Sometimes you find stuff out pretty much because of who you happen to know. In this case, the “strange case” of one Canopy Financial, Inc., which dealt in health savings accounts (HSA’s,) is made known to me because another Clark County blogger is among the victims of alleged financial fraud involving Canopy’s health care savings accounts. From Politics is a Blood Sport:
HSA’s were once touted as the market oriented solution to putting the consumer in charge of health care decisions. You see, in libertarian-land, the consumer would have more skin in the game since it was their pre-tax dollars combined with a high deductible insurance policy, and would thus magically drive down prices. And since the individual insurance market is broken anyway, why not get some tax benefit being self-employed?
Instead, what we’re left with is the CEO class absconding with the funds, both from investors and HSA account holders. In Canopy’s letter to me they “deeply regret this development”. Well, they’re going to deeply regret messing with the thousands of HSA account holders after all is said and done. Eventually, Canopy Financial’s insurance will have to foot the bill, but that’s probably months away. In the meantime, it’s time to raise a ruckus, with a class action lawsuit.
The mind boggles at the outright theft. From Dow Jones Venture Wire:
Venture-backed Canopy saw its once-positive reputation come crashing down after it was discovered in early November that a KPMG audit of the company was falsified. That discovery led the Securities and Exchange Commission to file a fraud suit against the company, naming only President and Chief Operating Officer Jeremy Blackburn, who is also the subject of criminal charges. The Chicago-based company has also let go most of its 100-plus member staff and filed for Chapter 11 bankruptcy. The company’s downfall followed about $75 million in equity investments through Foundation Capital, GGV Capital and Spectrum Equity Investors.
In its recorded statement to customers, Canopy didn’t state a reason how these funds could have disappeared.
“All of the funds for these savings accounts were supposed to be held in custodial bank accounts. We regret to inform you that most or all of the funds were misappropriated from the bank accounts and are now missing,” Canopy said. “As a result, Canopy can no longer process customer transactions for the health savings accounts maintained through these providers or the health savings accounts maintained by Canopy for its Wellfund customers. At present, all of these accounts have been frozen.”
Canopy states that the affected health savings account holders will be listed as creditors in its bankruptcy case, while the company cannot offer immediate access to those funds.
So even while we’re debating whether the current health care “reform” proposals deserve to become law, we’re seeing that previous laws crafted by the very same industry lobbyists have, in this case, resulted in outright theft.
While Chris Bassett of Politics is a Blood Sport has already received some inquiries from other consumers who have been ripped off, you kind of wonder what it might take to get this story further into the traditional media. I mean, if I walked off from a convenience store after stealing $75 million I would at least expect to get my mug on the tee-vee for my trouble.
This is a story that is just begging for some enterprising reporter(s) and other bloggers to start piecing together who all the victims are. Bassett tells me he lost a relatively paltry amount of money, but he’s hearing from folks who lost thousands. And while criminal indictments are nice, that doesn’t really do much if you have cancer or something and your money has been stolen.
Hell, this ought to be a campaign issue. The glibertarians never get called out on their failures, and this is a massive and timely example.
Gee, I guess deregulation of the financial markets wasn’t such a great idea…..
HSA’s aren’t evil, I had one for a while, it was pretty slick. Like everything else, HSA’s need to be regulated and there needs to be penalties when people break the rules.
@2 That’s part of the problem. A lot of people don’t seem to know or care where “slick” stops and “sleazy” begins.
HSA’s are awesome.
Jon is doing the Daily Kos/Democrat talking points trying to use this to sway the Public that they are bad.
Government workers have Diamond Health Plans at virtually all levels. There is little or no accountability.
HSA’s==it’s your money! Awesome.
I’m thinking that the CEO is going to do minimal jail time. Once the criminal case is going forward, he’s going to offer to direct prosecutors toward (most) of the remaining money in return for a few months at a “club fed” retreat. Prosecutors will have little choice but to take the deal, in order to recover at least a portion of the money owed to clients.
The reason Bernie Maddoff got hit with such a big sentence is that he didn’t fully cooperate with prosecutors, attempting to transfer funds and property to family members even while the investigations were underway. He chose to keep his mouth shut in order to protect others, figuring that he was an old man with a relatively short lifespan anyway, and he was willing to take the fall as long as his family could keep a good share of his ill-gotten gains.
But what really irks me is that under the U.S. bankruptcy laws, the people who are least able to protect themselves, such as those who invested in this fund, are given the lowest priority. Those who went into business with the fund with the greatist ability to determine their risk in advance will come out okay, with secured claims (banks) or administrative claims (lawyers, accountants). It’s a major failing of the bankruptcy system which has existed since it’s inception.
By the time the remaining money is collected, the secured creditors, and the fees to the trustees, lawyers, and accountants will probably leave little to the people the fund was designed to serve.
Hey Jon, where is the “correct” comment in the headline…
re 4: HSA’s are awesomely stupid:
– Wages have been flat or worse for decades.
– People can barely pay their bills let alone build up a significant amount in an HSA to offset high deductables.
– And the worse part of it is that the oligarchy in this country steals the money through ‘investment’ or outright theft.
Who’s side are you on Cynical, you twat ?
re 6: So what? Lincoln Savings was in AZ. Does that mean McCain had something to do with it?
OK. Bad example.
Once again headless is brainless. Search HA fool and see where Puddy copied most of that from.
You are a moronic mindless memory malady muttonhead.
@7
I’m a healthy guy who doesn’t go to the doc’s very often and even then it’s generally for something cheap to fix like a sinus infection. My HSA account allowed me to direct money that I would have been taken out of my check anyway and not used into an account where I could use it to help pay for things that I did need, like contact lenses and a couple of fillings (I have vision and dental coverage as well, but they’re crap). In exchange for the ability to do this my deductible was set at $1500 instead of $500. I also got a couple of bucks off on my payroll and income taxes. Not a bad deal at all in my book. I was able to keep about $600-700 in my account most of the time.
I have a couple of co-workers that have some health concerns that would have made an HSA account a complete rip off for them.
Like all things the devil’s in the details.
re 9: Your response is pointless.
@11: Your response is mindless as always headless.
Is there any sentient being who still believes Wall Street wouldn’t have stolen our social security retirement benefits if Bush had succeeded in giving them the chance?
(Note: Wingnuts don’t count as “sentient beings.”)
re 12: It isn’t mindless. You are implying that Canopy Financial, from Illinois is corrupt and who else (one is left to guess) is from Illinois? Why, it’s Barack Obama! So, by the flimsiest of threads, you attempt to paint Obama as being like Canopy because he’s from Illinois.
So, I pointed out that Lincoln Thrift debacle (you remember the S&L meltdown on Reagan’s watch) happened in McCain’s home state of AZ and I mockingly pointed out that your guy WAS involved in a crooked scheme.
Why do people have to explain the simplest things to you? You are such a nudge.
This is timely, because the Republicans in the state House have been pounding this drum for a while:
http://www.houserepublicans.wa.....091217.htm
I’ve got a special needs child. HSAs would stink for my family.