Accused Hermantown insurer’s clients unharmedThe Wolff Agency’s upscale office in Hermantown was open as usual Wednesday afternoon. Well, not quite.
By: Candace Renalls, Duluth News Tribune
The Wolff Agency’s upscale office in Hermantown was open as usual Wednesday afternoon.
Well, not quite.
No receptionist sat at the front desk. Former owners Duane Wolff and Douglas Wolff no longer work there. And representatives from the Cartier Agency were busy taking calls from concerned clients.
Lots of calls.
“We’re open to business and everyone has coverage,” Matt Cartier assured people.
News broke Tuesday that the father-son insurance team is accused of misappropriating more than $2.3 million and that they face possible license revocation and civil penalties.
But it’s not their clients who are out of money, it’s the financial institutions that were owed money, explained Nicole Garrison-Sprenger, a spokeswoman for the Minnesota Department of Commerce.
“The business is still a going concern,” she said. “It’s being owned and operated under new management under the bank.”
The St. Louis County District Court on Feb. 8 gave Beacon Bank, one of the victims, control of the Wolff Agency assets. The bank, in turn, hired Cartier Agency in Duluth to manage the business’s accounts until the business is sold or its assets transferred.
“[Clients] are going to be taken care of with the Cartier Agency managing the agency,” said Debra Demianiuk of Beacon Bank in Duluth.
Duane Wolff’s insurance licenses have been suspended as he and his son await an April 9 hearing before an administrative law judge in St. Paul, who will determine whether violations occurred that warrant license revocations and sanctions against both.
Neither Duane Wolff, 70, nor Douglas Wolff, 42, both of Duluth, could be reached for comment Tuesday or Wednesday.
The allegations against them include defaulting on nearly $700,000 in loans from Beacon Bank. But the biggest alleged mishandling of funds — more than $2 million — relates to the agency’s handling of its commercial trucking clients’ accounts, which were a big portion of their business.
“They approached a couple of financing entities for funding to enable them to pay clients’ premiums to the insurers in the full, while the clients would pay in installments,” Garrison-Sprenger said.
The Commerce Department investigation found:
Commercial trucking clients would finance their insurance premiums through Universal Premium Finance Corporation. The Wolffs set up a program with UPAC that allowed the trucking clients to make lower premium payments in installments while the Wolffs guaranteed the full amount.
Over time, the Wolffs failed to pay UPAC money owed on 125 accounts, mostly in returned premiums on canceled policies, which grew to $2.3 million. Then they failed to comply with a payment plan and a promissory note, and the amount owed grew to more than $2.5 million with interest and costs.
“We’ve been seeing more and more cases like this — title agencies and collection agencies that are supposed to collect money on someone’s behalf and not turning the money over as they’re supposed to,” Garrison-Sprenger said.
She declined to say whether criminal charges would be sought in the Wolff Agency case. But such referrals for criminal prosecution aren’t unusual. In 2009, the Commerce Department took action against 438 companies and individuals, with some of those proceedings turning criminal, she said.