Our Analysis and Review: State Farm Group Case
Updated: Jun 4, 2020
Corporate engineered crimes are generally extremely complex.
Due to the complexity of crimes operated by parties within a corporation, when a civil RICO case is filed generally, attorneys simplify the crime and attack only the easiest or most simple to understand components. In short, the business of law is why high corporate executives rarely are named defendants. Due to these factors, crimes committed by insurance company executives have gotten increasingly bold in recent years.
State Farm has a history of questionable conduct.
Over the last decade, we’ve witnessed RICO cases ranging from billion-dollar fraud schemes including State Farm Mutual Automobile Insurance Company paying claims agents to fraudulently destroy evidence to fix Hurricane Katrina related claims in Alabama, Mississippi and Louisiana, State Farm Mutual Automobile Insurance Company forcing auto-body repair shops nationwide to use aftermarket body parts while telling consumers OEM parts were used which reduced the value of the consumers’ automobile, to State Farm Mutual Automobile Insurance Company bribing state Judges in Illinois.
Cases which could lead to criminal charges are usually settled prior to trial.
All of the above cases involving State Farm Mutual Automobile Insurance Company were settled before trial and none of the executives were named in the complaints but could have faced individual criminal charges had the cases gone to trial. These cases filed by major law firms failed to name executives due to the surety of payment. RICO litigation in itself is a multi-billion-dollar industry in the United States with major law firms collusively controlling justice. Once in a great while, a case is filed which seeks the truth rather than profit and it is for this reason, we have become focused on a case filed in the Unites States District Court of the Eastern District of Texas, Sherman Division. Within our office, we’ve named the case “the state farm group” case but officially within the Court system the case is cited as 4:19-cv-00119.
Why this case is of interest.
1. How easily the racketeering enterprise was organized and established.
According to the complaint, when Defendants Rand Harbert and Michael Tipsord changed the trademarks of State Farm Mutual Automobile Insurance Company and began online sales and marketing activities at StateFarm.com, the Defendants, acting in a conspiracy, took the first steps in establishing a multi-billion racketeering enterprise known as “the state farm group.” These seemingly innocent first steps effectively eroded consumer protection mechanisms State Farm Mutual Automobile Insurance Company had in place since the company’s inception in 1922. According to the complaint, the conspirators purposefully removed sales activities from State Farm Mutual Automobile Insurance Company’s third-party agent network, which for years held the duty to inform the consumer that insurance products sold by the third-party agents were from three different companies.
2. The bold and intentional manner in which the sales frauds were implemented.
When Mr. Tipsord and Mr. Harbert changed the manner of sales to consumers removing the third-party agent network from sales activities and replacing these local salespeople with national call centers and online marketing, the conspirators were easily able to implement fraudulent sales strategies. These fraudulent sales strategies exponentially increased sales by misleading consumers to believe the products sold to the consumer were from one company, when in fact the products were not from State Farm Mutual Automobile Insurance Company but from as many as 26 companies owned by State Farm Mutual Automobile Insurance Company.
3. The broad acceptance of fiduciary parties to engage in fraud schemes.
The complaint clearly shows, and the Defendants have not denied, Defendants Michael Tipsord, Chairman and CEO of State Farm Mutual Automobile Insurance Company and President and CEO of State Farm Fire and Casualty Company, John Farney, SVP and Chief Financial Officer of State Farm Mutual Automobile Insurance Company and treasurer of many subsidiary companies owned by State Farm Mutual Automobile Insurance Company, Paul Smith, EVP and CFO of State Farm Mutual Automobile Insurance Company, Rand Harbert, EVP, Chief Agency Sales and Marketing Officer of State Farm Mutual Automobile Insurance Company and Michael Wey, SVP of State Farm Mutual Automobile Insurance Company, President and Secretary of State Farm Lloyds and a member of the board of directors of State Farm Fire and Casualty Company all hold multiple officer and director positions in each of the subsidiary companies engaged in the State Farm Group racketeering enterprise. The complaint alleges these five Individual Defendants abused these overlapping officer and directorship positions to engage in a pattern of frauds, in the operation of the State Farm Group racketeering enterprise and directed the activities, which are defined as crimes under the RICO Act. We conducted a review of these allegations and shockingly found Messrs. Tipsord, Farney, Smith, Harbert and Wey hold a total of 36 director positions within the 25 companies owned by State Farm Mutual Automobile Insurance Company. Based upon our review of the case filings and filings made with government regulators, none of the fiduciary officers attempted to stop the criminal activities or have moved to end any of the fraudulent activity alleged within the complaint.
