PAUL FRAYND - ARIES INSURANCE COMPANY

Update October 2016 DFS spends the funds of Aries Estate assets and has nothing to show for it

2011-04-22T19:37:00.003-04:00

Update October 2016

As of March 31st 2016 the total collections as reflected in the financial statement posted on the DFS website shows that the new figure for legal fees, salaries and travel expenses and fringed benefits is now over $35 Million or $2,2 Million more spent since December 2011 and the collected amount only increase buy $3,706,000 to $73.7 Million which means that the DFS and its legal profesional team has spent over $3,6 Million during the last 5 years of the Aries Estate and have brought only $2,2 M in collections to the Estate of Aries. During the first Quarter of 2016 the additional collections increased by $46,454 and the expenses to collect this amount was $218,355 or 470% of the collected amount.

The is a serious Government waste of the Aries Estate assets and no additional funds returned to FIGA which ultimately affects the tax payers of the State of Florida and the Insurance consumer buying public. Most of these additional fees have been spent by DFS employees and the firm of:

http://www.calelaw.com

See the most recent financial statement for the Estate of The Aries Insurance Company at:

http://www.myfloridacfo.com/division/receiver/Companies/aries/documents/AriesInsuranceCompany3312016FinancialStatement.pdf

FLORIDA OFFICIALS TARGETED A PROMINENT HISPANIC INSURANCE COMPANY,

2011-04-22T19:37:00.000-04:00

FLORIDA OFFICIALS TARGETED A PROMINENT HISPANIC INSURANCE COMPANY, THE ARIES INSURANCE COMPANY AND ITS OWNERS FOR POLITICAL REASONS.

April 22, 2011

Keeping insurance Companies healthy in Florida is the stated purpose of the Florida Department of Insurance and the Florida Department of Financial Services (“DFS”). Yet, their appointed receivers, consultants, and scores of attorneys, usually failed to do just that. Such was the case of The Aries Insurance Company (“Aries”) when DFS failed to collect the re-insurance money contractually owed to Aries, a South Florida insurance company that in the aftermath of September 11 2001 ran into financial troubles by being unable to collecting from its re-insurers. Sadly, an immigrant Hispanic family was forced to watch as their American Dream and the private insurance company they had built over twenty years was brought to financial ruin by those very State agencies that were duty-bound to create an atmosphere in which the company could thrive.

Aries Insurance Company (a Florida domestic insurance company) served the South Florida Hispanic business community for more than 20 years, during a time that national insurance companies refused to insure the Hispanic community. Aries Insurance Company was the American Dream of the Fraynd Family. This Hispanic family emigrated from Latin America to follow the American Dream. In 1981, Marcos Fraynd, patriarch of the family, invested $2 million to establish Orion Insurance Company, later renamed Aries Insurance Company. Their dream thrived until shortly after September 11, 2001, when it became another casualty of that horrible day.

After September 11, 2001, General Reinsurance Corporation (“GenRe”) – (A major International Reinsurance Company), the main Aries re-insurer, made a decision to stop paying the re-insurance receivables it owed to The Aries Insurance Company, solely for its own financial benefit. Outraged by GenRe’s actions, the Fraynd family contacted the then Insurance top regulator Tom Gallagher to assist the Fraynd family and The Aries Insurance Company to collect the reinsurance receivables from GenRe. On May 9, 2002, the Aries Insurance Company and the Fraynd Family voluntarily invited the Florida Department of Insurance and The Florida Department of Financial Services to work with the Aries management team together to collect the re-insurance money from General Re. As of March 31, 2002, GenRe owed Aries $21M. The Fraynd Family offered to invest an additional $20 Million in order to save Aries but DFS did not accept it because their intent was simply to take over Aries and spend the rest of the assets.

At an arbitration held in October 2002, the receiver’s (“DFS”) only demand for payment of monies owed by GenRe were those bills prepared by Aries’ management before March 31, 2002, prior to the receiver’s (“DFS”) appointment by the Tom Gallagher. That arbitration panel ruled in November 2002 that Aries owed GenRe $3.7 million, but directed GenRe to pay all unpaid reinsurance receivables owed to Aries after the receiver prepared and presented those bills. Prompt action by the Florida receiver would have enabled Aries and its policyholders to survive. Even then, the Florida receiver took no action to collect the millions of dollars owed by GenRe, preferring instead to vilify Aries management for the Receiver’s own inaction. Located on the same premises with The Aries Insurance Company was Onyx Underwriters, Inc., another Fraynd Family business. Onyx was the general agency for Aries and all Onyx Underwriters, Inc. affiliates. To bolster Aries’ rehabilitation, the Fraynds voluntarily turned over more than $20 million dollars from Onyx Underwriters to the receiver and assigned all rights to collect all funds due from finance companies, agents, policy holders, and others.

Upon receiving that money and rights to collect all of the assets of Aries, the Florida Department of Insurance receiver inexplicably ordered the management team that ran both Aries Insurance Company and Onyx Insurance Group of Companies to leave the premises. Instead of working together with the Fraynds and Aries as agreed on May 2002, the receiver and the Florida Department of Insurance turned a voluntary rehabilitation into an expensive legal battle. The Fraynd Family had no other option to protect their policyholders but to hire a team of attorneys to preserve their legal rights under the U.S. Constitution and to fight this abuse of power by both receiver and the Florida Department of Insurance.

The Florida Department of Insurance appointed over the years, several overpaid and under qualified receivers to setup a team to collect those overdue funds and collect premiums, settle bills, pay claims, collect re-insurance receivables, and rehabilitate The Aries Insurance Company. This never happened as it was never the intent of DFS to rehabilitate Aries. The intent was always to liquidate Aries and use all of the Aries assets to hire politically connected friends. During the next 10 years DFS and the appointed receiver, Huge Dates paid over $25Million from Aries Insurance Company’s Bank accounts to re-insurance consultants, financial consultants, influential law firms’ attorneys, accounting firms, computer consultants, security firms and Insurance Adjusting firms that were hired because of their political connections, and many DFS government employees while the reinsurance bills were never even prepared or sent to the reinsures in a timely matter. Experts that DFS hired using Aries funds were paid over $2Million so that they would testify against the Fraynds in Criminal and Civil actions.

