The Ethan Allen was a tour boat that plied the waters of Lake George in upstate New York. Six years ago this week, it sank and killed 20 of the elderly tourists on board.
The owners believed they had sufficient insurance, until they tried to use it and found they had been defrauded by Houstonian Christopher Purser.
They weren't alone: federal prosecutors say Purser sold bogus life-insurance policies to "apartment complexes, condominium associations, bars and restaurants," even after the Texas Department of Insurance banned him from the business.
Today Purser entered a guilty plea to insurance fraud in federal court, and faces 20 years in prison.
Here's how honorable he was when it came to dealing with the Ethan Allen deaths, according to prosecutors:
The sinking of the Ethan Allen on Oct. 2, 2005, gave rise to substantial claims against the policy. In response, Purser presented backdated documents to make it appear, falsely, that the policy did not cover the Ethan Allen while the boat was operating on Lake George. In fact, Shoreline Cruises Inc. had purchased exactly that type coverage. In any event, none of the purported insurance companies had any ability to pay the claims.
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Purser's fake companies were supposedly set up in Belize and the Caribbean island of Nevis.
Five other defendants have been charged in the scheme. Three go to trial later this month -- with Purser assumedly testifying against them to save his ass -- and two are still awaiting extradition.
UPDATE: The USAO announced another guilty plea October 7:
HOUSTON - Edmund Hugh Benton, 63, of Scottsdale, Ariz., pleaded guilty yesterday to the federal felony offense of conspiracy to launder money before U.S. District Judge Sim Lake, United States Attorney Kenneth Magidson and Internal Revenue Service Criminal Investigations (IRS-CI) Special Agent in Charge Rodney E. Clarke announced today.
Benton admitted to conspiring to launder the proceeds of a fraud scheme that sold fake liability insurance policies to a "benefit association" operated from Texas called Global Property Owners Association Inc. (GPOA). The insurance was purchased by apartment complexes, condominium associations, bars, restaurants and a company called Shoreline Cruises Inc. which operated a 40-foot tour boat called the Ethan Allen on Lake George, N.Y. The tour boat operator discovered its insurance policy was fictitious after the Ethan Allen sank on Oct. 2, 2005, in a tragic accident that claimed the lives of 20 elderly tourists.
Benton obtained liability insurance for GPOA members in 2003 from Heritage Mutual Surety Limited (Heritage), a company in the Caribbean island of St. Vincent. Heritage was controlled by a fugitive in Barbados through another St. Vincent entity called Tri-Continental Exchange Ltd. Benton admitted knowing that GPOA was not licensed or authorized to sell insurance in Texas, that Heritage did not have the ability to pay claims, that Tri-Continental Exchange Ltd. was subject to cease and desist orders from insurance regulators and that the fugitive, "Robert Lewis Brown," was not using his real name. Benton also acknowledged receiving proceeds of the fraud in an account he maintained in The Bahamas.
Benton now faces a maximum of 10 years in federal prison without parole to be followed by a maximum three years of supervised release, a fine of up to $250,000 and an order to pay full restitution to victims. Judge Lake has set Benton's sentencing for Jan. 19, 2012. Benton has been held in pre-trial custody since March 3, 2011, after U.S. Magistrate Judge Nancy Johnson found that he presented a serious risk of flight, having gone to great lengths to hide his whereabouts and use offshore entities and bank accounts.
Five other defendants were charged along with Benton. Christopher Purser pleaded guilty Wednesday to conspiracy to commit wire fraud. Two others are set to begin trial before Judge Lake on Oct. 31, 2011, while the remaining two are pending extradition.