4. The ease in understanding the numerous frauds conducted around and through
the “single entity trade name fraud scheme.”
Sometimes, fraud is hard to understand and fraud can often be caused by a mistake instead of being caused with knowledge and purpose. It is clear, the named Defendants know “state farm” is not one company. It is clear, the named Defendants purposefully use the term “state farm” to cause confusion and to mislead people. It is also easy to see how Defendants engineered the “single entity trade name fraud scheme” and then caused hundreds of thousands of employees to use the term “state farm” to confuse consumers, to obscure fraudulent and criminal practices ordered by the Defendants in the conduct of racketeering enterprises under the control of the Defendants. The complaint does not overly simplify one event, but instead comprehensively outlines each of the elements of the highly complex conglomerate enterprise model involving seven subsidiary enterprises in a simple and easily understood common fraud scheme.
5. How clear the initial fraud and unlawful conduct is to understand.
The complaint outlines the establishment of the “state farm group racketeering enterprise” and clearly establishes facts. Factually, “state farm” is not a company; it is a registered trademark owned by State Farm Mutual Automobile Insurance Company. The complaint shows that pursuant to United States trademark law, it is unlawful for any other party, person or company to use a trademark that is not registered to them. The complaint argues, pursuant to United States trademark law, State Farm Mutual Automobile Insurance Company trademarked the term “state farm” to include “underwriting services.” The complaint then details that as State Farm Mutual Automobile Insurance Company did not receive any monies for underwriting services relating to the issuance of a homeowners insurance policy, the usage of the trade name “state farm” by any company under the control of the Defendants, participating in the single entity trade name fraud scheme was in fact a fraudulent act. The complaint then shows how multiple association-in-fact enterprises, each using the single entity trade name fraud scheme over a period of years, committed multiple acts of fraud and repeated predicate acts considered to be racketeering crimes pursuant to the Racketeer Influenced and Corrupt Organizations Act.
6. The ease in understanding why the alleged conduct of managers
to be fraudulent and unlawful.
State Farm Mutual Automobile Insurance Company, within automobile insurance policies sold to consumers, identifies owners of these policies as “members” and grants members certain ownership rights that could be considered the same as stock shareholders’ rights. As in any company, the members / shareholders rely on members of the board of directors of the company to properly and legally operate the business to the benefit of the company’s shareholders. This case clearly shows the board of directors of State Farm Mutual Automobile Insurance Company have not been legally operating the company. It is also clear that the Defendants have not operated the company or its subsidiary companies to the benefit of the company’s members. As the Defendants’ fraud schemes also sold Plaintiffs automobile insurance policies, which granted the Plaintiffs’ membership rights, this case is part civil RICO case and part shareholder rights case.
7. The unlawful conduct of Defendants and the effect on the health of financial markets.
The case alleges and supports, Defendants Michael Tipsord, Jon Farney, Paul Smith, Rand Harbert and Michael Wey have actively committed acts of fraud and engaged in criminal acts to obtain monies illegally. The complaint also details how each of these Defendants engaged in acts of money laundering to obscure the criminal nature of their fraud schemes and source of monies derived from racketeering activities. The complaint also details the usage of illegally obtained monies and how the Defendants corrupted financial markets and several publicly traded companies in the United States and globally through the investment of illegally obtained monies. The complaint directly names publicly traded companies the Defendants used to illegally obtain monies to gain controlling positions, and the usage of financial markets to further their criminal activities.
8. The clear definition between racketeering enterprise and corporate enterprise.
The complaint details the creation of the “State Farm Group” racketeering enterprise and identifies characteristics which determine the enterprise to be an “association-in-fact” and not a “corporate entity.” This classification separates the acts of the “state farm group” from State Farm Mutual Automobile Insurance Company. The complaint then details the establishment of seven subsidiary association-in-fact enterprises that was created, managed and controlled by the Individual Defendants who used monies derived from illegal activities to establish, manage and control each of these subsidiary companies. The complaint details the scope of work of each of these seven subsidiary enterprises and labels them by act, but names the enterprises in a step-by-step manner as Enterprise A through Enterprise G.
