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Peoples Trust Insurance lost $42 million in 2016, was recently in financial “shambles,” and was overvalued by more than $50 million when current President and CEO George W. Schaeffer agreed to buy half of the company from the widow of his late partner. Those claims surfaced in a memo that Schaeffer reportedly sent to Eileen Gold, widow of company co-founder Mike Gold, before he sued her for the return of $4 million he says he overpaid her.

Schaeffer and Gold are now suing each other in Palm Beach County Circuit Court.

In his suit, Schaeffer is demanding that Eileen Gold release him from his May 2014 agreement to pay $30 million for the Golds’ half of the Deerfield Beach-based company. He says an analysis conducted following Mike Gold’s death in January 2014 “grossly misrepresented” the company’s value as $88 million, but that Schaeffer later discovered it had been poorly managed and was actually worth $34 million in June 2014.

As a result, Schaeffer’s suit says, the $21 million he has so far paid to Eileen Gold was $4 million more than he should have paid. The suit demands that Eileen Gold release Schaeffer from having to pay the remaining $9 million as agreed, and repay $4 million the widow received “unlawfully” and as “unjust enrichment.”

Eileen Gold filed in both suits a memo she said Schaeffer hand-delivered on Dec. 8 — a week before the two filed their respective suits.

The memo includes the words “Privileged and Confidential Inadmissible Settlement Communication” and is headed “To: Eileen Gold. From: George Schaeffer.” It accuses Mike Gold of “mismanaging the company very badly” and hiding it from his then-partner.

“Unfortunately, I also learned that Mike spent almost every day of the week at a casino and at a massage parlor. And it appears that he was using cash from the company to finance these activities,” the memo states.

“Upon reviewing the books and records of the company, we have found that Mike had apparently engaged in CRIMINAL activity with the company, including the borrowing of funds from the insurance company. This is a crime. There are many other examples. But this company that was in supposedly good shape was actually in shambles, and lost $42 million last year alone.”

The memo then contends that an independent forensic accounting firm reviewed the prior valuation and found it was actually worth $34 million in 2014. “So the most I would have ever had to pay you was $17 million,” it says. “And yet I have already paid you $21 million; am supposed to pay you $9 million more; and on top of that I am supposed to pay you a percentage of the company if I should ever sell.

Please enjoy the full article below

http://www.sun-sentinel.com/business/fl-bz-peoples-trust-valuation-lawsuit-20180420-story.html

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