By Chloe Scheller
With golf charity events on the rise an increase in fraud is fast becoming an unwelcome side effect.
In fact, the National Hole in One Association (NHIOA), a company that specializes in golf event prize services, recently went public with a warning to non-profits and companies with plans to conduct such golf tournaments in 2014. It recommended that all promotions be supplied through a licensed insurance carrier and adequate research should be done before signing any contracts.
“Golf does more for charity than any other sport or leisure time activity!” said John P. Everhart, founder of NHIOA. “Golf fundraisers have more than tripled over the past 20 years, according to a study done by the National Golf Foundation. It is important to us — and our industry — that licensed, credible operators are insuring prizes at these important events.”
Arrest Sheds Light on Unscrupulous Practice
In February, Kevin Kolenda, a Connecticut man, was found guilty in Washington of three felony charges in regards to selling insurance without a license and failure to pay prize money for hole-in-one awards in amounts ranging from $10,000 to $50,000.
Kolenda has been investigated on similar charges in 11 other states. His alleged failure to pay on prizes includes an $80,000 Mercedes-Benz, which was won in Georgia, and $100,000 to a UCLA student who made a field goal from the 35 yard line during a recent Rose Bowl. Operating under different business names like Golf Marketing Worldwide LLC and Hole-in-Won.com Worldwide, Kolenda’s other victims have included the Marines Corps League and the D.A.R.E. anti-drug campaign.
In most cases, the victims had no idea that they were being scammed until a prize was won and Kolenda failed to pay out. Even simple internet research would have alerted clients that Kolenda was fined $5.9 million by the Connecticut Insurance Department for larceny. This February, Kolenda was sentenced to 86 days with credit for time served provided he pays $15,000 in restitution before his sentencing date in November. After his sentence, Kolenda is required to pay another $20,000 in restitution.
With insurance regulations that differ by state, NHIOA has continued to pursue enforced regulation of licensing insurance providers. However, so far the battle has been all “uphill,” according to the company.
“The question today still remains, ‘How can an insurance regulator enforce proper discipline over questionable providers without the threat of license suspension?’” Everhart asked.
The NHIOA suggests that companies offering substantial sums of money or high value auction items for their charity events should do background research or ask credible licensed insurance agents for recommendations before entering a contract with an insurance provider. There are many organizations that have successfully insured thousands of events and acted as a licensed agent with notable companies that are highly-rated through AM Best, a full-service credit rating organization for the insurance industry. These credible companies also ensure that the prizes are taxed properly by collecting all premiums to state insurance departments.
“Golf is a powerful driver in fundraising today, and should continue to be,” Everhart said. “The offering of big prizes can enhance additional sponsorship and fundraising for any successful tournament or silent auction. We need to continually assure the public that the companies offering these prizes have proper licensing and regulation. The nonprofits and others who look to our industry for help deserve that protection.”