9. The clarity of purpose and understanding of the Defendants’ fraud schemes.
The complaint states the Individual Defendants’ purpose in their racketeering activities was to “obtain monies from plaintiffs (consumers) by acts of fraud.” The complaint then argues the Individual Defendants ordered and operated national advertising campaigns, which highlighted and emphasized the single entity fraud scheme. The complaint alleges the term “State Farm” was illegally used in national advertising campaigns known as the “like a good neighbor” and the “help life go right” campaigns that fraudulently misrepresented the products sold by the illegally operating association-in-fact enterprises, and fraudulently represented the intentions of the parties selling the products through acts of fraud. The complaint shows the products sold were not all underwritten or sold by State Farm Mutual Automobile Insurance Company and the Defendants never intended to act “like a good neighbor” or “help life go right.”
10. Defendants’ fraudulent activities were exposed operating within the parent corporation, State Farm Mutual Automobile Insurance Company.
The Plaintiffs’ complaint clearly supports in evidence, each Defendant and enterprises under the direct control of each Defendant engaged in the racketeering enterprises using the term “state farm.” The complaint shows the purpose of each enterprise was to defraud the Plaintiffs and support the bait and switch sales fraud schemes, as well as the “single entity fraud.” The complaint highly details the activities of enterprises engaged in fraud schemes such as bait and switch sales fraud schemes and delaying tactic frauds used to protect and defend the Defendants’ bait and switch frauds. Further, the complaint claims the existence of racketeering enterprises operating within the subsidiary companies owned by State Farm Mutual Automobile Insurance Company.
11. The complaint showed Defendants’ intentional activities to
defend the fraud schemes.
Despite State Farm Mutual Automobile Insurance Company’s yearlong effort to dismiss the case, the Plaintiffs have fought to obtain their day in court. The complaint outlines the Defendants’ usage of third-party attorneys, often hired under fraudulent pretense, to conduct overt racketeering crimes during unlawful claims practices. The Plaintiffs detail the racketeering crime of usage of illegally obtained money to establish and engage in racketeering activities through this conduct engineered specifically to protect the Defendants’ fraud schemes. The case file shows multiple amended complaints filed by the Plaintiffs and multiple motions to dismiss and sanctions filed by the Defendants. In opposition to the Defendants’ motions, the Plaintiffs’ responses provide insights to the case and the pattern of the enterprises’ operations. The Plaintiffs have submitted multiple aids to the court, which detail each element of the complicated conglomerate in response to the Defendants’ attempts to misrepresent the case as merely an “insurance dispute.” The Plaintiffs’ first and second complaints highly detail “state farm’s” history of abuse of the legal system and prior cases in which “state farm” was found to have destroyed evidence, interfere with witnesses, harass plaintiffs and the opposing counsels through false statements and abusive motions’ practice. In review of the case log, that has been “state farm’s” pattern here as well.
12. The complaint shows unlawful usage of financial institutions
in conduct of the crimes.
The Plaintiffs have claimed the Defendants are engaged in multiple acts of bank fraud and money laundering activity. The complaint profiles the commingling of monies obtained from illegal activities by tracing payments made by the Plaintiffs to “state farm.” The companies paid via two separate payments, each drafted to “state farm” were in fact transacted to two allegedly separate companies; State Farm Lloyds and State Farm Mutual Automobile Insurance Company. The complaint shows the movement of these monies to a single bank account with JP Morgan Chase Bank, NA in Columbus, Ohio. After the February 17, 2017 fire event, the Plaintiffs detail the usage of a single account by these two allegedly separate companies operated under the control of the Defendants. Plaintiffs’ complaint supports in evidence two checks issued from the single JP Morgan Chase Bank, NA account. The first check is printed as “State Farm Mutual Automobile Insurance Company” and makes a payment to the Plaintiffs for damages to the Plaintiffs’ automobiles paid in accordance with the Plaintiffs’ automobile policy. The second check is printed as “State Farm Lloyds” and makes a payment to the Plaintiffs for damages to the Plaintiffs’ residence paid in accordance with the fraudulent bait and switch contract illegally sold by the Defendants’ racketeering frauds.
AREAS OF CONCERN EXPOSED BY THIS COMPLAINT.
