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Home Government Inside Rye’s $2M Theft Insurance Claim – What City Hall Hasn’t Told...

Inside Rye’s $2M Theft Insurance Claim – What City Hall Hasn’t Told You. – Ted Carroll, Guest Columnist

by Ted Carroll, Guest Columnist

For 3 years Rye officials say they’ve diligently pursued Travelers Insurance for recovery. Three months ago Travelers told Rye they’ve done next to nothing right to make a valid claim. It would be nice for someone to finally officially mention this, right?

The list of allegations Rye made claiming why Travelers should pay us for the 7 year long Rye Golf Club fraud is itself a long one – the complaint copy on the city website features 87 separate claims covering 16 written pages. Travelers response to those 16 pages is shorter – only 9 written pages in which they deny knowledge or information sufficient to determine the truth or falsity of 76 of the 87 claims. Of the remaining 11 claims Travelers admits them for varying reasons but concedes little. The more telling part of Travelers answer follows in 4 pages of what are called their ‘Affirmative Defenses.’

Travelers makes 8 so called ‘Affirmative Defenses’ (AD’s) which are facts other than those alleged by the plaintiff Rye which, if proven by Travelers, defeat or mitigate the legal consequences of Travelers otherwise ‘unlawful conduct.’ Of these 8 AD’s, 3 are legalistic or technical in nature (failure to state a proper claim – barred or limited by the equitable doctrines of laches, waiver and estoppels – failed to take steps to mitigate). Four more AD’s assert in various ways that Rye has “failed to specify and submit proof establishing its alleged loss.”

The hyperlink ending the previous sentence will direct readers back to the only official report of several about the fraud that city has approved for public release. It’s one I’ve previously called incomplete and misleading and suppresses evidence of prior senior city official’s involvement originating and then hiding the fraud. Travelers apparently agrees.

The last of the 8 AD’s is I think the most troubling given Rye’s 7+ years of secret stealing & defrauding followed by our 3 years of confidential but supposedly diligent private co-operation with Travelers to obtain resolution and recovery. In this, in the so enumerated ‘Fourth Affirmative Defense,’ Travelers says that Rye has so far failed to – 

  1. “Notify us as soon as possible.”
  2. “Submit to examination under oath at our request and give us a signed statement of your answers.”
  3. “Give us a detailed, sworn proof of loss within 120 days.”
  4. “Cooperate with us in the investigation and settlement of any claim.”

I’d personally hate to be making these claims to a Federal Judge if they were untrue and I suspect golf club members (who personally faced a wave of sharp official condemnation and rebukes starting in mid 2012 as they first uncovered and then forced termination of the fraud) will be deeply concerned if any of these 4 actually ARE true.  

By way of history, please remember that Rye elected officials decided early on to go out of their way not to pursue all parties and remedies available to achieve recovery.  Logical and supportable professional malpractice claims against Rye’s outside lawyers and independent accountants for negligence and breach of fiduciary duty were inexplicably ignored in favor of simply submitting one gigantic bill for all the bad stuff pulled by our former city officials to Travelers.

I for one sure hope this approach works, because given the statute of limitations all our other recovery options are now likely gone with the wind.

And perhaps that’s been the plan all along.

Some bad actors sure got it good.

Ted Carroll is a lifelong Rye resident, a Certified Public Accountant, and a partner at Noson Lawen Partners, a media industry private equity firm. 

See reference documents:

Discovery schedule

Response

  1. Thank you Ted for this review. I cannot find a phone number or contact to add information on previous management failures on the RGC matter and hope you will contact me at 914 967 4970 so we may start a dialogue on this matter and others of importance to our Rye community.
    Be Well!
    Bertrand de Frondeville 914 967 4970

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