Former VP of Failed Insurer Guilty of Fraud : Court: Kathleen Helm admits siphoning more than $1 million from premiums to buy trips, clothes and jewels.
A former executive of a now-defunct Irvine insurance agency pleaded guilty in federal court Monday to charges of defrauding a construction industry association to finance a lavish lifestyle.
Kathleen Helm, once an executive vice president of Rubell Helm Insurance Services, Inc., admitted Monday that she spent the money on expensive vacations, extensive renovation of a Colorado ranch, clothing and jewelry, Assistant U.S. Atty. Jeffrey B. Isaacs said.
She is the second top officer to plead guilty to wrongdoing while employed at Rubell Helm Insurance, which authorities said orchestrated a scheme to sell bogus group life and health insurance.
“This was all over a (long) period of time,” Isaacs said. “She was living high off the hog.”
Authorities believe that as much as $10 million was embezzled by Helm and company chairman Michael Rubell from a multimillion-dollar pool of group insurance premiums during the company’s five years in business. The company was closed in September, 1989, after a six-month probe. It had offices in Irvine, Fresno and Maitland, Fla.
Rubell pleaded guilty in August, 1991, to masterminding a scam that left thousands of employees in a variety of industries in California, Texas, Louisiana and Florida without health and life insurance.
The president of the failed corporation, James Helm--who divorced Kathleen Helm after she left the company in 1988--has not been charged with any crime, Isaacs said, adding that the investigation into the case is still ongoing.
Rubell Helm Insurance, which once promoted itself as a leader in group insurance, came under suspicion in early 1989 and became a subject of an investigation by a subcommittee of the U.S. Senate Governmental Affairs Committee in May, 1990.
At the time, Sen. Sam Nunn (D-Ga.) used the company as an example of a nationwide insurance scam that preyed on owners of small businesses seeking inexpensive group insurance for their employees.
Kathleen Helm, 40, of Twin Falls, Ida., pleaded guilty in U.S. District Court in Los Angeles Monday to one count of embezzlement from an employee benefit plan and one count of income tax evasion, Isaacs said.
During her hearing, Helm admitted to U.S. District Judge Mariana Pfaelzer that she helped siphon more than $1 million from premiums paid by the California Assn. of Builders’ Exchange, a coalition of construction industry associations.
She then used the money to finance trips to Hawaii and domestic ski resorts, upgrade her ranch in Durango, Colo., at a cost of “several hundred thousand dollars,” and to purchase clothing and jewels, Isaacs said. She also admitted to evading taxes on more than $760,00 in income in 1988.
Helm faces up to 10 years in prison and a $500,000 fine, he said. Sentencing was scheduled for Sept. 14, Isaacs said.
The admission came after both she and Rubell agreed to cooperate with authorities in a probe being conducted by the U.S. Department of Justice, the U.S. Postal Inspection Services, the U.S. Department of Labor, the Internal Revenue Service and the California Department of Insurance.
Rubell, who faces 30 years in federal prison and a $1.5-million fine for embezzlement of more than $500,000 in premiums, tax evasion and mail fraud, is scheduled to be sentenced Aug. 17, Isaacs said.