1. State Farm’s rapid increase in assets due to involvement with the criminal enterprises.
Clearly, corporate mismanagement is a serious issue. The complaint argues State Farm Mutual Automobile Insurance Company illegally obtained more than 250 billion dollars in assets due to its conspiracy with the “State Farm Group.” While the complaint does not expressly state it, it is clear the “state farm group” racketeering enterprise merely uses the accounts and relationships of State Farm Mutual Automobile Insurance Company to safe harbor monies derived illegally and obtained illegally by the racketeering conglomerate’s illegal operations. It is hard to imagine how State Farm Mutual Automobile Insurance Company plans on responding to and addressing the Plaintiffs’ evidence of commingled funds between two companies that State Farm Mutual Automobile Insurance Company has argued in court are separate and unconnected companies.
2. Evidence of multiple violations of US bank fraud laws.
It is also hard to imagine how the Defendants can argue no engagement in acts of racketeering when the money trail ends in one source; a commingled funds account. It seems JP Morgan Chase Bank, NA will have to provide evidence of deposits, transfers of monies and copies of payments from all companies owned by State Farm Mutual Automobile Insurance Company which have been drafted from this single account.
3. Direct evidence of State Farm Mutual Automobile Insurance Company’s Chairman and CEO engagement in acts of fraud and criminality.
Perhaps, the most damning statement within the Plaintiffs’ complaint is the factually supported statement that Mr. Michael Tipsord, Chairman and Chief Executive Officer of State Farm Mutual Automobile Insurance Company is not an officer, director or employee of State Farm Lloyds. Yet, his signature appears on a check issued by that company. Plaintiffs have shown State Farm Lloyds to have been engaged in the single entity fraud scheme and claimed “state farm” made a series of false promises in the sale of insurance products in the state of Texas. Pursuant to Texas state statute, any usage of a trademark or name to confuse a consumer in the sale or purchase of insurance products is an act of fraud. The usage of mails and wires across state lines in a manner which affects interstate commerce, makes the crimes federal offenses under the RICO act.
4. The confirmation of strong-arm racketeering crimes in support of the
Defendants’ fraud schemes
Complaints against insurance companies for claims frauds and bad acts are not new. This case shows the pattern of frauds of the entire industry laid bare due to the cooperative nature of the ownership and management of State Farm Mutual Automobile Insurance Company. The false promises, sales fraud schemes, and strong-arm acts of racketeering are not new industry wide. This case goes after the kingpins who run the largest racketeering conglomerate that engages in the fraudulent sale of insurance products, which just so happens, according to the complaint, to be camouflaged and operating in an association-in-fact manner within the largest insurance company in the United States.
5. The insidious nature of the initial crimes committed against the Plaintiffs.
The complaint states long-term operational goal of the State Farm Group was to defraud the Plaintiffs through fraudulent marketing statements and direct sales fraud schemes used to engage in bait and switch sales fraud schemes. Further, the persistence of the Defendants’ fraud schemes included the offering of false and misleading statements to the Plaintiffs until such a time when the product fraudulently sold to the Plaintiffs expired is exceptionally troubling. The Plaintiffs were told “state farm” would issue the Plaintiffs a $5 million homeowners insurance policy for a price which was less than prices quoted from competitors of “state farm.” The racketeering enterprises expressed reason for the discounted price was due to Plaintiffs also purchasing a “bundled” insurance product from State Farm, which was an automobile insurance. Plaintiffs paid for the homeowners policy in full; purchasing a $5 million homeowners policy from “state farm” and a six-month automobile insurance policy from “state farm.”
6. The clarity of the bait and switch sales frauds and
the overt nature of the Defendants’ acts to commit them.
Shortly after the Plaintiffs paid for the insurance policies sold in the bundling fraud scheme, the Plaintiffs received automobile insurance cards from State Farm Mutual Automobile Insurance Company. A few weeks later, the Plaintiffs received a homeowners insurance policy from State Farm Lloyds issued in the amount of $800,000, which was mailed within an envelope labeled “State Farm Mutual Automobile Insurance Company.” The Plaintiffs immediately called representatives on a 1-800 telephone number listed on StateFarm.com and spoke with parties who identified themselves as working for “state farm.” For almost a year, the Plaintiffs diligently attempted to obtain the correctly written homeowners policy contract and to confirm they were insured for a total of $5 million on their home. The Plaintiffs were repeatedly informed, “not to worry, state farm has you covered for $5 million.” Also, no matter how hard the Plaintiffs pushed, the Defendants’ enterprises never seemed to be able to deliver the written contract the Defendants’ enterprises insisted had been issued. Unfortunately for the Plaintiffs, they suffered a loss requiring the full amount of coverage just weeks prior to the expiration of the bait and switch contract.
