State Insurance Commissioner Kim Holland has denied a request from former state Sen. Gene Stipe, of McAlester, that he be allowed to participate in the insurance business.

Michael Ridegeway, chief legal counsel for the Oklahoma Insurance Department, said a federal law prohibits anyone with felony convictions from engaging in the interstate business of insurance.

“The gist of it is if you’ve committed a felony involving dishonesty or breach of trust, you can’t participate or engage in the interstate business of insurance,” Ridgeway said.

The law includes a provision for those with felony convictions to apply to Holland’s office for special permission to allow them to work in the insurance industry.

Holland addressed the reason for her decision.

“We want to make sure the people we license and regulate are held to the highest standards of ethics and honesty,” Holland said. “Mr. Stipe has been convicted of several felonies that involve dishonesty and that is not the type of character we want in control of the insurance-buying public’s money.”

Ridgeway said the issue came up after Stipe filed a lawsuit alleging that he is a partner in the “ownership and operation of abstracting and title insurance companies.” The lawsuit had been filed in Pittsburg County District Court against Steve Phipps.

After Holland became concerned about the allegation, she sent Stipe an application form used by the Insurance Department to investigate convicted felons, according to her office.

After she reviewed his application and supporting documents, Holland concluded that consumers and the insurance industry would not benefit by granting Stipe special permission to participate in the insurance industry.

If Stipe participates in the insurance business without Holland’s consent, he may be subject to criminal prosecution under federal law, according to Ridgeway.

Stipe pleaded guilty to federal charges of perjury, conspiracy to violate the Federal Election Campaign Act and conspiracy to obstruct a Federal Election Commission investigation. His sentence in January, 2004, included five years probation which is set expire in 2009, according to a federal probation officer.

Ridgeway said there’s a question of whether Stipe has participated in the business of insurance. He is not licensed as an insurance agent and no state filings have been found listing him as the owner of an insurer, according to Ridgeway.

He said Stipe is the beneficiary of a trust that owns a note that’s owed by a holding company.

“The holding company owns American Land and Aircraft Title,” he said, according to records at the Insurance Department. He said he had seen no evidence that American Land and Aircraft Title has not engaged in interstate activities.

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