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Texas Orders Allstate to Pay Homeowners' Claims

Texans Displaced by Hurricane Rita Charge Allstate Stiffed Them

April 8, 2005

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A Texas judge has ordered Allstate Insurance Co. to cover the living expenses of its Texas policyholders displaced by Hurricane Rita, and the state's attorney general won a court order barring Bankopp.com, from an alleged scam directed at hurricane victims.

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Acting on a petition filed by the attorney general and the Texas Department of Insurance, state District Judge Darlene Byrne issued a temporary restraining order that directs Allstate to start paying the expenses of policyholders who have been unable to return to their homes in southeast Texas for the past two weeks.

Allstate, Texas' second-largest homeowners insurance carrier, said it will be back in court Oct. 20 to oppose payment of the claims.

A spokesman for the insurance department, Jim Hurley, said Allstate has refused to cover such "additional living expenses" as hotel or motel charges for families displaced by Hurricane Rita. An estimated 91,000 people in southeast Texas were still without electricity this week and could not go home.

Allstate insists its policies do not cover the "circumstances in question," a spokesman said. The state argues that if a homeowner is unable to return home, even though his home may be undamaged, the "additional living expenses" clause should apply.

Most of the families are policyholders whose homes suffered little or no damage from the hurricane but who have been prevented from returning home either because there is no electricity or because roads have been blocked.

Included in the examples cited in the lawsuit was the case of a family without power seeking additional living expenses when the husband, who is disabled because of a spinal cord injury, and his son, who has autism, needed to find a place where they could refrigerate medications. Hurley said most of the 75 complaints his agency has received have been against Allstate.

Bankopp.com

Meanwhile, Texas Attorney General Greg Abbott won a court order halting a bogus �debt elimination� scheme purportedly aimed at Hurricane Rita evacuees and others saddled with major debt.

Travis County District Judge Margaret Cooper issued a temporary injunction halting the Texas seminars hosted by David J. West, Roxana Suadi West and Carlos M. Suadi as well as their Web site, Bankopp.com., from falsely advertising as a �banking opportunity� to eliminate major debt.

�I look forward to a jury trial against these defendants who tried to exploit the desperation of hurricane evacuees,� said Attorney General Abbott. �Victims of natural disasters are looking for help, not quick-buck operators who will put them further in debt.�

The Bankopp.com Web site encouraged consumers to wire a one-time $5,000 �deposit� to help them become debt-free by December. Interested consumers were to have been given details at an Austin seminar, which the Attorney General halted a day in advance through a court order issued on Sept. 30.

The Bankopp.com operation, using the corporate name Pydia, Inc., promised the elimination of debt with the help of an unidentified national �bank� specializing in �debt forgiveness.� The defendants claimed the scheme was possible because the �bank� would profit from the venture through specialized banking practices. Consumers were told to wire the $5,000 fee to an account in the name of �Del Sur International Holdings,� which the Attorney General�s investigators traced to Panama.

The attorney general is seeking civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act, and restitution to harmed Texas consumers.

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