7. The overt criminal acts to obscure the litigation relating to the sales frauds.
On February 17, 2017, the Plaintiffs suffered a complete loss fire to their residence. According to the complaint, at the scene of the fire, parties working for the racketeering enterprises approached the Plaintiffs. These parties presented business cards to the Plaintiffs stating they worked for “State Farm” and “not to worry, State Farm has you covered.” Within a week, the Plaintiffs were threatened, extorted, intimidated and coerced by employees working for the Defendants into signing a subrogation agreement, which granted “state farm” the right to sue other parties to recover monies lost by “state farm.” Within weeks of these acts of racketeering, the Plaintiffs’ property required in evidence was stolen by the employees of “State Farm” in order to destroy the evidence to prohibit the Plaintiffs from bringing a case in Texas District Court for acts of negligence against the builder of their residence. As stated in the Plaintiffs’ complaint, within a year, the Plaintiffs learned that “state farm” also insured the negligent party who caused the fire. Further, employees of State Farm were directed to destroy evidence in order to prohibit the Plaintiffs from bringing a legal claim in state court, which would also expose the Defendants’ bait and switch frauds, and denial of claims activities crimes.
8. The complaint clearly supported claims of racketeering crimes of
robbery and extortion.
In the complaint, the Plaintiffs allege and support in evidence that parties employed by the Defendants extorted, intimidated and robbed the Plaintiffs in order to protect the sales fraud schemes. The complaint also alleges the Defendants employed people who engaged in acts of trespass, extortion and robbery to illegally obtain evidence from the Plaintiffs’ fire scene and then illegally removed the evidence without the Plaintiffs’ consent or approval. The Defendants, then for a year, obscured the stolen evidence after telling attorneys hired by the Plaintiffs that the evidence had been destroyed. Plaintiffs allege “state farm” took this tactic as attorneys hired by “state farm” fraudulently represented to the Plaintiffs, “no other insurance company existed from which “state farm” could obtain monies” sufficient to pay the $5 million promised to the Plaintiffs in the Defendants’ fraudulent sales and delay schemes. Plaintiffs’ complaint states the Plaintiffs, in December of 2017, discovered “state farm” in fact insured the negligent builder and the owners of the construction company, which would have faced litigation for damages incurred by the Plaintiffs.
9. The purposeful acts of State Farm Mutual Automobile Insurance Company to further injure the Plaintiffs’ businesses.
Shortly after the racketeering crimes were exposed, State Farm Mutual Automobile Insurance Company canceled the Plaintiffs’ automobile insurance policy declaring the Plaintiffs to be ‘high risk’ and responsible for losses attributed to the fire event. State Farm Mutual Automobile Insurance Company, despite misleading the Plaintiffs that they would not suffer any further losses as a result of the fire event and that “state farm” would restore their property to what it was like pre-fire, canceled the auto policy and made fraudulent reports to national insurance underwriting databases. As alleged in the complaint, “state farm” never intended to make good on any promises made to the Plaintiffs. Also, “state farm” made false promises and fraudulent statements until such a time the Plaintiffs were unable to force “state farm” to make good on its more than 2 year long series of false promises. As a result of this fraudulent reporting, the Plaintiffs lost underwriting for their businesses, which caused the loss of established lines of credit and access to financial resources that caused a further loss of $25 million to Plaintiffs’ businesses. What is shocking is the fact State Farm Mutual Automobile Insurance Company has stated in Federal Court that State Farm Lloyds is responsible for the Plaintiffs losses and damages but for over a year the case has been in litigation State Farm Mutual Automobile Insurance Company has not taken any steps to correct it's fraudulent reporting into national insurance databases. This failure to correct has continued to injure the Plaintiffs' personally and professionally and even exposed one of the Plaintiffs to the coronavirus due to the necessity placed upon the Plaintiff to travel into contaminated zones in order to placate investors in February of 2020. Had 'state farm' moved to correct this 'error' in 2019 the Plaintiff likely would not have been placed at risk, according to pleadings filed by the Plaintiffs.
