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Florida’s Chief Financial Officer Tom Gallagher announced that four officers of the former Miami-based Aries Insurance Company have been charged with diverting more than $60 million from the company. Aries was ordered into liquidation in 2002.

Aries wrote personal and commercial auto and property coverage, as well as workers’ compensation coverage, and had about 70,000 policyholders when it was taken into receivership. Investigators with the Department of Financial Services, Division of Insurance Fraud, said Marcos Fraynd, sons Paul and Saul, and daughter Fanny Fraynd willfully misrepresented the company’s 2001 financial statement to cover up the theft.

“This conduct has cost Florida’s taxpayers more than $100 million as state guaranty funds have had to step in to cover outstanding claims and return premiums to policyholders,” Gallagher said. “I am grateful to the investigators and the Office of Statewide Prosecution for persevering in following this money trail and bringing these charges to fruition.”

Aries owner Marcos Fraynd and sons Paul, who served as president, and Saul, who served as secretary, are each charged with racketeering and conspiracy to commit racketeering. The elder Fraynd also is charged with three counts of first-degree grand theft, Paul is charged with four counts and Saul is charged with two counts. Bond for the three men is set at $1 million each. Fanny Fraynd, who served as the company’s treasurer, is charged with 10 counts of filing of false and misleading financial statements. Her bond is set at $50,000. Fanny and Saul Fraynd were expected to surrender this week. Marcos and Paul Fraynd were still being sought.

The Fraynds diverted the money through various family companies, investigators said.

The principle companies involved were Aries and Onyx Underwriters Incorporated, which acted as the managing general agent for Aries. Other companies were Onyx Insurance Group Incorporated, Onyx Capital Corporation, Omega Finance Corporation, and All Florida Auto Parts Incorporated.

Topics Florida Fraud