Firstar Bank of Sheboygan is UNDER INVESTIGATION

In July 1993, Keith Nark, Cobleskill, NY, purchased a truck under a truck purchase finance program administered by a group known as I-TOO (see sidebar). The loan, obtained through Firstar Bank of Sheboygan, WI, was guaranteed by the Small Business Administration (SBA) under the program established with I-TOO.

To Nark, it meant spending his life savings. But the interest rate was low, and it sounded like a really good deal. He and his girlfriend Annie (now his wife), trusted Marshall Siegel, the head of I-TOO. Siegel was an industry celebrity. He was a poster boy of industry task forces and presented his business seminar, "Work Smarter, Not Harder," at truckshows nationwide.

As part of the loan program, Nark was required to buy five years pre-paid physical damage and non-trucking liability insurance. The five-year premiums for the two coverages were disbursed directly by Firstar to I-TOO's Truck Insurance Services (TIS) from the loan proceeds.

"We weren't so sure about this, but Marshall was our buddy. He made us feel like he was our advocate," says Annie Nark. "After all, the paperwork came in SBA wrapping. Our federal government! What could be more reassuring?"

But after the purchase, problems began to surface. According to Annie, the bank failed to provide a written explanation of certain "soft costs" (nearly $3,500), that were held by Firstar Bank for approximately three months after the loan closed. Mrs. Nark made numerous phone calls in an attempt to reach Kean Kasper, then an assistant vice president at Firstar. After weeks of calling, she was finally able to speak to Kasper and request a breakdown of these "soft costs." The money was abruptly refunded by Firstar, without explanation or formal accounting.

"It's not so much just taking us for a bunch of dumb truckers," says Annie. "Truckers have their backs right up to the eight ball all the time. They have no time to go over paperwork with a fine-toothed comb. Marshall, of all people, knew that."

What Siegel did not account for, however, was a trucker with a good business sense, and his sharp-eyed wife. When I-TOO/TIS failed to send an insurance policy, Annie began a game of phone tag with I-TOO.

"All we wanted was a policy," she says, "we had just spent $21,000 on insurance!"

Finally, she received a single page listing the name of the insurer–Continental National Indemnity Co. After persistent inquiries, Annie found an agent in Atlanta who asked her if she had received the packet routinely sent to new insureds. The agent faxed the packet. Annie was shocked that the premium amount on the certificate of insurance was substantially less than the amount charged by I-TOO/TIS and paid by Firstar. The bank had issued a check to I-TOO/TIS for $21,538.00, but the certificate of insurance indicated a premium of approximately $12,000 for 60 months of physical damage insurance. When attempts to reach Siegel were unsuccessful, the Narks knew they needed an attorney. Annie and Keith, members of the Owner-Operator Independent Drivers Association, called for help. OOIDA referred the Narks to their legal counsel in Washington, DC. Within 24 hours after Nark's newly-acquired attorney contacted Siegel, I-TOO refunded approximately $6,700 to Nark, sending it to Firstar to reduce the outstanding amount of the loan. Siegel told Nark it was just a clerical mistake.

"That's a chunk of money," says Annie. "Didn't that make anyone at the bank think something was amiss?"

Nark's attorneys called Firstar in January, 1994 to request information regarding Nark's loan account and the soft costs and miscellaneous fees. After a delay, the bank provided some information. But despite a specific request, certain key documents were omitted.

Finally, under court order, Boston-based attorney John Kiernan (now on the case) was able to investigate more than a dozen other loans and found a disturbing pattern. According to Kiernan, Firstar did not examine its other loans in the I-TOO program to determine whether the same insurance overcharges had been made. Keith Nark believes that such an investigation would have been reasonable to expect, given the fact that Kiernan was advised by Firstar's Kean Kasper that the amount of proceeds paid to I-TOO/TIS on the Nark account was similar (approximately $20,000 per loan) to other Firstar loans made under the I-TOO program.

"It's not reasonable to believe that all this failed to set an investigation in motion within the bank," says Annie Nark.

On May 5, 1994, a class action lawsuit was filed by Keith Nark and two other truckers (John Yeo and Donald Paquin) against Siegel and his co-conspirator, Marilyn Kriensky (an I-TOO officer). Yeo recalls a letter from Kriensky that stated, "It has always been the intent of your association (I-TOO) to provide you with the best possible coverage for the least amount of dollar premium."

As the litigation went forward, the plaintiffs began to suspect that Firstar had actually known about the overcharges and had just looked the other way.

"Then, during the legal process, our attorney deposed Marshall," Keith says. "Siegel said the bank was aware of the markup. At another time during the depositions, Marshall actually said Kasper told him he didn't mind if I-TOO made a profit. According to Marshall, Kasper said he wanted them to be "successful."

"I'm a trucker, I just pull the plow, but I know the difference between just ‘making a profit' and bilking hard-working people out of their life savings," says Nark.

Keith and Annie were outraged when it was discovered that Firstar's files contained copies of at least one certificate of insurance exhibiting the exorbitant premium amount, plus a copy of the actual certificate indicating the real premium cost. Misgivings were further fueled when it was learned that two of the trucks purchased under the program were subsequently repossessed under suspicious circumstances. Under the normal scheme of things, Firstar, as lender, would have been expected to affect the repossession (or to at least have issued a release from the loan obligation). In this case, however, both trucks were repossessed by Siegel, and neither of the individuals who had purchased the trucks were given any papers to evidence Siegel's right to repossess the vehicles or to remove the truckers from further obligation under the loans.

In August of 1996, Firstar was formally named as an additional defendant in the on-going class action, still pending in the Massachusetts Superior Court in Norfolk. Now that Siegel has been sentenced and is bound for prison (see sidebar), the truckers' attorney says that a win in the civil class action will hopefully see the truckers' money refunded.

"We are seeking the return of the excess premium dollars unlawfully taken from the truckers," says Kiernan, "including the payment of interest on something they never got." –Sandi Soendker

Also see Siegel Sentenced to 15 Months