One such Insurance adjusting firm was Lozano Insurance Adjusters, Inc. formed and owned by Lisette Lozano, a former DFS employee and close friend of Tom Gallagher. Lisette Lozano incorporated her adjusting firm on November 2002, just days before the Aries claims were going to be adjusted and paid. Lozano Insurance Adjusters, Inc. was awarded the multimillion dollar contract to adjust all of Aries claims and her fee was a percentage (%) of the amount of the claim she adjusted so her incentive was to over inflate the claims rather than reduced the claims. Lisette Lozano was given this opportunity, and then agreed to testify in court against the Fraynds. Lozano was a former DFS employee and became CFO of Aries, as a result of pressure by DFS for Aries to hire Lozano because the former Aries CFO was not “trusted” by DFS. After severe regulatory pressure including severe auditing fees against Aries for overbearing financial examinations by DFS to Aries, Aries agreed to hire Lozano. Lozano only worked for under a year for Aries Lozano resigned just months prior to the May 2002 DFS take over and left Aries without a CFO to prepare and file its 2001 Statutory Statement. The failure to file the statutory statement by Aries was one of the reason DFS sent investigators to Aries to perform yet another financial audit.

DFS examiners at the direction of Wayne Johnson, former chief examiner for DFS and now, the Division Director of Rehabilitation and Liquidation, had been sending examiners for years had from DFS to perform audits of the Aries’s books and records and all examinations had always resulted in showing that Aries was a solvent Insurance company. These same examiners that came in to Aries on May of 2002 proceeded to then, not admit assets in the Aries balance sheet so that it would then show that Aries was insolvent. With Aries alleged insolvency, DFS could take full control and liquidate Aries. In good faith, the owners of Aries voluntarily agreed to allow DFS to come in and assist the owners in rehabilitating the company. DFS took full control only after two weeks into the process of rehabilitation of Aries and took full control and attempted to liquidate Aries.

DFS has never successfully rehabilitated any insurer in the state of Florida. One has to wonder why the insurance department of the State of Florida has a division that calls itself, the Division of Rehabilitation and Liquidation. It should just be renamed the “Division of Liquidation”. As one former DFS employee once said: ”DFS is self funded, they eat what they kill”.

An adjusting contract similar to the contract that was awarded by DFS to Lozano in the Aries case, was awarded to several other adjusting firms during 1992 after the aftermath of Hurricane Andrew, resulting in one of the largest Insurance losses in US history. Similarly the Aries unpaid claims could have been settled for half of the $150 Million that was paid in claims to those insured by Aries. The claims were all paid with funds provided by the Florida Guaranty associations. This all results in higher premiums that are passed on to Florida policy holders by the other insurance companies that must fund the Florida Guaranty funds.

Failed candidate for governor of Florida, and former State of Florida CFO, Tom Gallagher, took umbrage when the Fraynd Family decided to fight back and take control of Aries again. In 2004, the Florida Statewide Prosecutor turned what should have been an insurance dispute into criminal charges against several Fraynd family members. After more than three years of litigation in the criminal courts and 8 different versions of the indictments filed against the Fraynds, the Statewide Prosecutor was forced to drop the most serious charges in return for technical violations of the insurance laws, extracting a promise that the Fraynd Family would not participate in the Florida insurance business ever again.

The Fraynd family, brought to the brink of financial ruin by the State’s overly aggressive legal actions, reluctantly settled the criminal charges in order to bring their ordeal to an end. The result of this debacle is that Florida’s regulators have saddled Florida’s taxpayers with millions of dollars in excessive fees and costs billed by the Florida receiver. The Florida receivership failed the Fraynd Family, Aries, Onyx, the South Florida Hispanic community, the 600 people previously employed by the Fraynd family, the 3000 statewide agents of Aries and Onyx , and the hundreds of thousands of Aries policyholders and the Florida Tax payers.

The Fraynd Family watched as their Hispanic-American owned company, successful for almost two decades, was first milked and then destroyed by its receiver the highly paid consultants and attorneys milked the company and refused to work with them as a team to rehabilitate a company that DFS had always considered solvent and that that insured thousands and provided jobs to the South Florida Hispanic community. One such example of a highly paid attorney is the E. Barclay Cale, http://www.calelaw.com/ who came out of retirement just to handle the civil prosecution of the Aries owners and executives and has made a carrier of collecting millions in fees from the Aries Insurance perusing this matter. This two attorney law firm has collected over $4Million in legal fees to date.

DFS continues to attack the Fraynds using funds from Aries and using the same baseless criminal charges to file civil charges against the Fraynds in order to obtain judgments against them and then proceed to attempt to collect even more funds to allegedly pay the Florida Guaranty Funds back for the over $150 Million in claims that they authorized to be paid to Aries policy holders

(See the most current financial statement as of December 2010 for Aries Insurance Company below posted on the DFS website showing that well over $25 Million has been misspent so far by DFS in legal fees, salaries and travel expenses and fringed benefits from that almost $70 Million has been collected from Aries assets but a large portion of these collected funds have been spent by DFS.

http://www.myfloridacfo.com/Receiver/company_pdf/498/498_123110.pdf )

Update October 2016

As of March 31st 2016 the total collections as reflected in the financial statement posted on the DFS website shows that the new figure for legal fees, salaries and travel expenses and fringed benefits is now over $35 Million or $10 Million more spent since December 2010 and the collected amount only increase buy $3,706,000 to $73.7 Million which means that the DFS and its legal profesional team has spent over $6 Million during the last 5 years of the Aries Estate and have brought no additional collections to the Estate of Aries. The is a serious Government waste of the Aries Estate assets and no additional funds returned to FIGA which ultimately affects the tax payers of the State of Florida and the Insurance consumer buying public.

Most of these additional fees have been spent by DFS employees and the las firm of

http://www.calelaw.com

See the most recent financial statement for the Estate of The Aries Insurance Company at:

http://www.myfloridacfo.com/division/receiver/Companies/aries/documents/AriesInsuranceCompany3312016FinancialStatement.pdf

For additional information contact: the.real.story.about.aries@gmail.com

Other links with additional information can be found at:

http://ariesinsurance.blogspot.com/2009/05/real-story-behind-dfs-take-over-of.html

http://sites.google.com/site/paulfraynd/home

http://www.sunbiz.org/search.html (Search for LOZANO INSURANCE ADJUSTERS, INC.)

http://www.myfloridacfo.com/Receiver/company_pdf/498/498_123110.pdf

http://www.myfloridacfo.com/Receiver/company_pdf/rehab_liq_annual_report_2009.pdf

http://www.myfloridacfo.com/sitePages/newsroom/pressRelease.aspx?id=3828 (next victim)

E. Barclay Cale P.A. Attorney for DFS vs FRAYND

2011-04-22T18:53:00.007-04:00

E. Barclay Cale, is the head of a two attorney law firm who came out of retirement in 2003 just to handle the civil prosecution of the Aries owners and executives and has made a carrier suing the Fraynds and the Fraynd owned companies and has collecting millions in legal fees from the Aries Insurance Company in perusing this matter.

