State Files $150-Million Suit Over Defunct Insurance Firm
California Insurance Commissioner Roxani Gillespie filed a $150-million lawsuit Friday against five former directors of the defunct TMIC Insurance Co., alleging their negligence contributed to the company’s demise.
Named in the Superior Court suit were Raymond Rodeno, TMIC’s chairman and chief executive officer; Gary Bradford, president and chief operating officer; John Hoof Jr., director of sales and marketing; Robert Cohen, treasurer and chief financial officer, and Thomas Kennedy, senior vice president for risk management.
Gillespie was appointed liquidator of TMIC in April, 1988. At the time, the state estimated that TMIC’s assets totaled $169 million less than its liabilities.
The defunct company’s major creditors include scores of thrifts, as well as the Federal Home Loan Mortgage Corp., and the Federal National Mortgage Assn.
TMIC’s troubles stemmed from policies it issued on mortgages held by investors in a Virginia-based real estate tax shelter known as Equity Programs Investment Corp.
In August, 1985, EPIC defaulted on $1.4 billion in mortgage loans for 20,000 homes, mostly in the Southwest. Between 1976 and 1985, TMIC had issued insurance on more than 9,000 EPIC loans and was the largest single insurer of mortgage guaranty insurance covering mortgage loans made to EPIC, the suit says.
