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Friends United Meeting |
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March 1998
Selling Trust, Pleading Guilty:
A Timeline of the Harmon Story
By Michael Crook and Judy Van Wyck Maurer
1972-National Friends Insurance Trust is established. Philip Harmon and two representatives from Friends United Meeting and Evangelical Friends International are named as trustees.
1980-Trust amended, designating Harmon as sole trustee and empowering him to appoint "successor trustees." Amendment signed by representatives from Mid-America Yearly Meeting, George Fox College and Northwest Yearly Meeting, apparently without notice to other participating groups.
1986-(during or before) Philip Harmon begins selling to investors "unregistered securities in the form of unsecured notes." Securities are bonds, stocks, or mutual funds. Except under narrowly defined circumstances, securities must be registered with the state and federal securities commissions before being sold.
1988-Harmon appoints his son-in-law and son as successor trustees. Only Harmon and a notary public sign the document.
1989-Harmon stops buying health insurance from licensed insurers and begins to operate "an illegal, unlicensed health insurance company under the name National Friends Insurance Trust," according to the federal complaint.
Feb. 21, 1995-A check for $42,035 is drawn on NFIT's account at First Interstate Bank of Washington, payable to First Interstate. Steven Harmon closes on a house near his father's home, using a cashier's check for $42,035 for closing costs and down payment.
February 1995-Printed materials from NFIT no longer contain the word "insurance" in its name. It becomes known as "National Friends Trust."
Dec. 31, 1995-Mid-America Yearly Meeting leaves NFT.
Jan. 31, 1996-Friends Church Southwest Yearly Meeting leaves NFT.
August 1996-Code-named "ISLANDSCAM," an investigation by the FBI, IRS and three other agencies begins.
Oct. 11, 1996-FUM's general secretary, Johan Maurer, receives a letter from Harmon stating "Some entities under my control are under investigation." However, Harmon wrote, "Neither National Friends Trust nor Harmon & Associates are a part of the investigation." U.S. attorneys later charge that this letter "concealed the nature, scope, focus and findings of an ongoing securities fraud investigation."
Dec. 5, 1996-Harmon relays message to Maurer that the visit Maurer wanted to make to the office of Harmon & Associates would be "premature."
Dec. 18, 1996-Harmon warns Quaker leaders that "recent rumors" and decisions by some to quit NFT could lead to higher charges to cover unpaid claims for those who remain.
Dec. 23, 1996-David Brock, superintendent of Indiana Yearly Meeting, writes to Harmon, pointing out that the "recent rumors" include "visits to our offices by FBI personnel."
Dec. 31, 1996-North Carolina Yearly Meeting (FUM) leaves NFT.
Jan. 29, 1997-Harmon and Associates fax a proposal to FUM and other groups for a "fully insured medical insurance option for your consideration."
Feb. 18, 1997-U.S. District Court issues a restraining order against Harmon, his son and son-in-law, freezing assets and barring them from "engaging in insurance sales, brokering, and any and all other activity related to insurance."
According to the court receiver, checks totaling $262,723.40 to pay NFT claims had been issued by the claim processor but not mailed by NFT. Total cash frozen in NFT accounts: $65,424.43.
Feb. 27-28, 1997-On behalf of the 10 organizations in NFT when it collapsed, Brock meets with the Seattle attorney they retained, as well as the court receiver, a federal investigator, and the assistant U.S. Attorney and others in Seattle.
Feb. 28, 1997-NFT ceases operations.
March 17, 1997-Federal prosecutors reveal that "the United States has thus far identified 62 pieces of real estate and 80 collector cars and other vehicles connected to the defendants and to Harmon-related entities" not previously reported to creditors.
March 26, 1997-Prosecutors allege "unusual circumstances suggesting witness tampering and dissipation of assets arose during the investigation." Harmon taken into federal custody on charges of mail fraud, wire fraud, embezzlement.
April 1, 1997-Harmon is released on bail.
June - Oct. 1997-FUM voluntarily pays more than $35,000 to employees' health care providers for unpaid NFT claims.
Oct. 10, 1997-FUM regains adequate medical coverage for its employees, after having been turned down by seven insurance companies and providing only stop-gap temporary insurance since March 15.
Oct. 31, 1997-Harmon pleads guilty to conspiracy and fraud charges, including inducing "more than 230 investors to invest more than $14 million" in Harmon's 18 related entities "and then to convert said money to the use and benefit of Philip E. Harmon and his relatives, co-conspirators and affiliates." He remains free on $350,000 bond while awaiting sentencing and an attempt by the court receiver to find and release assets, including over 100 bank accounts and 27 "business entities."
Sources: Court documents filed by the U.S. Justice Department, records of Friends United Meeting, interviews with Quaker leaders, National Friends Insurance Trust documents.
Copyright (c) 1998 Friends United Meeting
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