Ontario’s broker regulator, the Registered Insurance Brokers of Ontario (RIBO), has issued a warning related to legal action TruStar Underwriting has filed against its former president and CEO, Daniel Moses.
TruStar, a managing general agent, accuses Moses, two unnamed defendants (cited in court documents as ‘John Doe 1’ and ‘John Doe 2’), and two unnamed corporations of all scheming to defraud the company and its clients of $6 million, according to TruStar’s statement of claim, which was filed at the Ontario Superior Court of Justice in Toronto and obtained by Canadian Underwriter.
The allegations contained in TruStar’s statement of claim have not been proven in court.
Court documents show Moses is not represented by counsel in the TruStar action. The notice of legal action says Moses has up to 60 days to file a statement of defence. As of the morning of Jan. 6, no statement of defence has been filed with the Superior Court of Justice.
Canadian Underwriter has contacted Moses for comment via LinkedIn but has not heard back. His account appears to have since been deleted. CU has also contacted a possible personal email address under his name but has not heard back as of press time.
CU also contacted TruStar’s legal counsel at McCague Borlack LLP, though they declined to comment further.
RIBO’s notice
TruStar is a type of specialist insurance intermediary with the authority to quote and bind policies. MGAs are regulated in Canada as brokers, and RIBO regulates MGAs in Ontario.
“On or about Dec. 23, 2024, RIBO was notified of ongoing court proceedings against TruStar Underwriting Inc., a RIBO licensee. As TruStar Underwriting is a managing general agent that serves as an intermediary between brokerages and insurers, RIBO promptly issued an alert to all our licensees encouraging them to carefully review any business dealings they may have had with Daniel Moses and/or TruStar Underwriting,” a company spokesperson tells Canadian Underwriter.
“As with all managing general agents in Ontario, TruStar’s registration with RIBO is of a voluntary nature. As a RIBO licensee, they are bound to all applicable rules and regulations.”
RIBO says it’s monitoring the situation and is in contact with TruStar’s principal broker.
TruStar v. Moses
The Ontario Superior Court of Justice issued a Mareva injunction on Dec. 10, 2024, to freeze the assets of TruStar’s former CEO, according to a published endorsement.
In his endorsement, Ontario Superior Court Justice Peter J. Osborne cites evidence provided by TruStar that the former CEO engaged in two “separate but concurrent” schemes to defraud the company.
(The endorsement is a ruling on a pre-trial motion, meaning the allegations contained in the court’s preliminary assessment of the Mareva injunction have yet to be proven in trial, and the statements of fact have not been agreed upon.)
According to the court endorsement, the first scheme involves the former CEO allegedly selling insurance policies to proposed policyholders but failing to place those policies with any insurance company. Where a policy was not issued, after accepting the premiums, the former CEO deposited the premiums into his personal bank account, Osborne’s ruling states.
In the second scheme, the former CEO is alleged to have paid, or arranged to pay, funds from TruStar’s account into his own personal accounts. The transactions were being masked or misrepresented to appear legitimate, the endorsement states.
“I am satisfied for the purposes of the relief sought today that [TruStar] has a strong prima facie case,” Justice Osborne wrote in the endorsement of the Mareva injunction. In other words, since the evidence is strong enough to go to trial, Osborne granted the injunction.
After failing to place policies with an insurer, TruStar alleges in its statement of claim, the former CEO “engaged in acts, at the direction or with the assistance of the John Doe Defendants, to perpetuate the uninsured clients’ belief that they had an active policy of insurance, likely in order to conceal his errors.”
According to TruStar’s statement of claim, “these acts, include, but are not limited to:
a) Falsified emails from insurers representing that the uninsured client has an active policy of insurance;
b) Falsified correspondence purporting to be from a lawyer retained by an insurer client to represent an uninsured client in a legal dispute;
c) [Making] representations to lawyers, brokerages, and the uninsured clients that a claim against a policy was being investigated, defended, adjusted, or settled; and
d) Falsified correspondence from a variety of professionals to make it appear as though the claim was being addressed.”
TruStar’s statement of claim also alleges the former CEO made accounting misrepresentations “to provide the appearance of correspondence” from alleged MNP accounting firm employees.
MNP formerly performed accounting and other financial reporting tasks for TruStar, court documents say. However, “[d]espite representations being made by Moses that MNP continued to serve as TruStar’s accountants and created its financial reporting, it was later determined that the real MNP had not completed actual work for TruStar since at least 2021,” the MGA’s statement of claim says.
TruStar has claimed $6 million in joint damages against its former CEO, two unknown defendants, and two unknown corporations. TruStar has also claimed interest on the above damages, plus an additional $1 million in punitive damages.
The unknown defendants are individuals who helped misappropriate, redirect, or wrongfully benefitted from the money taken from TruStar, the company alleges in its statement of claim.
In the court endorsement, published Dec. 20, 2024, Justice Osborne writes that TruStar’s investigation into the matter is ongoing. The endorsement shows a report into the matter was conducted by Grant Thornton Limited.
TruStar in receivership
On Dec. 24, Justice Osborne appointed Grant Thornton as receiver for TruStar.
Under this receivership, Grant Thornton has been appointed custodian of all the assets, undertakings and properties of TruStar’s business, its policyholders and claimants, per the court order reviewed by CU.
The receiver is also responsible for any claim brought against TruStar by any individual, firm, brokerage or company who believed they’d obtained an insurance policy, but don’t presently have one.
The receiver also has the authority to collect any debts owed to the company, including the allegedly defrauded funds, according to the court order.
CU reached out to Grant Thornton for comment about whether the company is working to find policies for the uninsured clients.
“Having just been appointed as receiver over TruStar, we are in the early stages [of] the receivership and are attending to a number of matters, including those which you have noted below,” the firm’s vice president, Bruce Bando, wrote in response.
Feature image by iStock.com/Marilyn Nieves
