Owner denies claims by state, blames economy

Austin’s Minnesota Surety and Trust Company is in the process of liquidating its assets, a move that was ordered by the Minnesota Department of Commerce.

According to the Department of Commerce, Commissioner Mike Rothman ordered the liquidation because of the company’s long history of financial problems, administrative incompetence, dishonest business practices and record of fraudulent activity.

“This was a troubled company, with a history of unsafe financial and market conduct practices,” Rothman said in a news release. “Given the company’s history, its disregard for state law and its bad financial condition, the state had no other recourse.”

The company’s president, Peter Plunkett, said the asset liquidation was a voluntary move. In an e-mail sent to the Herald, Plunkett said Rothman’s statements in a Department of Commerce news release are defamatory. Plunkett also said the statements about fraud and misconduct are merely allegations and not findings.

“The current economy and regulatory environment has made continued operations a perilous venture and caused Minnesota Surety & Trust Co. to make the extremely difficult decision to voluntarily liquidate its business,” Plunkett said in the e-mail.

“The company’s resolution with the Department of Commerce is based solely on allegations.”

According to the Department of Commerce news release, all regulatory action against the company was consolidated on Nov. 11. The Department of Commerce revoked the company’s certificate of authority and Plunkett’s resident insurance producer’s license; the department also ordered both Plunkett and the company to cease and desist from doing business in Minnesota.

Plunkett may have to pay up to $50,000 in civil penalties, the news release states.

Throughout the course of the Department of Commerce investigation into Minnesota Surety and Trust Company’s business practices, officials learned the company reportedly made at least 4,000 false entries in books, reports or statements. The company was fined $1.2 million in May 2011 from the Colorado Division of Insurance for fraud and financial misconduct.

“It is not true that Minnesota Surety ‘was a troubled company with a long history of unsafe financial and market conduct practices,’” Plunkett said. “Our record of being a successful business for over 65 years speaks for itself. The reason the company reported a large loss at the end of June 2011 is due solely to the fining, market conduct examiner fees and attorneys fees that the company absorbed as a result of the Colorado matter in April 2011.

“The company maintains its commitment to its clients and will strive to continue to meet its ongoing financial obligations,” Plunkett added.