Hermantown insurance businessmen face charges of mishandling clients' moneyThe Minnesota Department of Commerce announced Tuesday that it has charged a father-son insurance team in Hermantown with allegedly misappropriating, withholding or converting funds totaling more than $2.3 million while operating their business.
The Minnesota Department of Commerce announced Tuesday that it has charged a father-son insurance team in Hermantown with allegedly misappropriating, withholding or converting funds totaling more than $2.3 million while operating their business.
A hearing to determine whether Duane Wolff and Douglas Wolff, former owners and operators of Wolff Agency Inc. in Hermantown, committed the alleged violations and should receive disciplinary action has been scheduled for April 9 at the Office of Administrative Hearings in St. Paul.
The Wolffs couldn’t be reached for comment.
According to an investigation conducted by the Department of Commerce, the Wolffs allegedly failed to repay premium loans and/or return premium refunds to Universal Premium Finance Corp.
The Wolff Agency used UPFC as the financing company for clients who paid their insurance premiums in installments rather than in full. Between Jan. 9, 2008, and May 20, 2009, the Wolff Agency allegedly issued 69 checks to UPFC totaling about $350,000 that were returned for nonsufficient funds.
In November 2007, Wolff allegedly submitted a financing agreement on behalf of one of its customers to First Insurance Funding Corp. FIFC forwarded the funds to the Wolff Agency, but no premium was paid to FIFC, nor was any money returned to FIFC, the commerce department alleges.
Wolff entered into a promissory note with FIFC for $329,810 for the purpose of repaying the funds FIFC forwarded to the agency. Wolff defaulted on the note.
In September 2005, the agency obtained two lines of credit totaling $700,000 from Beacon Bank in Duluth. Wolff withdrew undisclosed funds from the lines of credit, then defaulted on the loans.
As a result of a judgment obtained by the bank in January, all of the Wolff Agency’s assets have been turned over to the bank, which is currently running the agency.
Debra Demianiuk, senior vice president of business banking for Beacon Bank, issued a statement Tuesday afternoon saying that the St. Louis County District Court awarded control and possession of all assets of Wolff Agency Inc. to Beacon Bank on Feb. 8.
“Principals of the agency, Duane Wolff and Douglas Wolff, are no longer employed at the agency, but key personnel have been retained,” Demianiuk said in her statement. “Beacon Bank has hired Cartier Agency to professionally manage the insurance contracts and accounts until Beacon Bank is able to complete a sale or other orderly transfer of the agency’s assets.”
The Minnesota Department of Commerce is charged with licensing and regulating the insurance, banking, securities, mortgage and real estate industries in Minnesota.
When a commerce department investigator visited the Wolff Agency in June, Duane Wolff insisted he didn’t know what happened to a particular file an investigator asked about. After Beacon Bank took control of the business, bank representatives found the file in Duane Wolff’s refrigerator.