This two man attorney law firm has collected over $6 Million in legal fees to date in the ARIES INSURANCE COMPANY receivership. If he settles the ARIES case he would have to close up shop since he has no other clients other than DFS and has little or no other business to handle.

Mr Cale was given a sweetheart legal contract due to his ties with the Tom Gallagher administration and has been milking the Aries Insurance Company for millions in fees over the last 8 years and collecting very little for the estate of Aries.

Check out his website at http://www.calelaw.com/

He lists himself, another lawyer, Justin Calderon and one secretary.

MARCOS FRAYND FILES MOTION FOR REHEARING

2011-04-22T13:09:00.000-04:00

IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT

IN AND FOR MIAMI-DADE COUNTY, FLORIDA

COMPLEX BUSINESS LITIGATION SECTION

CASE NO.: 06-8827-CA-40

FLORIDA DEPARTMENT OF FINANCIAL SERVICES

Plaintiff,

vs.

MARCOS FRAYND, et al

Defendants.

_____________________________________________/

DEFENDANTS’ MOTION FOR REHEARING

Defendants hereby request that this Court rehear various this matter. The grounds for this motion are as follows.

1. Defendants believe that this Court may have misapprehended or misunderstood certain key aspects of this matter.

2. This Court misapprehends the agreement of Plaintiff as to what issues and counts were being tried. Pre-trial and reiterated during the trial, Plaintiff stipulated that it was proceeding on only two counts, namely, the alleged diversion of funds and breach of fiduciary duty. This Court exceeded these two counts in its revised findings of fact which form the basis of the final judgment.

3. With respect to the breach of fiduciary duty issue, this Court has overlooked the complete absence of evidence to establish that the defendants received any personal benefit from the transfer of funds from Aries to Onyx. In its findings of fact, this Court finds that the transfer was illegal and states several bases for this finding. However, all of these bases was refuted by the overwhelming evidence presented at trial.

4. With respect to the diversion issues, there was no evidence that the individual defendants diverted any funds. The best case and argument submitted by Plaintiff was that Onyx Underwriters did not fully and properly account for monies Onyx received on Aries’s behalf but did not submit to Aries. Although there was substantial doubt relating to these claims, there is no doubt that no one testified that the individual defendants did any of the alleged diversion or that any of them benefited from any such diversion. Mr. Thomas himself admitted that none of the individual defendants collected any of the alleged diverted money for themselves. (Thomas-676-677).

5. This Court’s findings to establish the personal benefit seems to be based solely on the premise that defendants were paid salaries for their full time work for the various entities. However, plaintiff’s witnesses testified that these salaries were reasonable. Again, Mr. Thomas admitted that there was nothing unreasonable or untoward about paying the defendants for their employment nor did he take any issue with the amounts paid to them. (Thomas-679-680)

6. There was no evidence to suggest there was anything improper or inappropriate about these salaries. Indeed, plaintiff conceded this point. (Thomas 680-681).

7. Finally, pre-judgment interest is allowable only for liquidated damages. Given the bases for the alleged damages in this matter, the amounts claimed are not liquidated and pre-judgment interest is inappropriate.

WHEREFORE, defendants request that this Court rehear this matter and enter judgment in favor of defendants.

I HEREBY CERTIFY that a true and correct copy of the foregoing was mailed this 22^nd day of April, 2011 to Edgar Cale, Barclay Cale P. A., 169 E Flagler St , Ste 1200, Miami, Florida 33131-1205.

THE LAW OFFICES OF ALAN P. DAGEN, P.A.

746 Heritage Drive

Weston, Fl 33326

(954) 389-8605

Fax: (954) 337-3250

By: __________________________________________

ALAN P. DAGEN, P.A.

Florida Bar No.: 456535

The Florida Inspector General

2011-04-22T12:33:00.002-04:00

The Florida Inspector General should take a closer look at the Department of Financial Services including the Division of Insurance Fraud and Investigate the massive fraud, abuse and waste in this agency and providing transparency and accountability in spending.

See Aries Blog and follow the link on the Aries Insurance Company financial statement as of December 2010 prepared by DFS and posted on DFS website.

http://www.myfloridacfo.com/Receiver/company_pdf/498/498_123110.pdf

LOZANO INSURANCE ADJUSTERS, INC.

2011-04-21T11:30:00.000-04:00

Florida Profit Corporation
LOZANO INSURANCE ADJUSTERS, INC.
Filing Information
Document Number P02000123396
FEI/EIN Number 113662902
Date Filed 11/19/2002
State FL
Status ACTIVE

Principal Address
12550 BISCAYNE BOULEVARD
STE 300
NORTH MIAMI FL 33181 US
Changed 01/06/2010
Mailing Address
12550 BISCAYNE BOULEVARD
STE 300
NORTH MIAMI FL 33181 US
Changed 01/06/2010
Registered Agent Name & Address
LOZANO, LISETTE C
12550 BISCAYNE BOULEVARD
SUITE 300
NORTH MIAMI FL 33181
Address Changed: 01/06/2010
Officer/Director Detail
Name & Address
Title DP
LOZANO, FRANK E
12550 BISCAYNE BOULEVARD SUITE 300
NORTH MIAMI FL 33181
Title DST
LOZANO, LISETTE C
12550 BISCAYNE BOULEVARD SUITE 300
NORTH MIAMI FL 33181
Title VP
BARRETT, PAMELA
12550 BISCAYNE BOULEVARD SUITE 300
NORTH MIAMI FL 33181
Annual Reports
Report Year Filed Date
2009 07/14/2009
2010 01/06/2010
2011 01/13/2011

Document Images
01/13/2011 -- ANNUAL REPORT
01/06/2010 -- ANNUAL REPORT
07/14/2009 -- ANNUAL REPORT
12/21/2009 -- ANNUAL REPORT
03/19/2008 -- ANNUAL REPORT
01/05/2007 -- ANNUAL REPORT
02/20/2006 -- ANNUAL REPORT
03/21/2005 -- ANNUAL REPORT
01/11/2004 -- ANNUAL REPORT
04/11/2003 -- ANNUAL REPORT
11/19/2002 -- Domestic Profit (ARIES was liquidated November 2002)

Oerview of DFS take over of Aries Insurance Insurance Company

2009-10-24T17:33:00.000-04:00

My name is Paul Fraynd and below is an overview of events that occurred when

The Florida Department of Financial Services (“DFS”) was appointed receiver of Aries Insurance

Company (“Aires”), an insurance company that I formed in 1983 along with other members of my

family. This is a case of being a political prisoner and of clear extortion by the State of Florida.

