Conservator Ordered for FGS Insurance

State insurance authorities obtained a court order Monday allowing them to put Irvine-based FGS Insurance Agency into conservatorship, but many of the company’s assets--including more than 100,000 auto policies--already apparently have passed to a new owner.

Lawyers for Insurance Commissioner John Garamendi and the new owner, CSI Insurance, said the order issued by Orange County Superior Court Judge Randell Wilkinson requires CSI to make payments to the state conservators rather than FGS. The conservators will use the money to pay millions of dollars in reported debts by FGS. Meanwhile, the lawyers said, the new owners will service the FGS policyholders and market insurance products to them and others under CSI’s name.

On March 21, attorneys for Garamendi secured a temporary restraining order in Los Angeles Superior Court against the sale of FGS Insurance to CSI. Insurance regulators have been seeking to shut down FGS for more than two years for alleged improper sales practices.

But by that time, the Garamendi and CSI lawyers said Monday, it appears that the FGS assets already had changed hands. All the temporary restraining order could do was to block the purchase payments from CSI to FGS, long headed by Sid Field and Alan Greenberg.

The court order Monday made the state conservatorship contingent on dissolution of the temporary restraining order. Garamendi attorneys Bruce Friedman and Ronald DiNicola, said that is expected Wednesday, when the restraining order was scheduled to lapse anyway.

Greenberg and Field, while resisting attempts to close their company, last September sued then-Insurance Commissioner Roxani Gillespie and the state Department of Insurance on grounds that they were harassing FGS.

Greenberg said Monday that that suit continues and that the new legal action by Gillespie’s successor “validates even more our charge of harassment” by the department.

But Garamendi spokesman Bill Schulz said the conservatorship merely reflects the determination of the commissioner that FGS pay off all creditors expeditiously. State investigators, he noted, have charged past skimming of money by Field and other FGS executives.