REINSURANCE AGENT'S ILL GOTTEN GAINS TO BE DISBURSED BACK TO HIS VICTIMS
AS A RESULT OF FEDERAL ASSETS FORFEITURE ACTION
Victims to be Compensated in Amount in Excess of $32 Million

CHARLOTTE, N.C.--United States Attorney Gretchen C.F. Shappert announced today that the United States has turned over roughly $22,500,000 in forfeited funds to the Office of the Clerk, U.S. District Court, for the Western District of North Carolina, for distribution to victims of frauds committed by former reinsurance agent Thomas G. Reitz.

This $22,500,000 in forfeited assets to be distributed to victims identified in the restitution portion of the judgment against Reitz is in addition to the $9,600,000 that the U.S. Attorney's Office previously negotiated for Reitz to turn over to the Clerk of U.S. District Court for distribution to victims. Thus, the amount turned over to the Clerk for distribution to victims now totals over $32,100,000.

Reitz previously pled guilty to mail and wire fraud conspiracy, and money laundering conspiracy as charged in a January 30, 2007 Bill of Information filed in U.S. District Court in Charlotte (Docket Number 3:07cr 21).

As set forth in the Bill of Information, Reitz, of Alpharetta, Georgia, committed reinsurance fraud against two North Carolina-based workers' compensation insurance pools and one Washington, D.C.-based pool. Workers' compensation insurance pools consist of two or more employers who agree to pool their workers' compensation liabilities. State laws require workers' compensation pools to purchase re-insurance coverage to insure such pools against catastrophic claims. Reitz and others prepared false reinsurance contracts that were entered into by the pools. Reitz then submitted invoices, purportedly for reinsurance premium payments, to the pools. Reitz and others collected the premium payments, used some of the money to pay insurance claims in a Ponzi-type scheme, used some of the money to pay unreported illegal kickbacks to an individual who controlled the administrator of the North Carolina pools, and ultimately deposited some of the money into accounts from which the United States forfeited such money. Reitz laundered the proceeds of his crimes via, among other accounts, a bank account at UBS in Switzerland.

Reitz is currently serving a five year and ten month sentence that was handed down, in May of 2008, by Chief United States District Judge Robert J. Conrad, Jr. of the Western District of North Carolina. The judgment issued pursuant to the sentence identified the insurance pools to receive recompense as North Carolina-based Phoenix Fund, Inc. and NC Chamber of Commerce Self-Insurers Funds, along with Washington-based NLC Mutual Insurance Company.

The victims suffered the following losses: NLC Mutual-$10,346,730.00; Phoenix Fund- $19,699,292.87; and NC Chamber of Commerce Self Insurers-$5,353,934.85. Phoenix Fund, which is based in Charlotte and which suffered severe losses, was ultimately placed under control of the North Carolina Department of Insurance.
Through forfeiture, the United States has provided for recompense to victims for most of their roughly $35,000,000 in losses. Forfeiture is the process whereby a criminal defendant is divested of his interest in property and the United States obtains title to the property. Federal statutes authorize forfeiture of assets that are the proceeds of crime, that facilitate crime, and that are involved in crime. The U.S. Attorney's Office prioritizes the use forfeited assets to provide recompense to defrauded victims, including businesses, government agencies, and individuals.

The conviction of Reitz, and the subsequent forfeiture of his assets and return of the assets to victimized workers' compensation pools resulted from efforts by the United States Attorney's Office, the Federal Bureau of Investigation, the United States Marshals Service, and the North Carolina Department of Insurance. Additional support in regard to obtaining forfeitable funds that had been moved to Switzerland was provided by Swiss prosecutors. The criminal prosecution was handled by Assistant U.S. Attorney Matthew Martens and the forfeiture action was handled by Assistant U.S. Attorney William Brafford, both of the U.S. Attorney's Office for the Western District of North Carolina at Charlotte.