I was born in South America on May 3, 1956 and attended high school there. I have two

sisters and one brother. After completing high school I came to the USA and attended the University

of Miami, studying English for six months. Then I transferred to Ann Arbor, Michigan where I

attended the University Of Michigan School Of Engineering and in 1979, I graduated with a B.S. in

Electrical Engineering and a B.S. in Computer Engineering. I attended the 5 year program and

graduated with a dual degree. I have been a US Citizen for 25 years.

After my graduation, I returned to Miami, Florida and started a job working for International

Computer Systems, as the Marketing Manager. The company was one of the first computer

distributors in Florida selling Apple and IBM -PC personal computers. I combined my knowledge of

computers and marketed systems that included software and hardware. While working at this

company I had the opportunity to sell a system to an insurance and premium finance consultant and

became knowledgeable in the insurance premium finance business. Finance interested me a lot

more than selling computers and I decided to form a premium finance company that lent funds to

insured’s that could not pay their premiums up front to the insurance companies.

I formed Omega Finance Corporation in 1982 and left the computer business and went full

time in the insurance finance business. I borrowed funds from local Miami based banks in order to

finance the initial phase of the company’s development. Omega grew and soon became one of

Florida’s largest premium finance companies, with over 1500 retail insurance agents generating

finance agreements on behalf of Omega.

During 1983, competition became fierce and most insurance companies formed their own inhouse

premium finance companies. Seeing this trend, I decided to form an insurance company and

offer insurance as well as financing of the premiums through Omega’s already establish network of

producers. The minimum capital require in 1983 for an insurance company to operate was

$1,500,000. I raised the funds with a combination of family funds and bank loans to obtain the

initial funds for the finance company and the newly formed insurance company. the Aries Insurance

Company (“Aries”) came from these businesses. The finance and insurance company grew over

the years and then I formed Onyx nderwriters, Inc., in 1986, an insurance managing general agency.

I also formed Gamma djusters, Inc., a claims adjusting operation. All of the companies became subsidiaries of Onyx

Insurance Group, Inc. (“Onyx”) and in 1991 Onyx sales of insurance and finance exceeded $40

million per year. Aries had been approved to write insurance and several other states including

California, Texas, Arizona, and Utah. My father, brother and sister joined the company and also

worked for it. While I was building the Onyx Insurance Group, I also got married in 1984 and had 3

sons. Ariel - age 16, Daniel - age 13 and Alex - age 7.

In 1992 Hurricane Andrew hit South Florida and caused devastating losses to individuals and

businesses in South Florida. Onyx and Aries were Miami based companies and had a lot of risks

insured in South Florida. While Onyx saw most of their competitors go out of business because of

not being able to pay for their claims, Aries was able to pay all of its insured’s claims and remain in

business, while seeing their competitors not honor their claims.

After 1992 very few insurance companies remained in Florida willing to continue to write

insurance, mostly on property risks. Over 20 local domestic companies were liquidated by DFS

under the direction of then Insurance Commissioner Tom Gallagher. A long time friend, business

partner and confidant named Michael J. Svaldi was appointed the head of the Division in charge of

“liquidating” and “rehabilitating” insurance companies. Mr. Svaldi was appointed receiver of the

insurance companies by Gallagher. His assignment was to liquidate these companies. I met Mr.

Svaldi in 1992 when the DFS was considering selling Books of Business from insolvent insurance

companies to other insurance companies, in an effort to not continue to request funds from the

Florida Guaranty Fund known as FIGA. FIGA is a State Association that its function is to assess all

Insurance Companies for funds, on a prorate basis depending on their writings of premium in

Florida, and these funds are then used to pay claims and return premiums due from insolvent

companies to their insured’s. FIGA went insolvent as a result of the massive amounts of losses that

insolvent insurance companies had as a result of Hurricane Andrew and Mr. Gallagher and Mr.

Svaldi made an attempt to sell off their Books. FIGA eventually issued Bonds and raised the funds

needed to pay all claims. No Books of Business were sold because the terms imposed by Mr.

Gallagher were unrealistic. I told this to Mr. Gallagher and he got upset at me. He wanted to sell

unearned premium reserves to Aries on a Homeowners Book of Business from one of the insolvent

companies, Guardian Property and Casualty, but refused to pay the unearned premium reserve to our

company. I told him I could not do this transaction at the terms he proposed and we had a parting of

the ways. Because I did not accept his proposal, I expected future retaliation. This would come in

the form of regulatory pressure, fines and constant regulatory harassment and abuse of power.

After surviving Hurricane Andrew, Aries was sitting on a great opportunity. It could grow in

writings because there was very little competition and it only needed to increase its capital. Aries

looked for additional capital to grow and it secured a capital contribution from it lead Reinsurance

Company General Reinsurance Corp. (“Genre”). Genre contributed $10 million to Aries for a 20%

stock ownership in Onyx Insurance Group, Aries Insurance Company’s parent company.

The shortage in insurance companies willing to write homeowners in Florida after

Hurricane Andrew was so large that Tom Gallagher had started a state owned and managed

insurance association known as The Residential Joint Underwriting Association (“RPCJUA”)

and its mission was to insure homes and condominiums that could not obtain insurance in the

private market. Also, the Florida Windstorm Underwriting Association (“FWUA”) had been in

place to write the wind risk of the home and the RPCJUA would write the property of the home

or condo. So an insured would end up with two policies, the RPCJUA would insure the property

and liability and the FWUA would insure the wind. Most of the officers and directors for these

state owned companies were personally handpicked by Tom Gallagher.

A scandal broke up in the RPCJUA when, under the direction of Tom Gallagher, a managing

general agency known as Smissi was formed and then DFS Chief Examiner, John Kummer was

appointed President of it. Massive corruption, self dealing, mismanagement, bribes and more were

soon uncovered at the General Agency that was underwriting policies for the RPCJUA and the

FWUA and the company was forced to disband. Another best friend and confidant of Tom

Gallagher was behind the wrong doings at the scandal riddled MGA, James Bax.

Onyx and Aries grew for the next 5 years by 15% each year and the companies were thriving.

Bill Nelson had been elected Insurance Commissioner, replacing Tom Gallagher and Onyx had a

good relation with DFS under Bill Nelson’s direction. Onyx Insurance Groups’ combined premium

writings for the year end 2000 reached $100 million and employed over 600 employees. It’s net

worth exceeded $20 million. These were the 5 most prosperous years of Onyx and Aries.

