Religious organization allegedly inflating membership in insurance scheme

by Leo Almazora18 Sep 2019

The Knights of Columbus, a Catholic fraternal organization and multi-billion-dollar life insurance company, has been accused of misreporting its membership numbers in an effort to get a better evaluation from insurance rating organizations.

As reported by Buzzfeed News, the organization faces allegations made by UKnight, a Colorado-based IT firm that members of the Knights of Columbus hired to update communications software. According to survey data filed by the company in a U.S. federal court, the organization’s national rolls reflected 28% more members than reported by its local councils.

“No matter how you count it, there is a huge disparity,” said Martin Shapiro, an expert witness chosen by UKnight to analyze the data.

UKnight claims that the Knights have padded their membership books with thousands of “phantom members” — members who haven’t paid dues in years and are mostly unreachable. The result of the misreporting, the company said, is to inflate the Knights’ potential customer pool, as the organization is only able to sell its policies to its members.

In his testimony in court, former Knights insurance agent John Hernandez said that some of the membership rolls are so outdated that they include members well past one hundred years old — too old to be alive.  The lawsuit filed by UKnight claims that the Knights’ membership is shrinking and growing older — a situation that would put its A+ rating from AM Best at risk.

Several heads and members of local councils who approached Buzzfeed News reported and shared documentation of their efforts to remove inactive or unreachable members from their rosters. But leaders at the state level told them that they had not followed the proper procedure, so the members could not be removed from the rolls even if they have been inactive have have not paid dues for a long time.

Under the rules of Knights of Columbus, local councils must pay dues to higher levels of the organization based on the membership reflected in their records. That meant local councils have had to pay dues for their “phantom members,” which were ostensibly difficult or close to impossible to remove.

“It’s like they’re just figuring out why you haven’t dotted all the ‘i’s and crossed all the ‘t’s so [they] can deny the request,” said a grand knight of a local council in Virginia. “Had I read these bylaws when I first entered the [Knights of Columbus], I never would have entered it.”