Tuesday, May 10, 2011

Kansas Athletics collects insurance on theft claim in ticket scandal


Kansas Athletics Inc. has recovered nearly $340,000 in losses from a tickets scandal that cost the department at least $2 million.

Among the sources of money is a $250,000 payment received by the department in March from CNA, the insurance company that carried a policy protecting the department against property damage and theft.

The department had filed its claim in October, citing Kansas University’s internal investigation that indicated employees had stolen at least 17,000 tickets for men’s basketball, and at least 2,000 tickets for football, over a five-year period and then had sold and otherwise distributed them for personal gain, costing the department at least $1 million.

A month later, a federal grand jury indicted five former department employees for conspiracy to commit wire fraud in the scam, which authorities determined had cost the department at least $2 million.

The $250,000 claim was the maximum allowed under Kansas Athletics’ insurance policy and came after another large claim for property damage that had been incurred during an earlier microburst, said Jim Marchiony, an associate athletic director. Both losses were covered under the same policy.

“Fortunately we had the policy when the microburst hit, and then we again were fortunate to have it because of the theft situation,” Marchiony said. “Neither incident is something that you expect to happen, but that’s why you have insurance.”

Given the two large claims during a five-year period, Marchiony said, CNA chose not to renew its policy with Kansas Athletics. Now the department is insured with Chartis for $250,000 in coverage.

The department also has received $64,500 from Ben Kirtland, former associate athletic director for development. He awaits sentencing Thursday in Wichita.

The balance of the funds received so far — nearly $25,500 — has come in through garnishments of wages from Brandon Simmons and Jason Jeffries, the first two former employees to plead guilty in the case. Each is paying restitution while on probation for their felony convictions on misprision, which is failing to notify authorities about a crime that is being committed.

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Jeremy Bolinger 9 years ago

Is it safe to say that Kansas Athletics may actually profit from this?

Funhawk 9 years ago

$2,000,000 loss with $250,000 insurance. There was probably a deductible with CNA, but it appears uninsured amount was around $1,750,000. Insurance premiums relect loss experience, so Chartis, a division of AIG, is probably charging higher premium than former carrier, CNA. The loss will be on the insured's record for five years, too, in case an insured wants to shop their insurance on renewal. All the way around, Kansas Athletics Inc is the big loser. Additional losers could be the ticket buyers if they have to absorb the large uninsured loss, increased premium, and additional charges incurred by Kansas Athletics. Also, when an insurance carrier pays for an Employee Theft claim, the insurance policy says the insurance carrier can sue the thief in order to get the amount back they paid their insured - and, the insurance company always subrogates. Sorry, no fun comment today. The lesson to be learned: always have audits in order to prevent employee theft and realize that employee theft is often caused by employees you least expect; that is, those high up.

Tony Bandle 9 years ago

I would say getting back about 17 cents on the dollar was not exactly the greatest "get rich quick" scheme I have ever heard of.

As funhawk has pointed out, that returned money may be eaten up by the higher premiums incurred by the new carrier.

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