Insurer Admits He Defrauded County Shelters

One of California’s leading homeless advocates admitted Friday there “is truth to the charges” that he defrauded several homeless shelters of at least $27,350 in phony insurance policies and instead used the money for himself.

Scott Mather, who was chairman of the Orange County Homeless Issues Task Force and also served on the boards of several other local charities, offered no excuse for his actions and said he is “ashamed and saddened.”

“I’ve destroyed myself and I have to figure out why I would do that,” he said in a telephone interview. “I’m as human and frail as anyone and I have to pay for it.”

Mather, an insurance broker for more than 14 years, said he accepted premiums from charitable organizations, told agency directors they were insured and issued binders but provided no coverage. On other occasions he issued policies that were not what the policyholders had requested, he said.

Community activists were stunned by the revelations, and state insurance officials said they are investigating.

Mather would not elaborate on how many organizations were involved or the amount of money he diverted for his personal use. However, directors of least five organizations in Orange and Los Angeles counties have indicated they were issued phony policies:

Anaheim Interfaith Shelter. Dolores Barrett, executive director, said her group paid Mather $5,000 for liability insurance over a two-year period for worthless policies.

Orange Coast Interfaith Shelter in Costa Mesa. The group paid Mather $5,000 for policies that were either phony or not needed, said board President Linda Schulein.

Friendship Shelter in Laguna Beach. Board President Phillip May said, “There was a period of time when we were not covered and we didn’t know that.” But he could not say how much the organization had paid Mather for the protection.

Share Our Selves in Costa Mesa. Executive Director Jean Forbath said Mather was paid $1,350 to buy insurance policies for the agency’s medical clinic, but they were never issued.

Harbor Interfaith Shelter in San Pedro. Executive Director David Christiansen said his group discovered in March that it had paid Mather more than $16,000 in premiums over a five-year period for insurance policies that were phony.

Dennis Ward, chief of the state Insurance Department’s investigative unit, said Mather could face revocation of his license and also possible criminal charges if investigators find that he stole money from the charities.

Ward said Mather has no prior record of being disciplined by the commission.

Jan Nolan, an investigator in the Orange County district attorney’s fraud unit, said no allegations involving Mather have been referred to her office.

Two of the groups, Harbor Interfaith Shelter and SOS, have filed complaints with the Insurance Commission. Schulein said her group will also file a complaint.

The news of Mather’s involvement in the insurance incidents shocked many in the community who had known Mather as a tireless and dedicated advocate for the poor and homeless.

“If the allegations are true, then many homeless and hungry people and the nonprofit agencies that serve them have been victimized,” said Rusty Kennedy, executive director of the Orange County Human Relations Commission. “It’s a total shock to everyone who saw the kind of volunteer activity he was involved in.”

Kennedy said he also worries that Mather’s actions will be used to taint all charitable organizations in the county.

“This is not about charities, it’s about dishonest acts by an individual,” he added.

Many community leaders said they were most saddened to learn that Mather apparently exploited several of the charities with which he was most closely associated.

He served as president of the Orange Coast Interfaith Shelter and helped to establish the Anaheim and San Pedro shelters.

He also served as president of the Orange County Homeless Issues Task Force and as chairman of the California Homeless Coalition.

Mather was a key figure in SOS’ recent controversial battle to find new quarters after it was evicted from its city-managed home. He was SOS’ president at the time the alleged insurance fraud came to light.

“We talked to Scott and he admitted this was something he had done,” Forbath said. “We asked him to resign and he did. It’s a great shock that someone so closely connected could get themselves in this situation. He didn’t really have an explanation; he just said he was sorry and that things had gotten out of hand.”

Although Mather apparently broke no law by selling insurance to organizations with which he was associated, Forbath said she is uncomfortable with the practice. When she learned five years ago that Mather had sold SOS the medical clinic policy, she said, she asked that the agency’s board obtain no additional insurance through him.

Forbath said she learned that the clinic policy did not actually exist just before SOS went before the Costa Mesa City Council to petition for a permit to relocate. She said she did not reveal the insurance problems, however, because SOS directors feared it might hinder critical fund-raising efforts.

However, Forbath said Mather has never been involved with SOS’ finances.

“We felt we have done the proper thing in asking for restitution and reporting the situation to the insurance commissioner,” she said.

Costa Mesa City Councilman Ed Glasgow, who voted to evict SOS from a residential community center but was a key vote to approve the groups’ relocation to another part of the city, said Friday that knowledge of Mather’s activities would not have changed his vote.

“It’s unfortunate that he got himself into trouble,” Glasgow said, “but I don’t think it is a reflection on SOS.”

In an interview Friday, Mather sounded both contrite and confused about his actions. He said he has severed his affiliation with the Farmers Insurance Group and is in the process of disbanding his independent agency.

He also said he is attempting to repay all of the money that is owed the charities. SOS director Forbath confirmed that Mather had sent the group a check for $1,350 this week.

And Christiansen, of the San Pedro shelter, said Mather had repaid the $16,000 that it was owed two weeks ago.

Mather said he began diverting insurance payments for his personal use about five years ago while under pressure to pay steep medical bills resulting from a serious illness to one of his children and while also trying to maintain his business.

He said he realized the gravity of his actions but thought that he could cover his tracks before he was discovered.

“I thought I could close it out and get out of it,” he said. “To some degree, I realized what I was doing but there was some denial too. It was very sporadic and specific. I used the money basically for just getting by. Then I began to think, ‘Oh my God, what am I doing?’ That’s no excuse. . . . I am trying to deal with it and be as responsible as I can and mitigate as much of the damage as I can.”

According to Mather and others, the facade of denials and evasions began to crumble in January when directors at the San Pedro shelter began considering expanding their facility and decided to undertake a risk analysis.

Christiansen said they asked Mather to supply them with copies of the actual insurance policies instead of the binders that he had provided. When Mather failed to respond, the group checked with the insurance companies named on the binders and found the shelter was not covered.

Shelter directors wrote Mather demanding that he repay the premiums but he did not respond, Christiansen said.

“We figured we needed to do something so we (took out other policies), but we also began to figure we probably weren’t the only fish out there,” he said. “We felt obliged to report the incident to the Insurance Commission to protect others who might be in this situation.”

By that time, in mid-March, other associates of Mather had become aware that he was having problems with his insurance business.

It was also at this point that Mather abruptly resigned from several of his positions with homeless organizations.

Christiansen said several homeless advocates confronted their colleague and Mather admitted his actions. The group then put out a notice on a computerized charity information network called HANDSNET alerting agencies to possible insurance fraud--but not referring to Mather by name.

Forbath and other agency directors said they first became aware of the possibility that they might be victims after that alert.

Many homeless activists, while condemning Mather’s actions, also said his previous efforts on behalf of the needy should not be dismissed.

“My reaction is one of compassion because I know Scott to be a man of very high integrity,” said Allison Klakovich, president of the Orange County Homeless Issues Task Force. “These actions are not something he would do lightly. He must have been under enormous pressure.”

Barrett, of the Anaheim shelter, concurred:

“We don’t condone any of his actions, but we do realize that Scott has been very supportive to our agency and to others that support the homeless in this community.”