Gary Vose, who was chairman of Investors Equity when the state took it over in June 1994, has agreed to hand over The Meadows, a 4,000-acre subdivision at Castle Rock, Colo., to Hawaii Insurance Commissioner Wayne Metcalf, the Associated Press said today.
The deal is expected to close Oct. 22. Metcalf and the previous insurance commissioner, Lawrence Reifurth, have been working to recover assets since the state seized the insurance company after its management had run up a $60 million deficit.
The deficit, which has since grown to more than $90 million, was incurred largely because Vose lost policy-holders' money in highly speculative leveraged investments known as derivatives, the state charges.
Vose's agreement to transfer The Meadows and a smaller subdivision settles the state's lawsuit against him, Eugene Sprague, an attorney in Denver representing the Hawaii Insurance Division, said today.
Neither Vose's attorney nor Metcalf could be reached for comment, so it was not immediately clear what the value of the Colorado properties might be. Sprague said he could go into details because of a confidentiality agreement.
The Meadows was the brainchild of former savings and loan executive Charles Keating and was put up for auction after Keating's Lincoln Savings & Loan Association became insolvent.
The state alleged that Vose then used $23.3 million of Investors Equity's money, through one of his affiliated companies, to acquire the property in 1992.
In a civil suit, the state accused Vose of racketeering, fraud and other misconduct in buying The Meadows. The suit alleges that the holding company that controlled Investors Equity conducted sham real estate deals and used the insurance firm's assets to pay huge fees to Vose and companies connected with him.
The State of Hawaii has also taken action against stockbrokers and others who assisted Vose in his trading deals.
ITT Hartford Life Insurance Co. early this year acquired the Investors Equity policies, keeping them alive. A state insurance fund contributed $10 million to boost the value.
That ensured that policyholders who wanted to cash in then would get 41 cents for every dollar they invested, while the stated continued to try to recover more.
Arrangements were made for policyholders to get their money back in full after five to seven years.