Company tries to clear broker Coventry says its information in case wrong

Boca Raton insurance magnate Barry Kaye was wrongly implicated in a fraud investigation after a Pennsylvania company gave erroneous information to a state regulatory agency, company officials said this week.

The Florida Office of Insurance Regulation is trying to shut down Coventry First LLC, a firm outside Philadelphia that specializes in viatical settlements. The company buys the life insurance policies of elderly individuals.

Kaye, a major donor to Florida Atlantic University, and his son, Howard Kaye, are brokers who do some work with Coventry. The Office of Insurance Regulation said the two were involved in a “fraudulent” transaction in 2003 involving a Massachusetts woman, 73. The woman should have been paid substantially more than the $968,832 she received for her $19.4 million life insurance policies, according to the state.

The review, dated May 10, states Barry and Howard Kaye received $800,000 in commissions for this transaction, even though they did no work, raising questions about whether they were involved in a bid-rigging scheme.
That has led to a separate investigation by the Department of Financial Services, which regulates agents.
But this week, Coventry officials sent a letter to the Office of Insurance Regulation saying that contrary to what they had previously told the state, Kaye was not involved in the questionable transaction.
“Information was brought to the regulators’ attention that clearly demonstrated that the claims about us were based on inaccurate information and erroneous record keeping,” Kaye said. “We did not receive any commission for the transaction.”
Coventry officials issued a brief statement Friday saying they had alerted the state to the problem.
“The confusion was due to there being another life settlement case of Barry Kaye’s the same week,” said John Lippman, a Coventry spokesman.

State officials wouldn’t comment on how this could affect the investigations. The Office of Insurance Regulation, which is investigating Coventry, confirmed it received a letter and was reviewing it, a spokesman said. The office would not provide a copy. A spokeswoman for the Department of Financial Services, which is investigating Kaye, declined to comment.

The case involving the Kayes has attracted national media attention, because the elder Kaye is well known in insurance circles and has close ties with FAU, where he has donated $17 million.
“I am distressed that our reputation has been harmed as a result of implications that have been drawn from these unfounded allegations,” Barry Kaye said.
Officials at FAU have been following Kaye’s case because the university’s college of business, a school of finance, an auditorium and an alumni hall are all named for him.

Kaye said he called Ken Jessell, interim director of the FAU Foundation, and Dean Dennis Coates of the business college to tell them about the latest development.
“They were thrilled. They didn’t expect to hear anything different,” Kaye said.
FAU officials would not comment Friday, because this is an open investigation, spokeswoman Aileen Izquierdo said. Jessell said in an interview last week that the university would withhold judgment until the case is resolved.

“At this point, it’s only an allegation,” Jessell said. “I understand his company was not involved in the issuance of the policy at all.”

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