The United States government has applied to seize funds frozen in two Bermuda Commercial Bank accounts that are alleged to be proceeds of a bogus insurance operation that ran between January 2000 until December 2004.

The US government wants the $6,810,576.61 and $999,953.49 in American currency held at BCB accounts under the names of Professional Liability Insurance Company and Medical Risk Associates Limited as part of an investigation into the activities of William A. Ledee III.

He is scheduled to be tried later this year in the US District Court for the Northern District of Georgia for fraud and money laundering for allegedly operating sham medical malpractice insurers.

Prosecutors allege that Mr. Ledee engaged in continuous criminal activity by devising and participating in a scheme to defraud physicians and other health care professionals by pretending that PLIC was a legitimate, duly-licensed offshore insurance carrier.

PLIC was not licensed, registered or permitted to engage in the business of insurance in any state of the United States or in any foreign country, according to court documents.

PLIC and MRA as well as related business entities were the subject of several cease and desist orders in US states as well as a regulatory warning last year from Bermuda Monetary Authority which stated that those companies and other entities were not incorporated in Bermuda or licensed to conduct business here.

Mr. Ledee and his wife Bertha were the sole signatories on the BCB accounts. According to court documents, the sole source of funds deposited in those accounts was ?insurance premiums? paid to PLIC by US health care providers and sent to mailboxes in Atlanta, Georgia.

The cheques were processed and prepared for deposit before being mailed via commercial carrier to the BCB.

The only source of revenue for Ledee or any of his companies was the ?insurance premiums?, the complaint said.

Until August 2004, the sole source of funds in six other accounts at American banks were wire transfers from the PLIC account at BCB in Bermuda.

Bermuda?s Department of Public Prosecutions successfully secured a restraining order on the funds held locally in January this year, however a Bermuda Commercial Bank spokeswoman declined to comment this week on the status of those funds.