MADISON (WKOW) -- The sale of a Watertown-based insurance company brings more relief to the more than one hundred mom-and-pop investors who each lost thousands to what federal officials say was a Ponzi scheme.
A federal judge in Madison Thursday approved the sale of the assets and offices of Insurance Service Center to Middleton-based Avid Risk Solutions for $5 million.
ISC had been operated by Loren Holzhueter of Watertown. Officials with the Securities and Exchange Commission brought legal action against Holzhueter in 2015, maintaining he misused investor funds to expand his insurance and other businesses, costing clients $10.4 million. Holzhueter died in 2015, with his business affairs in disarray. Court officials used several million dollars of Holzhueter's life insurance policy to partially reimburse jilted investors.
The proceeds of the ISC sale will additionally reimburse victims. "They may be able to get 85% of their money back," Avid President Brock Ryan says.
"This is a good thing to bring some closure for the victims," Avid attorney Mary Turke says.
Ryan and Turke say their acquisition of Holzhueter's former company and seven of its Wisconsin offices is also career-extending for the firm's employees, who have continued to keep ISC going for more than two years with the black cloud of the Ponzi scheme investigation over their heads.
"In this industry, a lot of the insurance agents could have left with their books of business, which would have resulted in ISC losing revenue over time," Turke says. "And the fact that the last two years the employees stuck together and did not lose money is really remarkable."
Ryan says he intends to retain all of the company's nearly thirty employees, and met with them for the first time Friday.
"Put their minds at ease," Ryan says. "It was kind of emotional for a few of them. Some of their family members were victims of the Ponzi scheme."
"Putting the Avid name on the company and giving employees, all of these people who otherwise would be out of work, a job, is really the best result," Turke says.
The Milwaukee Journal Sentinel reports court records show one of Holzhueter's clients states Holzhueter told him ISC was worth $8.5 million. But Turke says the bid from Avid Risk Solutions was selected from among bids from several companies. "This wasn't like a fire sale," Turke says.
An Avid Risk Solutions representative says some victims urged the court to reject the sale, and explore options to make victims completely whole. But the representative says several letters to the court from other victims supported Avid's purchase.