Garden State Gubernatorial Campaign Involves Insurer Money

McDonough says Heartland is a captive of 2 organizations made up of Benecard clients==Benecard Association Trust and Benecard Association. McDonough says the captive, created in 2003, is managed by the McCarran-Ferguson Captive Management Company Inc., Washington, and has a locally based manager. It provides stop-loss insurance for programs that go over their contract spending limit, he says.

Cohen, in his letter requesting an investigation, says Benecard operated from Lawrenceville, N.J., as Heartland's general managing agent; offered its product in New Jersey; and sold Heartland insurance by bargaining with and securing "official approvals of municipal and county officials in New Jersey for Benecard contracts."

If Heartland is doing business in New Jersey, it is avoiding a 1% premium tax amounting to $2 million a year, Cohen says.

Public employees in programs with Heartland backing don't have New Jersey Life and Health Insurance Guaranty Fund support if the "thinly capitalized Heartland" becomes insolvent, Cohen writes. He suggests that several insurance statutes may be violated if Heartland and Benecard are illegally commingling non-insurance fees with premiums.

A spokeswoman for the New Jersey department, Jaimee Gilmartin, says the letter has been referred to the agency's legislative and regulatory affairs unit for a review.

If the New Jersey. Department of Insurance and Banking should decide to refer the matter to the state attorney general, "we would weigh in," says Lee Moore, a spokesman for the New Jersey Department of Law and Public Safety. "So far, there has been no overture to have us formally involved."

News of Forrester's insurance dealings have come at a time when Corzine is the focus of stories questioning his dealings with a former girlfriend, Carla Katz, who heads Local 1034 of the Communications Workers of America, which represents New Jersey state workers. Corzine, who has an estimated net worth of $15 million to $42 million, has acknowledged forgiving a $470,000 loan he made to Katz to help her buy out her ex-husband's interest in a house that she and the ex-husband once owned in Washington.

McDonough says the Democrats' questioning of Forrester's dealings may be designed to "take the well-heeled and the high-heeled off the front page."

Cohen says insurance infractions are unlikely to excite the electorate, but he says the Corzine campaign probably will present the issue as one of "illegal campaign contributions."