Foulkes said Teale's and Rentz's companies operated in the health insurance field as "reinsurers," companies that agree to share the risk of insuring major policies with other insurance firms.
The guilty-plea agreement the couple have signed says they persuaded World Life and Health Insurance Co., a King of Prussia firm in business for three decades, to enter into reinsurance contracts with them. Instead of using the premiums to pay claims, Teale's and Rentz's companies siphoned off the money for their own use, eventually leading World Life to be declared insolvent in 1991 by Pennsylvania insurance officials.
Foulkes said Teale and Rentz would plead guilty before a federal judge in Mobile, Ala., at the same time they were to be sentenced for their guilty pleas in an Alabama-based property and casualty insurance scheme that defrauded California policyholders of $100 million.
As a result of his guilty plea, Teale will get at least 10 years in prison on the California charges alone, Foulkes said. Rentz is likely to get about six years, she added.
Although investigators have located several million dollars in assets belonging to the couple, Foulkes said most of the money was gone, with little hope of restitution.
According to the charges to which they have agreed to plead guilty, Teale and Rentz operated nine companies, all involved in the arcane world of reinsurance. Taken as a whole, the companies appeared to be an international reinsurance syndicate with millions of dollars in assets. In reality, according to court documents, the firms were all shells used to justify the charging of multiple fees and commissions that devoured the premiums Teale and Rentz took in.
Foulkes said investigators were still trying to determine how many were victimized by Teale's and Rentz's operation. The victims include the Pennsylvania Insurance Guarantee Fund, the state fund established to pay insurance claims of up to $300,000 per claim resulting from insolvent insurers. The fund took over after World Life failed.
The victims also include multiple employer welfare arrangements - funds providing health insurance for several companies and their employees - whose insurance was through World Life and other companies, Foulkes added.
Among the multiple employer welfare arrangements victimized were three in Pennsylvania - CARE-Healthnet, United Businessmen's Association and Business Service Association Inc. - all of which used a now-defunct Media firm called Network Administrators Inc. to adminster their health insurance plans insured by World Life. According to court documents, one of Teale's and Rentz's shell companies, Bush-McKenzie, had a one-quarter interest in Network Administrators.
In the Business Service Association Inc. case, for example, Teale and Rentz in 1990 and 1991 took in $1.8 million in premiums through Network Administrators, court documents said, purportedly to buy reinsurance through seven of the shell companies. Instead, they transferred $316,716 to another bank account they controlled in Atlanta and failed to pay $1.2 million in medical claims.