North Carolina Insurance Commissioner Wayne Goodwin announced the distribution of $6.5 million to 661 former members of the Phoenix Fund Inc.
The Phoenix Fund was ordered into rehabilitation in October 2006, by the Wake County Superior Court after the N.C. Department of Insurance uncovered a more than $20 million fraudulent reinsurance scheme and left several insurance entities, including the Phoenix Fund, without reinsurance.
Since the Phoenix Fund has been under rehabilitation, the Department has sought and recovered nearly $18 million for the Phoenix Fund from Thomas G. Reitz, the Fund's purported reinsurance broker who was at the center of the fraudulent reinsurance scheme. In 2007, Reitz pleaded guilty to mail fraud and money laundering and was sentenced in 2008 to 70 months in jail followed by three years of supervised release. In addition, Reitz was ordered to pay over $19 million in restitution to the Phoenix Fund.
Distribution checks will be mailed to employers that were participating members of the Phoenix Fund as of Oct. 17, 2006, the date the Court ordered the Phoenix Fund into rehabilitation. The remaining recovered monies will be used to pay the Fund's obligations. Any monies remaining after the payment of such obligations will be returned to the same former members in a second and final distribution upon approval of the Court.
The Phoenix Fund was a self-insured group workers' compensation fund whose members agreed to pool their workers' comp liabilities rather than seeking coverage in the private market. Self-insured group workers' comp funds are licensed and regulated by the North Carolina Department of Insurance.