10. The repeated failure of State Farm Mutual Automobile Insurance Company to correct errors it admitted to have committed that injured the
Plaintiffs more than $25 million.
For more than a year, State Farm Mutual Automobile Insurance Company has attempted to obtain a dismissal of the Plaintiffs’ complaint. In each filing, the Defendants allege the injuries suffered by the Plaintiffs were caused by other parties; namely State Farm Lloyds. From our review of the case file, it is clear that State Farm Mutual Automobile Insurance Company has taken the position it did no wrong while at the same time acting in support of the racketeering enterprises. From Plaintiffs’ filings, State Farm Mutual Automobile Insurance Company has done nothing to correct ‘errors’ that it made that injured the Plaintiffs’ businesses in total more than $25 million. It is unclear why a company, which proclaims its innocence and states it is not a proper party to the lawsuit would not correct errors it made, allegedly in error, which injured the Plaintiffs. Especially, when the errors were based upon fraudulent information given to it by companies that State Farm Mutual Automobile Insurance Company have deemed and argued in Federal Court to be the named parties responsible for the injuries and damages claimed within the Plaintiffs’ complaint.
11. The Defendants’ illegal conduct to operate “State Farm” as a holding company.
The complaint shows “the state farm group” is not a registered trade name and is not a legally registered company. The complaint shows Defendant Farney submitted corporate filings to regulatory authorities, which detail the Individual Defendants’ illegal usage of State Farm Mutual Automobile Insurance Company as a “holding company”. When in fact, it is registered with an intended purpose of an automobile insurance company. State Farm Mutual Automobile Insurance Company has stated in multiple courts that it is in fact an automobile insurance company. Defendant State Farm Mutual Automobile Insurance Company has failed to answer the Plaintiffs’ complaint and for more than a year, engaged in motions attempting to defame the Plaintiffs to obtain a dismissal.
12. The illegal seizure of the Company by managers.
It would be easy to dismiss this case as a complaint against a company. However, State Farm Mutual Automobile Insurance Company is a privately held cooperatively owned company. This unique structure of ownership is an important factor in determining the “guilty” party in this case. State Farm Mutual Automobile Insurance Company is owned by people who purchase automobile insurance policies from the company and not by the board of directors. The complaint alleges, for years, the Defendants illegally issued “annual reports to automobile policyholders” which contain fraudulent financial statements and made false statements to consumers. The complaint also states these annual reports are used by the Defendants as part of the bait and switch sales fraud schemes and are currently listed on the StateFarm.com website under the control and management of the Defendants.
13. The exposure of criminal enterprises embedded in corporate entities.
The complaint brings a single charge of conspiracy against State Farm Mutual Automobile Insurance Company for its years long failures to prohibit, prevent and deny the Individual Defendants the ability to execute the racketeering enterprise crimes of the State Farm Group. The complaint shows Defendant State Farm Mutual Automobile Insurance Company illegally profited from the “state farm group” racketeering enterprises’ single entity fraud schemes and racketeering activities that derived from illegal operations conducted within companies owned by State Farm Mutual Automobile Insurance Company. The complaint also shows Defendant State Farm Mutual Automobile Insurance Company’s acts to protect the association-in-fact racketeering enterprises’ subsidiaries’ crimes and frauds that also damaged the Plaintiffs. This claim separates the criminal acts of the Individual Defendants from the civil misconduct of State Farm Mutual Automobile Insurance Company. It also isolates the owners of automobile insurance policies as the Company and the Individual Defendants mutually conspired to defraud the members as well.
Our Reaction and issued warning.
1. The Complaint is detailed and well supported.
While the complaint argues the details of the enterprises, recently, a series of infographics were filed as exhibits with a response filed by the Plaintiffs. The infographics show the conspiracy aspects of the Defendants engaged in racketeering and their usage of illegally obtained monies. The graphics also show the Defendants’ association with and employment by racketeering engaged entities from which they obtained monies derived from racketeering crimes and frauds. These graphics detail the progressive manner in operation, conduct and management of each phase of the state farm group racketeering enterprises and how each Individual Defendant is engaged in each of the subsidiary racketeering association-in-fact enterprises.
