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Angeles County | Official Business / Courts and Government

Insurance Official Pleads Guilty to Conspiracy

June 09, 1998

An executive of a Seattle-based company that defrauded auto insurance policyholders out of more than $100 million pleaded guilty to conspiracy charges Monday in Los Angeles federal court.

John Douglas Nordstrom, 60, was the fourth person to plead guilty in the case, which revolved around the sale of policies by offshore companies to high-risk drivers unable to obtain insurance through normal channels.

An investigation by the FBI, the state Department of Insurance and the U.S. attorney's offices in Los Angeles and San Diego found that Nordstrom was diverting a substantial portion of insurance premiums to benefit himself, his family and his friends.

His company, International Insurance Underwriters, served as an administrator for several offshore companies that marketed policies to high-risk drivers during the 1980s and 1990s.

When many of those companies failed to pay claims or refund premiums, the insurance department examined their books and records, concluding that many were shells with exaggerated or nonexistent assets.

A joint investigation with federal authorities found that Nordstrom and his colleagues siphoned off large portions of those premiums.

Nordstrom, who now lives in Carlsbad, faces a maximum of five years in prison when he is sentenced Sept. 8 by federal Judge Edward Rafeedie.

Previously pleading guilty in the case were Lawrence R. Hoehne, 57, of Seattle; Robert M. Thul, 58, of Carlsbad, and Kelly Jean Moore, 34, of Birmingham, Ala., all of whom were principals at International Insurance Underwriters. They are also awaiting sentencing.

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