Veterinary Pet Insurance Financial Scandal

The Securities and Exchange Commission (SEC) has suspended Veterinary Pet Insurance (VPI) founder and CEO Jack Stephens, his wife, and son from their jobs at VPI amid allegations of financial improprieties.

Jack Stephens, who is a well-known big game hunter, has partnered with Iams to sell insurance to Iams customers—calling Iams a company of “high integrity.”

Iams also owns an 8.9 percent stake in Veterinary Pet Services, Inc., VPI’s parent company. Click here for more information about VPI and its connections with Iams and big-game hunting.

If you care about animals, we strongly encourage you not to purchase insurance from VPI or to cancel your policy if you already have one. There are other pet insurance companies that are not connected to cruelty to animals.

Below is an article from the Orange County Register about the Stephens family’s run-in with the SEC.

http://www.ocregister.com/ocr/2004/07/22/sections/business/oc_region/article_175587.php

Thursday, July 22, 2004

2 more suspended during Brea pet insurance probe
Founder's wife and son on leave while auditors examine computer systems.

By ANDREW GALVIN
The Orange County Register

The wife and son of Jack Stephens, the founder of Veterinary Pet Insurance, also have been suspended from their jobs pending the results of an outside audit of the company's management-information systems, a spokesman confirmed Wednesday.

The suspension of Jack Stephens, who founded the Brea company in 1980, was disclosed in a July 7 filing with the Securities and Exchange Commission.

All three were placed on paid administrative leave on July 6, said VPI spokesman Curtis Steinhoff.

Stephens' wife, Vicki, was vice president of licensing for the company, which she joined in 1986.

His son, Richard, was vice president and chief information officer from 1991 until earlier this year, when he became vice president of quality control. He began working for VPI in 1982.

VPI, which sells health insurance for pets, disclosed in the July 7 SEC filing that accounting firm Deloitte & Touche had been hired to audit some of the company's systems and "conduct a forensic study of its security procedures and asset protection."

The company, which has about 250 employees, had a profit of $2.3 million on revenue of $37.4 million for 2002, the most recent year for which it reported results. VPI has more than 300,000 policyholders, who shouldn't see any impact from the company's management turmoil, Steinhoff said.

Jack Stephens didn't return a call seeking comment Wednesday. On Monday, he said he has been "answering some allegations" made by VPI's board. He declined to provide details.

Steinhoff declined to comment on whether Stephens or his family members are suspected of wrongdoing.

"There's been nothing announced in regards to any wrongdoing, and it would be inappropriate to speculate until the results of the audit are complete," Steinhoff said.

VPI hasn't reported financial results to the SEC since the second quarter of 2003, blaming problems with a new customer-service computer system.

J. Lynn Jacobs, who was hired this year to replace Richard Stephens as the company's chief information officer, resigned in June. Paul Souza, who had been VPI's chief financial officer since 2000, also resigned last month.

According to the company's Web site, Jack Stephens worked as a veterinarian in Villa Park before founding the company to fight "economic euthanasia," in which pets are put down because their owners can't afford or don't want to pay for veterinary care.

In his spare time, Stephens has hunted animals in Africa, Steinhoff confirmed. Last year, the animal-rights group People for the Ethical Treatment of Animals asked visitors to its Web site to steer their business away from VPI because of Stephens' hobby.

"What Dr. Stephens did in his own personal time was legal, and it was his choice to do it," Steinhoff said. "Hunting is a very personal issue and something that is left to an employee's choice."

Back to Top