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Monday - June 21, 2004


RALEIGH - United States Attorney Frank D. Whitney announced that the United States has settled a lawsuit involving the Ocean Dunes Homeowner Association and its former president, of Kure Beach, N. C., which resulted from events that occurred following Hurricane Fran.

The United States filed the civil action, U.S. v. Coastal Insurance Repair, Kenneth Hyatt, Ocean Dunes Homeowner Association, Jack Martin, and Donald Kennelly, No. 7:03-CV-3-F(1), to recover monies obtained under the federal flood insurance program by the Ocean Dunes Homeowner Association, its former president, its contractor, and its insurance adjuster. The United States alleged that false proofs of loss were submitted after Hurricane Fran struck Kure Beach properties and that payments were fraudulently obtained for repairs not covered by flood insurance. Kenneth Hyatt, the project contractor, and Donald Kennelly, the flood adjuster, were both criminally convicted of mail fraud and conspiracy to defraud the United States and were sentenced to 27 and 21 months of imprisonment, respectively, along with payment of criminal restitution (Criminal Case No. 7:02-CR-13-F).

The United States has now settled with the Ocean Dunes Homeowner Association for repayment of $600,000.00 and its former president for repayment of an additional $300,000.00. A consent order based upon this settlement was filed with the court on June 16, 2004, although the defendants deny any wrongdoing or liability regarding the flood insurance claims.

U. S. Attorney Whitney said, "Federal investigators and the U. S. Attorney's Office will continue to guard the federal flood insurance programs through both criminal enforcement and the recovery of civil damages." He added that any suspected flood insurance fraud should be reported to the Inspector General for the Department of Homeland Security at 1-800-323-8603.

 

News releases are available on the U. S. Attorney's web page at www.usdoj.gov/usao/nce within 48 hours of release.

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