Tom Gallagher was running for Insurance Commissioner again and Gallagher and Michael J.

Svaldi reappeared at the Aries Offices asking for political contributions for Gallagher’s re-election

campaign. In fear of future regulatory retaliation, Onyx contributed to Gallagher’s campaign fund.

This was also true for most insurance companies under the regulatory oversight of DFS. Gallagher

would request contributions from all. Those that didn’t follow with considerable contributions

would face examiner’s at their offices, billing $20,000 to $30,000 per month for as long as one year.

In 1999, Gallagher was re-elected again as Insurance Commissioner and took over as the

head of DFS. By then, the homeowner’s insurance problem in the State was out of control. The

RPCJUA and the FWUA had grown so much that their ability to pay for losses if another hurricane

were to strike Florida was not there. Several actuaries and other storm damage forecasters had said

that another major hurricane hitting Florida would result in the RPCJUA and the FWUA going

insolvent and they could phase an insolvency that could exceed $10 billion dollars if the hurricane

would hit a major city in the East or West coast of Florida. Mr. Gallagher decided to combine both

of these insurance pools into one entity and Citizens Property Insurance Company was formed. It

combined all of the risks written by the RPCJUA and the FWUA into one entity run by the same

officers and directors appointed by Gallagher back when the RPCJUA and the FWUA were formed.

These two State Insurance pools faced mismanagement abuses, self dealings by its employees,

officers and directors and they all combined to form one happy family at Citizen. Mr. Gallagher

knew this for years but these employees were all his friends and political cronies, so Gallagher did

nothing about it. This combination was fertile ground for the issues facing Citizen today.

By June of 2001, Onyx continued to grow and again looked to raise additional capital to

support its growth. Onyx considered doing an IPO. Wall Street was extremely interested in

Insurance Stocks and Onyx considered it to be a good next step to continue funding its growth.

Onyx obtained a valuation in 2001 by the firm of Payne Weber/USB and the value of Onyx

stock was valued at over $100 million. Onyx was considering selling 30% of its shares in the public

market for $35 million. This would provide the capital needed for the continued growth of the

companies.

Aries became one of the largest Florida insurers and the public offering was going to be a

success. Aries focused selling insurance to the small to medium risks for automobile and

commercial insurance. Everything was going very well but DFS continued to put pressure on Aries

and made some unusual demands. One of the demands was that Aries replace its CFO of 15 years by

one recommended by DFS. At Mr. Wayne Johnson, DFS head of Insurance Company Solvency,

insistence and recommendation, I replaced Steve J. Bacon, Aries’ CFO for Lisette Lozano. Miss

Lozano worked for DFS in the liquidation and rehabilitation division for many years under Mr.

Michael J. Svaldi. Miss Lozano was hired by Aries as the new CFO in early 2000 and replaced the

existing CFO. Everything was looking very good as Onyx prepared itself to go public.

Until September 11, 2001, the World Trade Center terrorist attack occurred. Insurers and

Reinsurers were devastated from the losses and several of Aries’ reinsurers were severely impacted

by this event. The reinsurers started after 9/11, to delay claim payments back to Aries. Aries would

only assume a small percentage of the risk on each insurance policy it wrote. Aries would re-insure a

large portion of every risk. For example, if the risk was worth $1 million, Aries would issue the

policy for the total amount of $1 million but would re-insure $900,000 of the risk’s value with its

reinsurers. Aries would also share the premium collected from the Insured with the reinsurers. So if

Aries reinsured say 90% of the risk it would also pay 90% of the premium to the reinsurers. When a

loss occurred, it would pay the full $1 million and it would recover $900,000 from its reinsurers.

Aries continued to meet all of its claims obligations but its reinsurers were not reimbursing Aries for

their proportionate share of the losses. A large reinsurance accounts receivable was developing in

Aries Books. Aries reported to DFS on a quarterly basis and the first indication of this problem was

reported by Aries to DFS in its September 30, 2001 statutory financial statement filed with DFS on

November 15, 2001.

Aries continued to pay all losses and by year-end 2001 the reinsurance receivable was

exceeding $40 million, due Aries. The reinsurance companies were also regulated by DFS under the

direction of Tom Gallagher and we decided to meet with Tom Gallagher I his office in Tallahassee

and discuss the problems facing Aries. We brought up the problem to the regulators as soon as it

became clear to us that we could not collect the accounts receivable from the reinsurers. Lissete

Lozano, the Aries CFO came to see me in early 2002 and she tendered her resignation. She gave me

a couple of reasons for her action, mainly too much pressure and the high work load and claimed she

was looking at another job opportunity at the request of Tom Gallagher and Michael J. Svaldi.

Mr. Svaldi was working as an outside consultant by then, and was working on the

rehabilitation of a company named Union America Insurance Company and he had offered Lissete

Lozano the CFO position. Lissete left Aries and went to work for Union America, a job that did not

last and wasn’t very rewarding to Miss Lozano and far from what she had envisioned.

We decided to meet with Mr. Tom Gallagher in early 2002 and traveled to Tallahassee along

with my father and sister. We met with Mr. Gallagher and discussed at length our current situation at

Aries and asked him for his assistance in helping Aries with the problems it was facing with the

nonpayment of account receivables from it reinsurers.

Mr. Gallagher suggested that we place Aries in his hands and agree to have DFS rehabilitate

Aries. r. Gallagher indicated that if we appointed DFS as the receiver for Aries he could provide

us with the help we needed. We thought about this proposal and believed that Mr. Gallagher was

sincere about his proposal, but were soon to find out that it was all a big scam to have us place Aries

in his hands without a fight and have the DFS and all of Gallagher’s consultant friends take over

Aries asset’s and feed of them like a school of sharks would feed from a piece of meat that would fall

in their infested waters. allagher assured us that this was a joint effort by DFS and the Aries executives, in

rehabilitating Aries and assist it getting back on its feet. What occurred after this was the opposite

and it came unexpected to us but eventually we would learn that this was Mr. Gallagher’s M.O. and

it was done to many companies in the past 25 years that DFS would take over with the pretense of

rehabilitation to find themselves in liquidation soon after that.

After our meeting with Mr. Gallagher in Tallahassee, Mr. Svaldi came to visit me at Aries

and continued to pursue the concept of allowing DFS to rehabilitate Aries and offer his “consulting

services” to Aries. This consulting turned out to be nothing more than having a spy from Tom

Gallagher in our company.

