing more than $250,000 in unpaid medical bills.