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Aug. 2, 2012

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“Insurer” of the Ethan Allen Heads to Federal Prison

HOUSTON – Christopher Purser, 50, of Houston, has been handed a 188-month-term of federal imprisonment following his conviction for conspiracy to commit wire fraud, United States Attorney Kenneth Magidson announced today along with and Internal Revenue Service - Criminal Investigation (IRS-CI) Special Agent in Charge Lucy Cruz. Also sentenced today were Malchus Irvin Boncamper, 56, of the Federation of St. Kitts and Nevis, West Indies, and Edmund Hugh Benton, 63, of Scottsdale, Ariz.

U.S. District Judge Sim Lake sentenced Purser to the more than 15-year-term and further ordered he serve three years of supervised release following completion of that prison term. Boncamper and Benton received respective sentences of 97 and 120 months for conspiring to launder proceeds of the scheme also to be followed by three years of supervised release. Benton and Boncamper were also ordered to pay fines of $17,500 and $1,000, respectively. Judge Lake further ordered each defendant to pay restitution to their victims. A hearing to determine the amount of such restitution will be held within the next 90 days. 

Purser, who was banned in 2003 by the Texas Department of Insurance from any involvement in the insurance business, admitted to selling liability insurance policies from 2004 to 2006 to apartment complexes, condominium associations, bars and restaurants while disguising his true identity and the existence of the ban. One of the companies that purchased the insurance was Shoreline Cruises Inc., which operated a 40-foot tour boat called the Ethan Allen on Lake George, N.Y. The Ethan Allen sank on Oct. 2, 2005, in a tragic accident that claimed the lives of 20 elderly tourists.

The fraud scheme began in 2000 when Purser sold liability insurance policies to nursing homes supposedly underwritten by Maryland Casualty Company, a subsidiary of Swiss-based Zurich Insurance Company. In fact, the policies were not real. In 2001, Purser sold insurance policies supposedly underwritten by Westchester Surplus Lines Inc. and reinsured by companies in Indonesia. Again, the insurance and reinsurance was fake. Beginning in late 2002, Purser sold liability insurance policies to apartment complexes and condominium associations through a “benefit association” created in Belize called International Property Owners Association. The insurance was supposedly issued by Great Domestic Insurance Company of the Philippines and Commonwealth Insurance Company of Canada and reinsured by yet another Indonesian insurance company. Yet again, the policies were not real. 

In April 2003, the Texas Department of Insurance revoked Purser’s insurance license and ordered him to cease and desist from conducting any insurance business in Texas. In direct violation of this order, Purser spent the next several years selling liability insurance policies to apartment complexes, condominium associations, bars, restaurants and other businesses in Texas and throughout the United States through a new benefit association created in Florida called Global Property Owners Association (GPOA). The insurance was supposedly issued by a series of insurance companies located in the Caribbean island of Nevis, including Heritage Mutual Surety Limited, United Re-insurance Group Ltd., Polaris International Ltd., Commercial Acceptance Indemnity Ltd. and Brentwood Re Ltd. In fact, these companies were entirely fraudulent.

Purser first sold marine liability insurance to Shoreline Cruises Inc. in May 2004. Purser renewed the policy a year later. The sinking of the Ethan Allen on Oct. 2, 2005, gave rise to substantial claims against the policy. In response, Purser presented backdated documents to make it appear, falsely, that the policy did not cover the Ethan Allen while the boat was operating on Lake George. In fact, Shoreline Cruises Inc. had purchased exactly that type coverage. In any event, none of the purported insurance companies had any ability to pay the claims.

Boncamper conspired to launder the proceeds of the fraud scheme through bank accounts in St. Kitts and elsewhere. Boncamper also acquired four insurance companies for the scheme in St. Kitts and Nevis (Commercial Acceptance Indemnity Ltd., United Re-insurance Group Ltd., Polaris International Ltd. and Brentwood Re Ltd.) and created financial statements for the companies listing assets he knew were worthless, including bonds purportedly guaranteed by a Swiss bank that was fictitious. Another person sent Boncamper’s financial statements to Shoreline Cruises Inc. in October 2004 to convince its owners to purchase the fictitious insurance offered through the scheme. 

Benton also conspired to launder the proceeds of the fraud scheme. Benton obtained liability insurance for GPOA members in 2003 from Heritage Mutual Surety Limited (Heritage), a company in the Caribbean island of St. Vincent. Heritage was controlled by someone in Barbados through another St. Vincent entity called Tri-Continental Exchange Ltd. Benton admitted knowing that GPOA was not licensed or authorized to sell insurance in Texas, that Heritage did not have the ability to pay claims, that Tri-Continental Exchange Ltd. was subject to cease and desist orders from insurance regulators and that the fugitive, “Robert Lewis Brown,” was not using his real name. Benton also acknowledged receiving proceeds of the fraud in an account he maintained in The Bahamas.

Robert Steve Mills, 57, of Bonita Springs, Fla., also pleaded guilty to conspiracy to launder money and will be sentenced by Judge Lake on Oct. 19, 2012. 
The charges are the result of an intensive investigation conducted by the IRS-CI with assistance from Homeland Security Investigations and the Texas, New York and California Departments of Insurance. During this four-year investigation, the U.S. government also received extensive and valuable assistance from the governments of St. Kitts and Nevis and also St. Vincent and the Grenadines. Investigators also received valuable assistance from the governments of The Bahamas, Nicaragua, The Philippines and Australia.

Assistant U.S. Attorneys John R. Lewis and Belinda Beek are prosecuting the case.