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.