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Brooke founder Robert Orr pleads guilty

Updated: 2013-06-28T01:36:57Z

By MARK DAVIS

The Kansas City Star

Robert D. Orr, founder of the defunct Overland Park-based Brooke Corp. insurance business, pleaded guilty Thursday to one count of making false statements in a federal securities filing.

Prosecutors said they agreed to recommend that Orr, 59 and now a Denver resident, be sentenced to three years probation and fined $48,000. Sentencing will be Oct. 7. He could not be reached for comment.

Brooke, whose shares traded publicly, was part of a group of companies that oversaw a network of insurance agencies, selling franchises and providing financing and support services to those who bought them.

In the plea, prosecutors said, Orr admitted that Brooke filed a misleading 2007 annual report with the Securities and Exchange Commission while he was chairman.

The report made the company’s investment in a related business look financially stronger than it was, prosecutors said. They said the report left out the number of failed insurance franchises tied to Brooke and how much financial assistance was given to struggling franchises.

Orr was charged last November along with his brother Leland Orr on several counts in the criminal case that stemmed from Brooke’s financial collapse.

Leland Orr is set to face those charges at a Feb. 24 trial.

The criminal case grew out of inquiries by the Federal Bureau of Investigation that became known publicly in 2008, the year Brooke declared bankruptcy.

Both men were charged with conspiracy to defraud the SEC and three counts of making false statements to the agency. Robert Orr faced two additional counts of making false statements to the SEC and one count of bankruptcy fraud.

Prosecutors declined to discuss their decision to accept one guilty plea from Robert Orr or their sentence recommendation.

Robert and Leland Orr as well as other executives of the Brooke companies settled various civil charges with the SEC in 2011. The brothers also consented to a ban from the banking industry.

In 2009, a judge dismissed a lawsuit several insurance agents brought against Brooke’s lending business, which had been called Brooke Capital and then Aleritas Capital. The suit had claimed fraud and kickbacks as part of alleged racketeering activity.

To reach Mark Davis, call 816-234-4372 or send email to mdavis@kcstar.com.

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