On May 9, 2002, the Aries directors agreed to place Aries in rehabilitation and allow DFS to

be appointed trustee. Mr. Svaldi assured us that this was the right thing to do in order to save Aries.

On May 13, 2002, an army of armed security guards and over 20 employees of DFS and

consultants came to the Onyx’s offices in Miami and took over effective-physical-control of all of

the companies under Onyx Insurance Group. Only Aries was going to be rehabilitated but DFS took

over the entire operation. The security force that descended on Onyx was right out of a movie when

armed commandos take over a hostile place. We soon learned that the security contract was awarded

to an Israeli firm very close to Gallagher and at a cost of $150,000 per month. We checked on

alternative bids and there was none.

This Israeli owned security firm was hired without competitive bidding and the cost was 3

times greater than other proposals that we obtained. Mr. Gallagher would not make a change even

though Aries would save $100,000 per month. Aries was also saddled with many other expenses

including 20 to 30 DFS employees added to the Aries expenses, a reinsurance consultant from the

Norman Reitchman Company named Saul Greenfield at a cost of $50,000 per month, outside

accountants at a cost of $25,000 per month, William Thompson and Andy Kaplan; a computer

consultant of $10,000 per month. The Aries expenses after May 2002 were increased at the request

of Tom Gallagher by over $600,000 per month. Several political friendly law firms were added to

represent Aries and all received very profitable engagement agreements with an hourly rate plus a

contingency fee based on recoveries.

Within two weeks of DFS arrival, we realized that DFS was not in our offices to rehabilitate

Aries, they were there to liquidate the company and rape Onyx and Aries from all of their assets. In

asking Svaldi what was going on his words were “they eat what they kill.” Prior to DFS taking over

Aries, there was an order in place to let go over 100 DFS employees from the rehabilitation and

liquidation division but that stopped as soon as DFS got a hold of Aries. Now everyone’s job was

safe. In discussions with Svaldi about the actions of DFS he responded “Tom Gallagher ask me why

was I consulting for a company that he was going to shut down? Gallagher knew from the day of our

meeting in his office in Tallahassee and envisioned way before this meeting that he always intended

on doing what he did to Onyx and Aries. Taking down companies and awarding lucrative consulting

and representation agreements to political friends of Gallagher was the way things were done at the

Gallagher’s camp. This was the way Gallagher paid his political friends. He never cared one minute

what would happen to the owners who built the companies with their own money and a lot of hard

work. He has destroyed other companies for over 20 years in similar ways!

One man that has made millions representing companies in the hands of DFS under

Gallagher’s command is Thomas Tew with the law firm of Tew, Cardenas, in Miami. Tom Tew has

made over $100 million in legal fees over the years representing companies in liquidation under

engagements granted by Gallagher.

All one needs to do is look on the DFS web site of companies in rehabilitation or liquidation

under Gallagher’s vein and you will see all of the names of companies that have suffered the same

consequences as Aries did. I can name from memory Union America Insurance Company,

Underwriters Guarantee Insurance Company, Superior National Insurance Company, First Miami

Insurance Company, South Eastern Insurance Company (there are many more . . . ).

Once DFS takes over an insurance company, the same pattern of mismanagement, waist of

company assets, self-dealing, awarding of lucrative claims handling contracts, legal engagements,

computer processing contracts and literally every aspect of operating the company in liquidation is

awarded to political friends of Tom Gallagher. These actions are all over Citizens Property

Insurance Company. What a coincidence that Michael J. Svaldi is one of Citizen’s founding

directors! And as usual, when some of their dirty deeds start becoming public, Mr. Gallagher refers

the matter “to his criminal division” so that an investigation is made on the owners of the company.

The investigation ultimately leads to a bogus indictment in order to discredit the owners and cover

his tracks. This is what occurred at Aries and is occurring at Citizen’s Property Insurance Company

and has occurred in most of the other companies Gallagher has taken over.

I tried to reason for over a month after the May 09, 2002 seizure of the Onyx Companies with

Tom Gallagher and Michael Svaldi about what was occurring at Onyx and it went on deaf ears.

Aries expenses for operating went up dramatically and soon into the rehabilitation process of

Aries, DFS filed a motion to liquidate Aries. This occurred only 3 weeks into the rehabilitation

process and I brought it up to Mr. Svaldi who asked Tom Gallagher why a liquidation order had been

filed. The order was reversed; it was too soon to do what it was standard operation procedure at

DFS. Gallagher had made several appearances with the press indicating that “regulations were

working with the Aries Management to Rehabilitate the Company” and soon Mr. Gallagher reversed

the order and the order miraculously reversed in the court docket of the Aries receivership case.

Probably Mr. Gallagher realized that we would make too much noise if he made his plan to obvious

and decided to wait longer to liquidate the company, besides, Aries had $100 million in assets and its

cash reserves were above $25 million and all of them would have to be used up until DFS could

succeed at obtaining a liquidation order. Most orders filed in Leon County Court by DFS would

automatically get approved by the courts. Most orders were submitted in ex-parte motions (meaning

one side present in court only) and DFS would file the orders without advising our attorneys in

writing, as the law requires with copies of the motions and orders to our attorneys and would simply

attend the hearing and give the Judge their side of the story.

Other actions taken by DFS were: selling of non-Aries assets to third parties and keeping the

funds collected for allegedly “the estate of Aries.” DFS has refused and has never provided any

detail accounting of the estate to us or anyone else. (This is true with other liquidated insurance

companies).

DFS employees moved in to the Onyx mail room and intercepted all incoming mail and took

all checks coming in the mail for non-Aries companies and divided the funds to DFS accounts. DFS

sold the Onyx Underwriters Book of Automobile business to Mercury Insurance Group for a minor

one-time payment. The Book had over 300,000 automobile insurance policies worth easy several

million dollars and it sold it for less than $100,000 and never even gave credit to Onyx for the

payment received by Mercury Insurance.

Absolutely nothing was being done by Gallagher or DFS to collect on the reinsurance. The

main reason Gallagher took over the company (Aries) was to collect the reinsurance and absolutely

nothing was being done or was ever done. No effort to collect on the reinsurance was done by the

consultant collecting $50,000 per month! All that occurred in the so called “rehabilitation effort at

Aries” was to add more and more consultants to do work on Aries. Friendly real estate brokers and

appraisers were engaged to sell off the Aries and Onyx real estate assets. A typical scheme was to

have the property appraised for1/3 of its value and have it sold through a “friendly broker” to a real

estate company formed by Gallagher’s friends or fronts and to sell the property at the reduced price

and then have the new company “flip” the property for its market value. This occurred at Aries with

6 acres of land located in Opalocka, Florida. The property was appraised by Gallagher’s people for

under $600,000, sold for this amount even though we provided an MAI appraisal for $1,600,000.

