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After firings of internal investigators sparked controversy, Citizens Insurance hires new forensic unit

Citizens Property Insurance Corp., which came under heavy scrutiny last year for firing four internal investigators who had discovered evidence of executive misconduct, has announced that new forensic accountants have been hired to root out fraud.

Citizens has hired three forensic professionals, forming a team that Joe Martins, the company’s Chief of Internal Audit, says will “provide an unprecedented level of internal oversight.” 

The abrupt disbanding of the Office of Corporate Integrity last year raised eyebrows, especially after the Herald/Times unveiled documents showing that the investigators had drafted an explosive report shortly before being ousted.

The report included evidence of large severance packages for disgraced employees, mishandled internal investigations, altered documents and a number of embarrassing workplace mishaps.

Citizens claimed that the firings were part of a restructuring effort, and the company announced Friday that the hiring of new forensic professionals is part of that effort.

Gov. Rick Scott said the OCI firings “concerned” him and asked his Inspector General to investigate last year. The report on that investigation, which follows another investigation into excessive travel spending at the state-run insurer, is expected to be released soon. In addition to the two inspector general reports, Citizens has come under fire for giving out large raises to executives, failing to negotiate large contracts and inadvertently giving away $2.5 million to another insurance company (the money has since been recouped).

Yesterday, Scott said he was “very disappointed” in what is going on at Citizens and he has asked the executives to return the large raises they received last year. Citizens said the raises were necessary to help the company compete with the private insurance industry, where compensation is higher.

The company's board is expected to address the salary issue at its next board meeting, but it's unclear if the executives will follow Scott's orders and return the money they've already received.

Citizens’ press release is below.


TALLAHASSEE, FL – Citizens Property Insurance Corporation’s efforts to root out fraud have been elevated to a new level following changes made to its internal audit structure and the addition of a team of forensic auditors whose backgrounds range from Big Four accounting firms to the Federal Bureau of Investigation.

Citizens Chief of Internal Audit Joe Martins says the newly formed cadre of financial investigators exponentially bolsters the company’s internal auditing capabilities, bringing the company on par with the best-run insurance companies in the business.

“In terms of our capabilities, this is a game changer,” said Joe Martins, Chief of Internal Audit. “We have assembled a formidable team and are putting a structure in place that will provide an unprecedented level of internal oversight.” 

The new forensic unit is part of Citizens’ larger effort to streamline and standardize internal investigations of potential fraud, mismanagement and employee grievances. It’s duties and enhanced capabilities replace the former Office of Corporate Integrity, which lacked the financial expertise to proactively ferret out fraud, waste and abuse.

Leading the new forensic audit team is Josh Shilts, who was hired in February as Director of Internal Audit/Forensics. Shilts is a Certified Fraud Examiner, Certified in Financial Forensics and a Certified Public Accountant. He holds a Masters in Accounting with a concentration in Forensic Accounting from Florida Atlantic University where he currently serves as an adjunct professor of Fraud Examination.

Shilts has led domestic and international investigations into abuse, malfeasance and fraud. He most recently served as a Manager of Litigation Support and Advisory Services for a Miami-based firm, one of the nation’s top 40 certified accounting firms, where he provided forensic investigative and advisory services and litigation support.

Shilts is joined by two additional auditors:

Gary Dagan, senior internal audit/forensics. Dagan is a Certified Fraud Examiner, Certified in Financial Forensics, Certified Public Accountant and a Certified Anti-Money Laundering Specialist. Dagan holds a Bachelor of Arts from Mercyhurst College.

Dagan starts work in March and comes to Citizens after 28 years as a Special Agent for the FBI, during which time he investigated financial crimes, cyber crimes and money laundering. Among his assignments, Dagan served as Chief of Economic Crimes and managed the agency’s Insurance Fraud, Securities Fraud program at FBI headquarters in Washington D.C. Dagan also has provided presentations and training seminars to law enforcement forums, regulatory, industry and community organizations in 25 countries. 

Mike Regan, senior internal auditor/forensics. Regan is a Certified Fraud Examiner, Certified Public Accountant, Certified Internal Auditor and a Chartered Global Management Accountant. Regan holds a Bachelor of Science in Accounting from Quinnipiac College.

Regan’s background includes more than 20 years of internal audit and accounting experience, most recently as the manager of investigations and support audit at a Jacksonville-based bank, where he developed and managed the company’s forensics team responsible for fraud detection, investigations and risk assessments. He began work at Citizens in February.

The forensics team will be completed with the addition of a fourth auditor, who will use data analytics and fraud technology to profile and identify abnormal patterns and behaviors. That position currently is advertised.

“This forensic team is an integral part of our strengthened internal review structure, which provides clear lines of review for financial and workplace issues” said Barry Gilway, Citizens President/CEO and Executive Director.

Since October, all complaints have been directed through Citizens’ newly appointed Ethics and Compliance Officer Deborah Kearney, who steers cases to the appropriate department and monitors the progress of complaints to ensure their timely and appropriate resolution.

Citizens has recently revised its travel and expense policies to more closely mirror those of state and federal agencies and supports legislation to modify its procurement policies to more closely match those of state agencies.