An insurance agent who killed herself in late March is now suspected of taking $700,000 in premium payments from a number of businesses, state officials say. They have yet to figure out why.
Investigators also have not figured out what happened to the money taken by Diane Cottingham, 45, of Underwood, whose agency has offices in Bismarck, Underwood and Washburn, and sells policies statewide.
“We don’t know what was going through Diane Cottingham’s mind,” Insurance Commissioner Jim Poolman said Tuesday.
The fraud case is the largest in North Dakota in at least 20 years, he said.
Cottingham’s body was found March 24 near her car in a pasture near Max. McLean County Sheriff Don Charging said Cottingham killed herself, though he would not say how. Cottingham had been scheduled to meet that day with Poolman, who planned to order her to stop selling insurance policies after being tipped that something was amiss.
Officials said Cottingham took premium payments from commercial businesses such as service stations that are considered to be high risk, but did not forward the money to insurance companies. Authorities suspect she forged documents to trick the customers into believing they were covered when they were not.
Poolman speculated that Cottingham was unable to find insurers who would assume the risk, so she “basically self-insured them,” paying claims herself.
Cottingham might have been trying to avoid losing the customers, Poolman said. “She wasn’t raiding the agency of money,” he said.
He acknowledged authorities still are not sure of her motives.
Investigators have identified 19 suspicious accounts, almost all of them commercial accounts of businesses that assumed they were insured but were not. Seven were clear cases of fraud with premiums totaling $700,000 over a period of several years, Poolman said. The premium total is up from $300,000 estimated earlier in the investigation.
Poolman said a state crime bureau agent will tap into Cottingham’s computer to try to find out what happened to the money. Some premium payments on the bogus accounts go back to 1999, meaning “a lot of bank account records to go through to parse out good money from bad money,” he said.
The suspicious accounts were included with legitimate accounts on Cottingham Insurance’s computer system. Other agency employees were instructed to direct any calls on the accounts to Diane Cottingham and had no idea anything was wrong, Poolman said.
“Those customers were not to talk to anyone else but Diane Cottingham,” he said. “She micromanaged those accounts.”
Four of the seven fraudulent accounts had a total of $24,613 in claims, which Cottingham Insurance paid, Poolman said.
The investigation into the seven fraudulent accounts has been closed, Poolman said. Twelve other accounts are still being investigated, he said, but they will not increase the estimated missing premium value much.
Authorities do not believe any other accounts at the Cottingham agency outside the 19 in question were affected, and they believe Diane Cottingham acted alone, Poolman said. The agency is not being punished, though the insurance department is working with the company on restitution to the businesses that were defrauded.
Poolman would not name the holders of the 19 accounts, citing the ongoing investigation.
Five of his department’s 36 regulatory staff members have been dedicating their time to the investigation since late March, he said, and the probe is expected to take another few weeks. More than 500 Cottingham policy files were reviewed.
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