Kirch, Kieslich, and Love v. Meadowbrook Insurance Group and Star Insurance Company

Kirch, Kieslich, and Love v. Meadowbrook Insurance Group and Star Insurance Company (Second Judicial District Washoe County 1995-2008)

“IT DON’T TAKE A BRAIN SURGEON TO FIGURE OUT WE ARE A LITTLE BIT OUT OF TRUST”

In May of 1995, management of Meadowbrook Insurance Group/Star (MB/Star) determined that the operators of American Insurance Agencies and Frontier Surety Agency (AIA/FSA), Mark Kirch, Zednek “Denny” Kieslich, and Dan D. Love fell some $800,000 behind in tendering bond premiums to MB/Star. Within a month, the premium shortage grew to $1,700,000 to $2,000,000.

Under the terms of a management agreement signed by the owners, MB/Star assumed management and began an audit. Management determined that Kirch, Kieslich, and Love had perpetrated a massive fraud on MB/Star and on those who purchased bonds and posted collateral to secure those bonds by embezzling bond and insurance premiums and literally using AIA/FSA bank accounts as if they were personal accounts. Needless to say, MB/Star fired the three culprits, who promptly filed suit against MB/Star alleging, among other things, wrongful termination of their employment, fraud, and the wrongful takeover of their businesses. MB/Star counterclaimed for fraud and embezzlement.

Discovery unearthed scathing evidence of fraud. For example, Mr. Kieslich sent a memo to his cohorts stating that “…it don’t take a brain surgeon to figure out that we are a little bit out of trust.” Little Bit? $2,000,000 embezzled by the Defendants who used the business accounts, including monies held in trust, as their personal bank. The trial judge dismissed the claims by Kirch, Kieslich, and Love because of their falsification of financial statements meant to prove themselves unable to pay fines levied for their contempt of court. The Jury ultimately awarded MB/Star monetary damages and interest in excess of $7,000,000. The case was finally decided by the Nevada Supreme Court in 2008, after long delays caused by Kirch, Kieslich, Love, and their lawyer, who was shortly thereafter disbarred.