Aviva USA Sues Ex-Employee in Alleged $6 Million Embezzlement; Criminal Trial Pending
July 13, 2010 by Fran Matso Lysiak
July 12, 2010
Aviva USA Corp. and the federal government are pursuing separate legal actions against a former employee of the life insurer accused of embezzling nearly $6 million from the company through a fraudulent commission payments scheme.
Around April 2004, Phyllis R. Stevens, who was employed as a compensation specialist, “devised a scheme to convert and embezzle funds” from Aviva USA by causing commission payments to be paid from Aviva into a bank account she jointly held with Marla Stevens, her spouse, the company alleges in its civil complaint against both women filed last September in the U.S. District Court for the Southern District of Iowa.
Phyllis Stevens was also charged last October in an 18-count indictment, with crimes ranging from wire fraud and money laundering to aggravated identity theft, according to a recent ruling in the criminal case by the United States against Stevens.
A trial for both women in the government’s case is set for Aug. 16.
Though Stevens had recently maintained she was incompetent to stand trial because she suffers from multiple personality disorder, Senior U.S. District Judge Ronald E. Longstaff ruled Phyllis Stevens is competent to stand trial on the charges in the indictment. She “is presently able to understand the nature and consequences of the proceedings against her and assist appropriately in her defense,” Longstaff ruled in the government’s criminal case.
Stevens’ indictment charged that she “used her position as an employee with Aviva USA” to divert almost $6 million of Aviva’s funds into accounts she and Marla Stevens controlled.
The company can’t comment on the government’s case, said Kevin Waetke, a spokesman for Aviva USA, in an e-mail. “However in cases of this nature, where employee misconduct has been detected, we are committed to taking swift and strong actions to protect our company, customers, distribution partners, and employees — including notifying law enforcement when appropriate.”
Aviva’s civil case against both women is ongoing and no trial date has been set, an attorney who represents the company said.
According to the company’s complaint, Phyllis Stevens had been employed by Aviva or by Indianapolis Life Insurance Co. continuously since 1974 in Indiana and Iowa. In 2001, Aviva acquired Indianapolis Life, and in 2004, Aviva merged and combined the computerized operating and data systems of Indianapolis Life into its own systems, its lawsuit says. As a compensation specialist at Aviva, she used a computerized system to manage commission payments to insurance agents, the Des Moines-based company alleges.
Most of the commission payments were calculated and paid in this system automatically, but a small percentage of agent commission payments needed to be corrected and managed manually. Her job duties included correcting the amounts paid to agents, the suit alleges, and she’s accused of making more than 200 “unauthorized manual adjustments” within that system.
In court filings, Phyllis Stevens maintained she was diagnosed with multiple personality disorder — now known as dissociative identity disorder — in 1989 and continued to suffer from this condition, making her incompetent to stand trial. Her defense counsel expressed concerns that she might “switch” or change identities, during trial.
In the company’s suit, which alleges violations of the Computer Fraud and Abuse Act in addition to other fraudulent acts, Aviva seeks monetary and punitive damages, court costs and attorneys’ fees.
Aviva Life and Annuity Co., a member of Aviva USA Group, currently has a Best’s Financial Strength Rating of A (Excellent).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
