Written by Nathan Thomas on March 30, 2004
Written by Nathan Thomas on March 30, 2004
Hundreds of appraisers nationwide were informed this month that the Noble Group, an E&O insurance broker affiliated with the American Real Estate Association and the United Real Estate Alliance, was going out of business. The Toledo, Ohio-based liability insurance company was a scam, lawyers for the U.S. Small Business Administration said.
The Noble Group was shut down by federal judge Jed Rakoff in New York, who issued a temporary restraining order against Toledo businessman and proprietor Mark Haukedahl instructing him and his representatives to discontinue operations and not form any similar businesses.
Haukedahl ran a series of businesses that claimed to arrange discounts on professional liability insurance for appraisers, inspectors and agents for more than 20 years, the Toledo Blade reported. The associations through which the insurance was issued generated numerous complaints about unpaid claims and twice shut down and re-opened under new names, the paper said.
The Illinois address used by the businesses is also the address of attorneys representing them, the paper reported. Illinois authorities ordered the firms to stop doing business or operating an office there in 1996.
"Members," as customers were known, sent premiums not to insurance carriers but to Haukedahl's suburban Toledo business, according to court papers. The SBA, in successful suits against American Real Estate and Haukedahl, alleged that the insurance coverage was bogus and that Mr. Haukedahl paid small claims to keep the scheme going while pocketing much of the premium money.
According to regulators, because the insurance was un-registered, customers won't be eligible to collect from state funds set up around the country to reimburse people when insurers fail.
Read below for tips on avoiding insurance fraud.