NU Online News Service, March 2, 1:09 p.m.EST

Four former insurance executives of now-defunct Vanguard Fireand Casualty Company have been indicted on charges of fraudulentlyobtaining $20 million in reimbursement from the Florida HurricaneCatastrophe Fund (FHCF) after the 2004 hurricane season.

Maitland, Fla.-based Vanguard was ordered into liquidation inMarch 2007, according to the state Department of FinancialServices, but the U.S. Department of Justice said the company wouldhave been insolvent sooner without defrauding the state catfund.

Pamela C. Marsh, U.S. Attorney for the Northern District ofFlorida, said the 12-count indictment charges William Sanders,former president; Thomas Stinson, former CEO; Richard Magsam; andJohn Henry Axley III with making false statements to the FHCF,state regulators and the state Board of Administration. Thefoursome also conspired to misrepresent Vanguard's financialcondition and solvency, Ms. Marsh said.

Vanguard had "severe cash-flow problems" due to the number ofclaims filed after the 2004 hurricane season, when four storms hitFlorida. One of these storms, Hurricane Jeanne, did not meet thecompany's threshold to claim reimbursement from the FHCF, butanother storm did, so the group allegedly used another storm's lossdata for Hurricane Jeanne in order to fraudulently obtaincompensation, Ms. Marsh said.

Vanguard would have been insolvent by the end of 2004 had theformer executives not misrepresented storm loss for HurricaneJeanne, Ms. Marsh added.

Each man faces a maximum prison sentence of five years on eachconspiracy charge and 10 years on each count of insurance fraud ifconvicted.