Although Congressmen write law, they are not above it. Former Arizona Congressman Richard Renzi learned this lesson when he was convicted on charges of conspiracy, honest-services fraud, extortion, money laundering, making false statements to insurance regulators, and racketeering. In U.S. v. Renzi, the Ninth Circuit Court of Appeal was asked to reverse convictions for blatant insurance fraud.
Renzi misappropriated clients' insurance premiums to fund his congressional campaign, and lied to insurance regulators and clients to cover his tracks. The evidence established that Renzi used his business as an enterprise to conduct a pattern of racketeering activity by diverting clients' insurance premiums for his personal use, facilitating an extortionate land transfer, and laundering its proceeds.
Renzi owned and operated Renzi & Co. (R & C), an insurance agency specializing in coverage for non-profit organizations and crisis pregnancy centers. On Dec. 10, 2001, Renzi publicly announced his candidacy for a seat in the U.S. House of Representatives serving Arizona's First Congressional District. The very next day, Renzi began diverting cash from R & C to fund his congressional campaign. Between December 2001 and March 2002, Renzi transferred more than $400,000 from insurance premiums to his "Rick Renzi for Congress" account. To avoid campaign disclosure regulations, Renzi claimed the money as a personal loan to the Renzi campaign.
Because R & C no longer had the money, Renzi did not pay the broker to fund the insurance. Two months later, Safeco—showing amazing patience—warned R & C that it planned to cancel policies for nonpayment. A month later Safeco began sending cancellation notices to R & C's clients, who called the agency. Renzi dictated a letter, which stated that, because "spiritual counseling was no longer covered" under Safeco's policy, R & C had "replaced" Safeco with the "Jimcor Insurance Co." The letter promised that clients would experience "no lapse in coverage." Jimcor is not an insurance company (While Jimcor Agency was a broker for some of R & C's policies, Jimcor was not a broker for these particular ones. And although Jimcor Agency was a broker, it was not an insurer.) The new certificates Renzi sent were entirely fabricated. Renzi caused at least 74 letters and phony insurance certificates to be delivered, but only to clients who had called R & C to voice concern.
On Nov. 5, 2002, Renzi was elected to Congress. A few weeks later, he received a $230,000 gift from his father, which he used to pay Safeco, who in turn retroactively reinstated R & C's policies.
Testimony at trial established that there was no "inadvertent computer slip" as Renzi claimed. Rather, Renzi had instructed an employee to create the fake certificates, insert the false coverage information and send the certificates to complaining clients.
Former Congressman Renzi abused the trust of this nation, and for doing so, he was convicted. The jury found that Renzi used the business of insurance with utmost bad faith, stole funds entrusted to him by his clients, lied when policies were cancelled for non-payment of premium, created false and fraudulent insurance policies to stop complaints from his customers, and then lied to the regulators investigating his acts. After careful consideration of the evidence and legal arguments, the Ninth Circuit affirmed the conviction and sentence imposed on Renzi. His punishment—only three years in prison—was merciful.
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