The 19 policyholders who were sold fraudulent insurance policies by Diane Cottingham, of Underwood, may be getting their money back fairly soon, Insurance Commissioner Jim Poolman said Wednesday.

Cottingham, 45, committed suicide in late March when it was uncovered that she'd been fabricating insurance policies by cutting and pasting forms she printed off the Internet and then keeping more than $700,000 in premiums.

Poolman said the Cottingham Insurance Agency has a "significant amount" of money with which to repay the policyholders and his office froze those accounts, pending negotiations on their behalf.

"We're using all the tools available to get restitution sooner rather than later," Poolman said. "We're trying to negotiate without having to litigate."

He said he hopes to get 100 percent restitution for those defrauded by Cottingham. One policyholder alone paid out $338,000 in premiums for the fake insurance.

Some of the policies were sold to Cenexes in Bismarck-Mandan and to a Cenex-subsidiary fuel transport business in Beulah, Hazen, New Salem and Glen Ullin, which had huge potential liabilities.

Cottingham did pay $38,000 in claims out of pocket in order to maintain the ruse that the policies were legitimate.

The policies were direct-billed by the agency and some date back to 1999.

Poolman's investigation found that Cottingham was the only one involved in the fraud and that she instructed other staff to refer all calls and contracts from those policy-holders directly to her.

The fraud unraveled two months ago, when the Cenex manager at Hazen was seeking a competitive insurance bid for the transport subsidiary. The competing agent found the company that purportedly was insuring the subsidiary had no record of it and nor was Cottingham licensed to handle that company's insurance products.

The situation was reported to Poolman, who arranged a meeting with Cottingham two days later to serve her an order to quit doing business.

When she failed to appear at the meeting, Poolman contacted McLean County law enforcement. She was found dead on a rural McLean County road within several hours after police were able to get activation of her OnStar global position system.

Her daughters and other agents have continued to maintain the insurance agency business, which has some 5,000 policies.

Poolman said Cottingham's scam was a difficult balancing act. She couldn't move the policies to a real carrier because she couldn't provide a legitimate claim loss history. Nor could she risk losing those accounts because the fake policies would be uncovered by another insurance agency, which is what happened, Poolman said. She also was at constant risk for a multimillion-dollar claim by some of the riskier insureds, like the company that transported thousands of gallons of fuel at a time.

He said he first thought Cottingham may have been trying to self-insure hard-to-cover clients, but finding farm and homeowner policies in the mix "blew that theory out of the water."

(Reach reporter Lauren Donovan at 888-303-5511 or lauren@;westriv.com.)