The chief executive officer of a Towson insurance agency, Charter Group Inc., has disappeared amid allegations that up to $1.1 million is missing from the company.
The CEO, Hamilton Schmidt, 38, a part owner of the company, was last seen by his sister about a month ago when he left his house to drive to work. The car has not been recovered, and since then, the company's assets have been purchased by another insurance agency.
The new owner, Benedict Rosenberg, president of Insurance Inc. of Timonium, said yesterday he is negotiating to make good on premiums paid by at least one Charter customer that were never forwarded to the insurance company providing coverage.
Mr. Rosenberg said a preliminary estimate by his auditors shows that about $1.1 million is missing from Charter. State insurance investigators are conducting their own audit, but they said they don't know how much is missing.
Charter sells about $20 million in premiums annually through a subsidiary, Charter Financial Service Inc., according to a company agent who asked not to be named.
Charter acted as a third-party administrator for health insurance for the Maryland League of Financial Institutions, the group that was told its insurance premiums have not been paid.
The League, a group of Maryland savings and loan associations, was to meet this morning to discuss the situation. In a letter to members, the group's president, Charles H. Kresslein Jr., said Charter had not forwarded premiums for September to Blue Cross and Blue Shield of Maryland.
The letter said Charter failed to pay the group's more than $117,000 to Blue Cross for September, and that the company has no money to pay this month's premium. According to Mr. Kresslein, 18 associations already had paid Charter $56,000 toward October's bill.
Blue Cross spokeswoman Amy Levy said the insurer was extending coverage until payment could be worked out.
In a telephone interview yesterday, Mr. Kresslein said he is negotiating with the new owners of the company as well as researching other options to recoup the group's losses. He said Blue Cross agreed not to cancel coverage if the League would begin collecting the unpaid amounts from its members immediately and resubmit them.
The new Charter owner, Mr. Rosenberg, said he has offered to cover the savings and loans' lost premiums if they agree to continue doing business with his firm for the next three years.
Mr. Rosenberg said Mr. Schmidt had four or five companies under the Charter Group Inc. umbrella, including the insurance agency, a mortgage company and others.
Robert Andrews, a salesman and administrator with Charter, said he and three or four others who don't work for the company all owned stock in Charter. Mr. Andrews has lost between $175,000 and $200,000, and the others probably lost more, he said.
In addition, Charter's employee stock ownership plan owned 52 percent of Charter and appears to have lost it all, Mr. Andrews said. If criminal actions are involved, the plan may be protected by insurance, he said. The company has about 40 employees.
Auditors and market conduct examiners from the state Insurance Administration are investigating allegations of missing funds, according to Charles Kelly, deputy Maryland insurance commissioner. He said no one knows how much money is involved.
"We are in the midst of a thorough investigation," Mr. Kelly said, but we don't have figures to release because it is not complete."
According to Mr. Kelly, Charter mostly sells commercial insurance policies to groups, and the bulk of the policies are "direct pay," in which the person buying insurance receives a bill at home and pays the insurance company directly.