The Indianapolis Star

December 8,2006

SECTION:Insurance

LENGTH: 939 words

HEADLINE:'It's All Over Now'



By J.K. Wall, The Indianapolis Star

Dec. 7--Six-and-a-half years after they parted company, Conseco Inc. and Stephen Hilbert finally are done with each other.

Hilbert and the Carmel insurance company he co-founded agreed to a secret settlement just before 6 a.m. Wednesday. An all-night negotiation ended a bitter, $300 million legal dispute over company-backed loans Hilbert used to buy Conseco stock in the late 1990s.

That was when the company was flying high, gobbling up insurance firms as it grew into one of America's largest companies. The stock purchases by Hilbert and more than 170 others in the company were meant to be a bold statement of confidence to investors.

But they became just one more liability that contributed to Conseco's fall.

Red ink flowed from Conseco's ill-fated acquisition of Green Tree Financial Corp. And Hilbert, who led the company for 21 years, was ousted in 2000. Losses only accelerated under his successors, and the company entered bankruptcy reorganization in 2002.





Nearly a year later, Conseco emerged from bankruptcy and sued Hilbert to get its money back.

On Wednesday, Hilbert agreed to pay. How much, neither side would say.

But both sides were smiling before they announced their agreement to Hamilton Circuit Court Judge Judith S. Proffitt in Noblesville.

Hilbert's wife, Tomisue, high-fived one of her attorneys. Stephen Hilbert chatted casually with Conseco's Chuck Cremens and attorney Reed Oslan, the two men who have pursued him doggedly since 2003.

Just last Friday, Oslan accused Hilbert and his attorneys of lying in court and suggested he should be jailed.

The lawsuit hung over the company and the Hilberts, who lost their home and many of their possessions.

"It's all over now," Hilbert said. "I'm ecstatic."

The settlement spared Stephen and Tomisue Hilbert a detailed public airing of their finances during a court hearing scheduled for Wednesday.

If the case is not wrapped up by Dec. 31, Conseco likely will give some glimpse of how much it expects to collect from Hilbert in its annual report. As of Sept. 30, Conseco expected to collect $22.8 million from Hilbert and four others who had failed to repay company-backed loans they used to buy Conseco stock.

Hilbert had argued unsuccessfully that he owed little to none of the debt. But the pressure to settle certainly increased in October when the U.S. Supreme Court refused to hear his appeal of Proffitt's $84 million judgment against him, said Indiana University law professor Alex Tanford in an e-mail.

Until then, Tanford wrote, "the two sides had widely different views of the merits of the case, and, thus, had no common settlement range. Once the last appeal is exhausted, however, the landscape changes -- one side must concede that it cannot prevail as a matter of law. Then the sides work out a settlement."

On Friday, Conseco was granted nearly $600,000 generated in the last two years by auctions and garnishments of Stephen Hilbert's assets. The company has been trying to fetch $20 million for the Hilberts' former mansion in Carmel, which it controls.

The house is scheduled to be auctioned by the Hamilton County Sheriff's Office on Dec. 28.

Conseco sought such an auction because it said the litigation with Hilbert hampered the company's attempts to sell the property to satisfy the judgment against him. Now that the litigation is over, it's unclear whether Conseco will go forward with the sheriff's auction.

The deal also settles a lawsuit filed in Illinois in which Conseco claimed Hilbert owed it more than $200 million.

Lawsuits are pending against two former directors of the company, James D. Massey and Dennis E. Murray Sr. Together, they have failed to repay about $220 million in loans and interest, according to court filings.





Hilbert was the largest borrower of 11 insiders sued by Conseco. Seven have now settled and two -- James Adams and Dr. David Decatur -- are in bankruptcy.

The Hilberts said they are eager to return their attentions to their own business ventures and their philanthropy.

"We waited several years before Steve and I came together and worked out a settlement," Tomisue Hilbert said, adding that she could not elaborate.

The settlement benefits their family, Conseco and the community, the Hilberts said.

"It's a win-win-win situation," Stephen Hilbert said.

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LOAD-DATE:December 8,2006