Insurance Industry:

Chronology of F.T. Riley's Activities and Related Regulatory Actions

OSI-95-5: Published: Oct 26, 1994. Publicly Released: Nov 18, 1994.

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Pursuant to a congressional request, GAO investigated the insurance business practices of an insurer and his related companies, focusing on: (1) his methods of operations; and (2) the actions state regulators have taken against him and his associated companies.

GAO found that: (1) prior to the passage of the Violent Crime Control and Law Enforcement Act, no federal statutes directly prohibited insurance fraud; (2) states are reluctant to investigate insurance fraud because of budgetary and jurisdictional constraints; (3) the insurer and his related companies have continued to operate in a questionable manner by moving from state to state; (4) the insurer and his associates have engaged in insurance activities in over 18 states during the last 10 years; (5) although the insurer has been indicted and has been the subject of many investigations of insurance fraud, misrepresentation, and theft, he has never been convicted; (6) the insurer has been able to bypass home-state regulations and claim foreign-insurer status by locating his insurance company in one state while selling insurance in another state; (7) states have attempted to regulate the insurer's activities since 1986 and some state regulators have succeeded in keeping him from continuing operations in their states; (8) the insurer and his related companies are under investigation by a federal grand jury in the Western District of Missouri; and (9) although some states permit nonadmitted insurers to sell coverage that is available from licensed insurers within their borders, there is no uniform state policy regarding nonadmitted insurers.

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