First American Insurance which recently filed bankruptcy with $100 Million in debt is now being investigated for an alleged pyramid scheme. - First Americans Insurance Nebraska Accused

First American Insurance which recently filed bankruptcy with $100 Million in debt is now being investigated for an alleged pyramid scheme. A pyramid scheme is a non-sustainable business model that involves the exchange of money primarily for enrolling other people into the scheme, often without any product or service being delivered.

Nebraska Attorney General Jon Bruning authorized investigation into the company’s services and its three principals: James Masat, Stella Levea and Kenneth Mottin. The investigative authority or state patrol’s main objective is to find out how more than $100 million simply disappeared. Bruning believes that some of the money may have been paid out to investors.

Bruning said that an investor told him he was promised 12 percent returns and was paid 12 percent regularly over several years. “I think that was the standard scheme,” Bruning said. “Investors were promised a return, and were told it was for reserves for an insurance company to allow them to sell more policies. That makes sense if you’re an insurance company, not an insurance agency, but I’m not sure how they were holding themselves out” Bruning added.

First Americans filed for Chapter 11 bankruptcy protection on Jan. 12, claiming between $100 million and $500 million in liabilities. The principal liabilities are close to $104 million, but that figure could rise if claim holders seek interest. The filing lists more than 200 creditors, with the top 20 including mostly individuals and couples from Nebraska. Individual creditors from Montana and Georgia also made the list. Assets were estimated at $1 million to $10 million, according to the filing.