Minnesota Insurance Agents Charged with Misappropriating Funds

The Minnesota Department of Commerce has charged a father-son insurance team in Duluth with allegedly misappropriating, withholding or converting funds in the course of their business. A hearing to determine whether the agents committed the alleged violations and should be subject to disciplinary action has been scheduled for April 9 at the Office of Administrative Hearings in St. Paul.

According to an investigation conducted by the department, Duane and Douglas Wolff, owners and operators of Wolff Agency Inc. in Duluth, allegedly failed to repay premium loans and/or return premium refunds totaling more than $2.3 million to Universal Premium Finance Corp. (UPFC). Wolff 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 non-sufficient funds, the DOC said.

In November 2007, the agency allegedly submitted a financing agreement on behalf of one of its customers to First Insurance Funding Corp. (FIFC). Although FIFC forwarded the funds to the Wolff Agency, the department alleges that no premium was paid to the insurer nor was any money returned to FIFC. Eventually, Wolff entered into a promissary 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, DOC said the agency obtained two lines of credit totaling $700,000 from Beacon Bank in Duluth. Wolff withdrew substantial 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 running the agency today.

When an investigator from the department visited the agency in June, Duane Wolff insisted he didn’t know what happened to a particular file about which the investigator asked. After Beacon Bank took control of the business, bank representatives found the file in Duane Wolff’s refrigerator.

The Minnesota Department of Commerce is the state agency charged with licensing and regulating the insurance, banking, securities, mortgage and real estate industries in Minnesota.

Source: DOC