2. Plaintiffs' Aids to the Court assisted our review.
We utilized the graphics submitted by the Plaintiffs to reevaluate the complaint and perform a string line analysis of the 381-page complaint. Typically, complaints tend to contain quite simple statements. However, RICO complaints have higher pleading requirement. Due to the complexity of the state farm group racketeering enterprises the Plaintiffs’ complaint outlines each of the elements, actions and activities of the state farm group subsidiary crime operations using a legalized format procedural detail analysis outline. Due to the outline nature of the complaint, the activities claimed are clear and simple to understand when aided by a graphic aid. The diagraphs remove the repetitive nature of the pleading requirements. The complaint, in a linear manner, identifies criminal operations in a step-by-step process and shows the execution of events, which clearly defines each of the frauds, and criminal elements as alleged to be perpetrated by the Defendants’ conglomerate racketeering scheme. This methodical process directly shows Messrs. Tipsord, Farney, Smith, Harbert and Wey’s conduct, control, operation and participation in multiple criminal schemes used to defraud consumers / Plaintiffs in activities that violate the RICO act.
3. The alleged conglomerate’s crimes are simple in nature and execution,
but complex in structure.
The graphics not only show the complexity of the engagement between the Individual Defendants, but also show how the Defendants effectively eroded the corporate protections of the companies owned by State Farm Mutual Automobile Insurance Company. It is our analysis, the Individual Defendants’ multiple directorship roles and overlapping employment positions remove all separation between the allegedly separately operated companies. We do not rationally see how State Farm Mutual Automobile Insurance Company can state the companies it owns are operated separately.
4. Multiple facts are well established and impossible to deny.
It is clear, State Farm Mutual Automobile Insurance Company did in fact dramatically increase its value in assets and sales during the period of time alleged in the complaint. It is also clear that State Farm Mutual Automobile Insurance Company’s Chief Executive Officer and Chairman Michael Tipsord’s signature appears on a check drafted from a single bank account issued by two allegedly separate companies. One of which, he is not affiliated with or employed by. As State Farm Mutual Automobile Insurance Company has officially stated in court that it is not the responsible party in this case, how Mr. Tipsord responds after the court denies the Defendants’ Motion to Dismiss will be of a concern for financial markets and government regulators.
If our firm were engaged by the shareholders / members of State Farm Mutual Automobile Insurance Company, we’d recommend an attempt to immediately settle the case. We would encourage State Farm Mutual Automobile Insurance Company to remove Mr. Tipsord from the Board of Directors of the Company and we would seek the removal of Messrs. Farney, Harbert, Smith and Wey from director and officer’s positions in all companies. We would recommend a third-party auditor be hired to conduct an audit of all companies. We would recommend an immediate change in branding and insist all companies owned by State Farm Mutual Automobile Insurance Company to immediately utilize their full legal name in all correspondence. We would recommend the return of sales activities to the third-party agent’s network and we would re-engineer StateFarm.com to reflect ‘a family of companies’ owned by State Farm Mutual Automobile Insurance Company. We would encourage an audit of all claims practices and delegate claims activities to the company which actually underwrote the insurance policy sold to the consumer.
In summation, we would assure the separation of companies and eliminate conflicts of interests specifically including any single party holding similar positions in any two companies owned by State Farm Mutual Automobile Insurance Company. We feel, as organized and alleged in the complaint, State Farm Mutual Automobile Insurance Company has a high potential for fraudulent and or bad faith conduct which reasonably led to acts of criminality.
We are actively advising our clients and staff to avoid any contact with State Farm Mutual Automobile Insurance Company or its subsidiaries. Additionally we are advising clients, staff and affiliated financial organizations we are affiliated to liquidate holdings of any asset, or holdings in any publicly traded company that State Farm Mutual Automobile Insurance Company or any of its subsidiaries holds a position in. We have a concern regarding any 'blow-back' any company may experience due to their failure to comply with regulations regarding the receipt of monies derived from racketeering activities and how regulators may few what appears to be a massive fraud executed within the financial markets.
Update: June 4th, 2020.
Within a few hours of publication of our review, and due to the unprecedented economic uncertainty related to the global COVID-19 Pandemic, several of our clients contacted our staff seeking recommendations and more information regarding our findings. Due to this we will shortly be releasing a detailed warning citing State Farm's history of questionable activities and our global warning.