Consultants and brokers as well as attorneys and “friendly” claims adjusting companies all took a

bite on Aries assets until there were none left.

The biggest abuse that occurred at Aries was awarding Miss Lisette Lozano the handling of

all claims during the liquidation phase of Aries. By November 2002 Aries ran out of funds and DFS

filed for liquidation. This was a necessary step so that the Florida Insurance Guarantee Association

“FIGA” could become liable to pay all outstanding claim losses and return premiums to Insureds.

Miss Lozano incorporated in November 2001 a company in Florida called Lozano Adjusting

Services, Inc. and this company billed over $120 million in to FIGA to pay claims. Part of the funds

went directly to Lozano Adjusting Services, Inc., for the job of adjusting the claims and the rest of

the funds were used to pay claims. Lozano’s incentive was to pay claims fast and the larger the

claim paid, the larger her fee was. Out of $120 million paid to in claims by Lozano at least 50% was

paid in very generous payments of losses to insured’s. Payments made of losses not covered because

DFS had destroyed the integrity of the Aries computer database and many claims were paid without

verifying coverage and many other fraud PIP claims were paid without care whether the treatments

were real or not. Her goal was to just send money to insured’s or medical PIP clinics and to spend

the funds from FIGA. DFS failed to collect over $50 million from Aries reinsurers and inflated the

claim payments through the Lozano claims operation to cause a total FIGA payout of over $150

million.

It was much easier and profitable for the adjusting company to get money from FIGA and pay

out claims than properly adjust claims and deny “not covered” claims or collect reinsurance payment

on losses.

If DFS and Lozano would have done their job properly, FIGA’s responsibility for Aries

losses would have been much, much less than the amount claimed by FIGA was spent on Aries to

date. I am sure that the shareholders of Lozano Adjusting Services were not interested in saving

FIGA any funds. As a matter of fact, DFS made a second request to FIGA for an additional $100

million to complete the liquidation of Aries but when FIGA balked and started asking questions,

DFS soon enough advised FIGA that the initial funding was going to be enough! The DFS and

company actually attempted to defraud FIGA of $100 million additional funds on top of the $150

million that was already used to date. No one has questioned the Lozano Adjusting Services

finances and I am sure that doing so will reveal how Mr. Gallagher’s cronies use these “friendly”

adjusting companies to defraud FIGA and the estate of insolvent companies of millions of dollars.

Perhaps billions in the case of Citizen Property Insurance Company! It’s the same M.O.!

During 2003, FIGA began to ask questions to Tom Gallagher about what occurred at Aries

and why $150 million had been used and remained unaccounted for.

Under the pressure (from FIGA) Gallagher took his usual route - - “it was stolen by the Aries

principals.” “And we are going to criminally prosecute them for it,” Gallagher said!

This again is Gallagher’s solution to problems that might compromise him or his cronies.

Well into 2004, after the alleged investigations performed by Mr. James Cobb, Assistant

Statewide Prosecutor and Lieutenant Mark Dee and Captain Satner of the DFS Insurance Fraud

Division, a massive fraud had been discovery at Aries.

Tom Gallagher and James Cobb issued joint press releases that James Cobb’s investigations

had followed the money trail and discovered a theft of $60 million by the Fraynd’s! from Aries. The

Fraynd’s were indicted on the alleged crimes and charged with numerous counts of theft,

racketeering, trust violations, etc. One million dollars on each of us was set. We were outside of the

country at the time of the Indictments, and we arraigned for the bond and flew back to the US and

surrendered. We returned to fight the case and clear our names from any accusations. We have been

in court defending ourselves for over one and a half years, have made numerous requests to the

Statewide prosecutor James Cobb, requesting the evidence that he had of the alleged theft and of the

other charges and to date he has not provided us any evidence at all that can support any of the

alleged crimes that he charged us with.

This is a case where Gallagher after being pressured by FIGA for answers on the Aries

receivership regarding the accounting of funds, simply turned it over to the statewide and had Lt. Dee

and James Cobb make up a criminal case against us with whatever they can come up with.

While the criminal case was proceeding against the Fraynd’s, Mr. Gallagher had a “buffer” as

he calls it from DFS’s wrong doings. It’s interesting to point that DFS initially filed civil actions

against the Fraynd’s for the exact alleged wrong doings of the Fraynd’s in the criminal case and lost

in civil court, unable to prove any of these allegations. DFS abandoned all civil actions. The

criminal allegations followed against the Fraynd’s by Gallagher after being unsuccessful in civil

court.

Criminal defense attorney for the Fraynds have been defending the Fraynd’s since 2004 and

have made numerous demands to the Statewide Prosecutor’s Offices and on DFS for the evidence

supporting their allegations and James Cobb nor Mark Dee have been able to provide not even one

piece of evidence that would support the alleged $60 million theft.

No evidence had been produced by Jim Cobb of the offices of Statewide Prosecutor by

October 2005 and as pressure was mounting to justify their actions, James Cobb revoked my bond

and had me arrested in November 9 of 2005 and has had me held in custody in Leon County Jail

since then. His words were clear and explained his motive for doing so and for refusing to reinstate

my bond so that I am released so that I can prepare for my defense. He openly says “he wants to

keep me in custody so that he can “shake me down” and force me and my family to accept a guilty

plea and pay back restitution in the amount of $30 million. DFS and the Office of Statewide

Prosecution cannot provide any proof that any funds were taken by the Fraynd’s from Aries yet

simply wants to extort $30 million from us. DFS took civil actions against Aries’ lender (Ocean

Bank of Miami), Aries Actuaries (Milliman International), Aries independent auditors (Weisberg and

Brausse) and are attempting to collect funds against their malpractice insurance policies. They

alleged that the experts professionals misrepresented the Books of Aries and are asking for millions

from them. DFS also sued the Fraynd’s under an AIG directors and officers insurance policy for

errors committed by the officers and directors of Aries, yet they have blamed the Fraynds for Aries

demise in their criminal action. The Fraynd’s relied on their experts to prepare and submit the

financial statements. DFS is accusing the experts but is attempting to at the same time blame the

Fraynd. It is important to note that Ocean Bank engaged a forensic accounting firm that reconciled

all funds received by Onyx and subsequently paid out to Aries and accounted for all funds being

properly paid to Aries and reflected on Aries and Onyx’s Books. These experts have proven false,

all of the accusations of DFS and the Statewide Prosecutors against the Fraynd’s. DFS and

Statewide have violated my rights, my civil liberty and simply want to prove their case right

regardless of what means it takes. DFS and Statewide claim that because this is a “political year”

they need to do this and it would be difference if their bosses were not running for the Florida

Governor’s position! They are attempting to extort $30 million from us and have decided to keep me

in custody until they wear me down and agreed to their terms. Who would think I would become a

political prisoner in America in 2006!

