Friends of Hal Katz say they lost thousands, call it "betrayal of trust"
10:38 PM, Dec 26, 2012
8:33 AM, Dec 27, 2012
Baltimore - They each loaned his company thousands of dollars, but now friends of an infamous Baltimore insurance salesman are fighting him in court. Records show a group of people who say they fronted huge amounts of money for one of Hal Katz's businesses are going through bankruptcy, trying to get back some of their cash. You can forget the notion that those fighting are all millionaire investors. In an exclusive interview, a Katz confidante tells ABC2 many of the investors are regular Joes who simply loaned a friend all the money they saved.
You know him from TV.
Hal Katz is the insurance pitchman who plays loud music, points at the screen and says he can put you behind the wheel. But some of Hal Katz's former friends, including Michael Cohen, see him differently. He says, "I didn't dislike him but i came to think he was not a good businessman."
Cohen, a Baltimore County attorney, may know Katz better than most. For more than two decades he was the attorney for the Katz Insurance Agency. He sat on the company's board and says he trusted Katz so much that he invested more than one-million dollars of his family's money in the financial arm of Katz's business, Insurance Payment Plan. Cohen tells ABC2, "Obviously when you enter into this kind of arrangement with somebody like that, you have to have a certain level of trust. I'm profoundly disappointed that the trust was warranted."
The breach of trust is something Cohen realized after finding about a state investigation into Katz's businesses last fall. ABC2 News Investigators first told you back in October, the Maryland Insurance Administration revoked Katz's license to sell insurance after finding he "knowingly committed fraudulent or dishonest business practices".
That state decision involved Katz Insurance, but federal records also show at least two-million dollars missing from Insurance Payment Plan, the lending arm of Katz's company. Bankruptcy filings list more than a dozen local creditors, including Michael Cohen, who say they're owed money by Katz. Cohen says, "Everybody I know had some sort of personal relationship with Hal Katz, so essentially it's not just a question of a misappropriation of money, but a betrayal of trust."
And it may be a costly mistake for friends and family of the well-known insurance salesman. According to Cohen, some of those investors are middle-class people who lost their children's college funds, their retirement money and even their life savings. Federal court records show the smallest investor put in nearly $50,000, while others invested hundreds of thousands in IPP.
A group of investors filed to get an involuntary bankruptcy declared for IPP. A bankruptcy trustee was appointed in early December. It will be the trustee's job to trace the missing money and determine how much is left and can be awarded back to the investors, if any.
Although Katz did not comment for this story or our previous coverage, citing pending cases, his investors may get to hear from him January 7
th. Cohen, who hasn't spoken to Katz since the case was filed, wants an explanation, "He's either delusion or sociopathic. When you take money from people that's not yours, it's not the right thing to do."