Insurance broker findings delayed

Deputy state’s attorney may present report to County Executive Committee Sept. 7

Winnebago County Deputy State’s Attorney Chuck Prorok said last week he may present findings of his investigation of the county’s former insurance broker to the County Board’s Executive Committee Aug. 23.

However, Winnebago County State’s Attorney Paul Logli said Aug. 24 the findings may be presented as late as Sept. 7. Logli cited more interviews were needed to complete the report.

Prorok began his controversial investigation in February into alleged undisclosed fees paid to Bruce Hagshenas, president of Benefit Planning Services Inc.

The investigation was controversial because Hagshenas contributed $1,000 in 2000 to Prorok’s failed campaign for judge in the 17th Judicial Circuit.

Prorok’s supervisor, Logli, tapped him for the job despite calls by some County Board members for Prorok to recuse himself from the investigation to avoid even an appearance of a conflict of interest.

The Rock River Times reported June 16 that Prorok planned to complete the investigation and issue his report by the middle of July (see article “Insurance investigation nears conclusion”). Prorok said last week he still had to speak with representatives of the county’s new insurance broker, Rockford Consulting and Brokerage, Inc., before completing his report.

In addition to being the county’s insurance broker, Benefit Planning was also broker for the Rockford School District, Harlem School District and Rockford Park District. Benefit Planning’s contract with the Harlem schools expires in 2005.

The June 16 article suggested Prorok had a precedent to follow during his investigation due to similar Illinois insurance broker lawsuits in Rosemont, Orland Hills and Williamson County. The Williamson County Agricultural Association alleged in court documents hidden commissions Aon Corp., received were really “undisclosed kickbacks.”

Hagshenas is familiar with the area’s court system. Hagshenas is a plaintiff in a defamation lawsuit filed in March concerning alleged comments County Board member Patti Thayer made at an Executive Committee meeting last October.

In another case in 1982, Hagshenas sued co-owners Robert Gaylord Jr. and Virginia Gaylord to dissolve Imperial Travel Ltd., a travel agency that was founded in 1980.

According to the appellate court’s 1990 decision concerning the dispute, Hagshenas’ ex-wife, Barbara Hagshenas, testified that she, Bruce and the Gaylords were all “involved in a cash-skim operation involving commission checks and incoming cash. She stated Virginia would take large amounts of cash home with her. She saw Virginia give Bruce an amount of cash in Reno.

“She and Bruce testified they told the Gaylords they wanted to stop the operation on several occasions, and it was eventually stopped sometime in 1982. When Bruce was first asked about this by the Gaylords at trial, he was evasive and stated he did not know what was going on, but he had suspicions Virginia was skimming cash.

“In later testimony, he admitted full knowledge and stated he was evasive earlier because he was surprised it was brought out. The Gaylords denied there was ever a cash-skim operation. Virginia stated she took cash to her home as part of an ongoing study of the cash receipts that was initiated after she discovered their first manager had been embezzling,” reads the courts decision.

The decision added: “The Hagshenases stated they had full knowledge of the scheme and participated in it. Though they stated at times they voiced their objection, they also testified that the scheme was stopped. They did not relate in their testimony how this concluded scheme had anything to do with the other conduct that occurred.”

On the assumption a cash-skimming operation existed, the court decided the issue was not relevant to the litigation. The appellate court ruled in the Gaylords’ favor, but did not award punitive damages.

Prorok said last week he was not aware of the case.

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