An arrest warrant was issued Wednesday for a Chattanooga insurance agent accused of defrauding a policyholder out of $2.6 million in unearned commissions and fees.
Edward Prater, co-founder of U.S. Insurance Group LLC at 376 Market St., is charged with insurance fraud, theft by taking and first-degree forgery for allegedly adding unauthorized commissions to a client's policies, according to a release from the Georgia Insurance Commissioner's office.
The client was "a commercial trucking firm. This firm was having to charge its clients more, running up the cost of business that they were providing people," said Georgia Insurance Commissioner John Oxendine. "For a small business to get ripped off an additional $2.6 million of overhead in an economy like this, that's costing people's jobs, that's hurting everyday employees."
U.S. Insurance Group is one of the largest privately held transportation specialists in the United States, focusing on long-haul trucking companies, dump trucks and terminal coverage, according to the company's Web site.
THINK YOU'VE BEEN DEFRAUDED?
The office of Georgia Insurance Commissioner John W. Oxendine: 404-656-2070
The Tennessee Department of Commerce & Insurance: http://tn.gov/consumer/ccp.html
Mr. Prater is accused of telling a client they would be charged a set fee for his services, but later changing the premium amount on the contracts to add a commission for himself, Mr. Oxendine said. After the client approved the contract, Mr. Prater allegedly changed the contract again before returning it to the company that underwrote the business, according to Mr. Oxendine.
The suspected fraud began in 2003 primarily affecting group auto and worker's compensation policies, Mr. Oxendine said.
For another group of policies underwritten by Lloyd's of London for the same client, Mr. Prater added a fee he said was going to Lloyd's but was actually for himself, Mr. Oxendine said.
"He basically charged double commission plus a fake fee," Mr. Oxendine said.
Mr. Prater was not licensed to sell insurance in Georgia but through his agency sold the policies in the state, according to the commissioner's office.
Mr. Prater could not be reached for comment, but Russ Huston, president of U.S. Insurance Group on Market Street, said the company still is operating and that all claims would be honored.
"This is nothing against U.S. Insurance Group," he said.
U.S. Insurance Group also has offices in Brentwood, Tenn., and Lakeland, Fla., but it is not a part of the investigation at this point, according to Wayne Whitaker, spokesman for the commissioner.
The identity of the affected business is not being released now, but Mr. Oxendine said more victims may exist.
"We'd like to hear from anyone who has done business with Mr. Prater and who has reason to believe they paid too much," he said.
Mr. Oxendine said the commission plans to seek restitution for the victims.
Mr. Prater has been ordered to turn himself in to authorities in Atlanta, Mr. Whitaker said.
Insurance fraud is a felony with a penalty of two to 10 years in prison and/or a fine of up to $10,000.