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Chasing after a disaster chaser

July 05, 2009|Jason Felch

In the top-floor ballroom of a downtown San Francisco hotel, Steve Slepcevic took the podium to share the story of his success.

The son of Serbian immigrants, he began working on construction sites at the age of 12. By 17, he had started his own general contracting business. Soon enough, he was chasing natural disasters, looking to help victims rebuild their property and put their lives back together.

"I was always fascinated by disasters," said the 41-year-old contractor, wearing a tailored pinstripe suit and a sparkling smile. "But not in a sick way. . . . You've got to take a disaster and turn it into an opportunity."

The quip provoked muffled laughter from the roughly 150 people attending the 2009 National Disaster Summit, Slepcevic's seven-city road show, now in its third year. The property owners, government officials and risk managers had paid $395 a head to learn how to prepare a disaster plan, read an insurance policy and use a fire extinguisher.

For The Record
Los Angeles Times Tuesday, August 04, 2009 Home Edition Main News Part A Page 4 National Desk 1 inches; 35 words Type of Material: Correction
Disaster recovery: An article in the July 5 Section A about the disaster recovery industry said that half of states license public insurance adjusters. According to the National Assn. for Insurance Commissioners, 46 states do.
For The Record
Los Angeles Times Sunday, August 09, 2009 Home Edition Main News Part A Page 4 National Desk 1 inches; 35 words Type of Material: Correction
Disaster recovery: An article in the July 5 Section A about the disaster recovery industry said that half of states license public insurance adjusters. According to the National Assn. for Insurance Commissioners, 46 states do.

For The Record
Disaster recovery: An article in Section A on July 5 about the disaster recovery industry cited court records naming Michael McKeel as an employee of Paramount Disaster Inc. The employee, who could not be located at the time, said in an interview last week that the correct spelling is Mekeel.

There was no indication that the man with the sharp suit and smile was half a step ahead of his own disaster, a cyclone of angry customers, subcontractors, lawyers, banks and state regulators. They accuse him of being a special brand of con artist -- one who preys both on insurers and those already devastated by catastrophe.

The Times found dozens of fraud complaints, lawsuits and government investigations targeting Slepcevic and his Rancho Palos Verdes-based company, Paramount Disaster Recovery, spanning six states over the last decade. In California alone, insurance companies have filed 22 fraud complaints since 2002, records show.

In a recent interview, Slepcevic acknowledged that he had "made mistakes" and that Paramount had suffered from "management issues," but he said those problems were in the past. He attributed most of the complaints to "greedy" insurance companies and disputes with subcontractors but refused to address pending litigation in detail.

"Since 1989 I've completed several thousand projects with no problem and no complaint," he said. "I'm like the Robin Hood in the industry -- we're taking money away from the big bad insurance companies and giving it to the little people."

The story of Paramount and its founder sheds light on the world of "storm chasers," traveling contractors and insurance adjusters who descend on natural catastrophes, offering to help victims maximize their claims and rebuild. Regulators, fraud investigators and victims' advocates allege that many inflate damage estimates, do unnecessary repair work and take exorbitant cuts from insurance settlements -- or skip town with all of the money.

"Every disaster has them," said Dave Stuart, president of a nonprofit that helps wildfire victims. "They're literally like vultures circling."

Chasing the storm chasers through court can prove a costly, time-consuming and often fruitless exercise.

Contractors and public adjusters -- who negotiate with insurers on behalf of policy holders -- are subject to a patchwork of regulation and uneven enforcement from state to state. Half of the states do not even license public adjusters, giving the government no jurisdiction to pursue complaints. Many victims have no recourse beyond filing suit.

"If you screw someone who's down and out, he's not going to have the resources to go after you," said Steve Irving, a Louisiana attorney who is seeking $600,000 from Slepcevic and other Paramount employees in a racketeering suit on behalf of two victims of hurricanes Katrina and Rita.

In some cases, homeowners make out well and the victims are insurance companies, which often pay inflated claims rather than spend money on litigation, industry experts say. Policy holders ultimately pay the price in rising premiums.

The cost of post-disaster insurance fraud is hard to measure. The Insurance Information Institute, a trade group, estimates that fraud accounts for 10% of all property damage claims, suggesting that the toll from a disaster the size of Katrina could reach billions of dollars.

Paramount has left a trail of complaints from Mississippi to California, which, despite some of the toughest regulations in the country, has struggled to hold the company accountable.

Only recently have Slepcevic's troubles been closing in.

The day before the San Francisco conference, California suspended his contractor's license. Weeks earlier, a judge had thrown out his petition for personal bankruptcy.

In the bankruptcy case, Slepcevic had acknowledged 21 claims against him or Paramount. But the U.S. trustee said in court papers that Slepcevic was "actively concealing" a $200,000 fine by the California Department of Insurance and six related criminal charges for allegedly misrepresenting himself to victims of California wildfires.

Slepcevic has promised to pay the debtors -- just as soon as the next disaster strikes.

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