We were prepared to go to trial and the trial was going to commence on May 6, 2007 and the

night before the trial, James Cobb, The States lead prosecutor call our attorneys and told them that

they didn’t want to go to trial and if we would be willing to accept a guilty plea for a very reduced

charge and a short prison term. Being that the trial was going to occur in Tallahassee and the court

system in Tallahassee is very biased and very pro government, our attorneys recommended that we

take the plea and I agreed to also serve 1 year in prison so long as the rest of my family would not go to prison.

Case against Paul Fraynd

2009-10-24T17:10:00.000-04:00

You can read additional information on Aries Insurance Company and Paul Fraynd at

http://sites.google.com/site/paulfraynd/home

The real story behind the DFS take over of ARIES INSURANCE COMPANY

2009-05-12T18:05:00.000-04:00

FLORIDA OFFICIALS TARGET PROMINENT HISPANIC INSURANCE
COMPANY AND OWNERS FOR POLITICAL REASONS

Miami, May 22, 2007

Keeping insurance healthy in Florida is the stated purpose of the
Florida Department of Insurance and the Florida Department of Financial
Services. Yet, their appointed receiver, his consultants, and his scores of
attorneys failed to do just that. They failed to collect re-insurance money
contractually owed to a South Florida insurance company in the aftermath
of September 11. Sadly, an immigrant Hispanic family was forced to watch
as their American Dream and the private insurance company they had built
over twenty years were brought to financial ruin by those very Departments
that were duty-bound to create an atmosphere in which the company could
thrive.

Aries Insurance Company (a Florida domestic insurance company)
served the South Florida Hispanic business community for more than 20
years, during a time that national insurance companies refused to insure
the Hispanic community. Aries Insurance Company was the American
Dream of the Fraynd Family. This Hispanic family emigrated from Latin
America to follow the American Dream. In 1981, Marcos Fraynd, patriarch
of the family, invested $2 million to establish Orion Insurance Company,
later Aries Insurance Company. Their dream thrived until shortly after
September 11, 2001, when it became another casualty of that horrible day.
After September 11, 2001, General Reinsurance Corporation
(“GenRe”), the main Aries re-insurer, made a decision to stop paying the
re-insurance receivables it owed to The Aries Insurance Company, solely
for its own financial benefit. Outraged by GenRe’s actions, the Fraynd
family contacted Insurance Commissioner Tom Gallagher to assist the
Fraynd family and The Aries Insurance Company to collect the reinsurance
receivables from GenRe.

On May 9, 2002, the Aries Insurance Company and the Fraynd
Family voluntarily invited the Florida Department of Insurance to work with
the Aries management team together to collect the re-insurance money
from General Re. As of March 31, 2002, GenRe owed Aries $21M. The
Florida Department of Insurance appointed an overpaid and under qualified
receiver team to collect those overdue funds and collect premiums, settle
bills, pay claims, collect re-insurance receivables, and rehabilitate The
Aries Insurance Company.

After the Receiver paid over $650,000.00 to re-insurance consultants
who were hired as a result of their political connections, millions to the
other consultants and several influential law firms, the reinsurance bills
were never even prepared or sent to GenRe. More than $30M is still
pending, but has not been billed by Florida’s receiver to GenRe.
At an arbitration held in October 2002, the receiver’s only demand for
payment of monies owed by GenRe were those bills prepared by Aries’
management before March 31, 2002, prior to the receiver’s appointment by
the Florida Department of Insurance. That arbitration panel ruled in
November 2002 that Aries owed GenRe $3.7 million, but directed GenRe to
pay all unpaid reinsurance receivables owed to Aries after the receiver
prepared and presented those bills. Prompt action by the Florida receiver
would have enabled Aries and its policyholders to survive. Even then, the
Florida receiver took no action to collect these millions of dollars owed by
GenRe, preferring instead to vilify Aries management for the Receiver’s
own inaction.

Located on the same premises with The Aries Insurance Company
was Onyx Underwriters, Inc., another Fraynd Family business. Onyx was
the general agency for Aries and all Onyx Underwriters, Inc. affiliates. To
bolster Aries’ rehabilitation, the Fraynds voluntarily turned over more than
$20 million dollars from Onyx Underwriters to the receiver and assigned all
rights to collect all funds due from finance companies, agents, policy
holders, and others. Upon receiving that money and those rights to collect,
the Florida Department of Insurance receiver inexplicably ordered the
management team that ran both Aries Insurance Company and Onyx
Insurance Group of Companies to leave the premises.

Instead of working together with the Fraynds and Aries as agreed on
May 2002, the receiver and the Florida Department of Insurance turned
voluntary rehabilitation into an expensive legal battle. The Fraynd Family
had no other option to protect their policyholders but to hire a team of
attorneys to preserve their legal rights under the U.S. Constitution and to
fight this abuse of power by both receiver and the Florida Department of
Insurance. Failed candidate for governor of Florida, Insurance
Commissioner Tom Gallagher, took umbrage when the Fraynd Family
decided to fight back.

In 2004, the Florida Statewide Prosecutor turned what should have
been an insurance dispute into criminal charges against some Fraynd
family members. After more than three years of litigation in the criminal
courts, the Statewide Prosecutor was forced to drop the most serious
charges in return for technical violations of the insurance laws, extracting a
promise that the Fraynd Family would not participate in the Florida
insurance business ever again. The Fraynd family, brought to the brink of
financial ruin by the State’s overly aggressive actions, reluctantly settled
the criminal charges in order to bring their ordeal to an end. The result of
this debacle is that Florida’s regulators have saddled Florida’s taxpayers
with millions of dollars in excessive fees and costs billed by the Florida
receiver.

The Florida receivership failed the Fraynd Family, Aries, Onyx, the
South Florida Hispanic community, the 600 people previously employed by
the Fraynd family, the 3000 statewide agents of Aries and Onyx , and the
hundreds of thousands of Aries policyholders. The Fraynd Family watched
as their successful, Hispanic-American owned company was destroyed
because its receiver and the highly paid consultants and attorneys refused
to work with them as a team to rehabilitate a company that insured and
provided jobs to the South Florida Hispanic community.