Prosecutor Pushed For Jail Time Before Horace Mann CEO's Sentencing
September 24 2010 - 2:42PM
Dow Jones News
Louis Lower, the insurance company chief executive jailed two
weeks ago for drunk driving, didn't alert his board to his arrest
though his attorney knew for several weeks that prosecutors were
pushing for jail time.
Lower's attorney alerted the board of directors at Horace Mann
Educators Corp. (HMN) to Lower's late-May arrest in Florida on
Sept. 9, the day after the executive was given a 60-day sentence
and had begun serving the time in the Indian River county jail. The
board placed Lower on leave and appointed the company's chief
financial officer as interim CEO. Lower remains on the board.
A spokesman for the Springfield, Ill., insurer said last week
that Lower hadn't informed the board before Sept. 9, but had
discussed his arrest with company executives in July, and that it
was viewed as having no impact on his ability to do his duties.
At the Sept. 8 court hearing, the state prosecutor on the case
sought a six-month jail term, according to an audio recording of
the proceeding. Lower's attorney, Andrew Metcalf, told the judge
there was "a gentleman's agreement" with a prior prosecutor on the
case "that if my client pled to the court they would be seeking
somewhere in the neighborhood of 60 days," according to the audio.
(The initial prosecutor had been promoted during the summer.) Lower
pleaded no contest to the drunk-driving charge.
Metcalf at the hearing argued Lower should be sentenced to house
arrest. In interviews this week, Metcalf declined to say whether he
told Lower he risked jail time. However, Metcalf said the
"implication that it was clear that Mr. Lower would most likely
receive a jail sentence from the judge is not accurate. In this
case, until the judge ruled, it was impossible for anyone to know
what the sentence was going to be.... The judge determines the
sentence, not the prosecutor."
The disclosure of the prosecutor's tough stance reinforces
dismay among some corporate-governance specialists that Lower
didn't tell Horace Mann's board of directors about his arrest. U.S.
securities law mandates that public companies promptly disclose
material events to shareholders and the public. Several management
specialists said possible incarceration of a CEO is material.
"It's material information because it goes to the question of
his judgment and his stability," said Jay Lorsch, a Harvard
Business school professor who has advised some boards about
governance.
At the sentencing hearing, Lower said his decision to drive
while intoxicated was a "terrible mistake" and an "isolated
incident." Lower was arrested after driving the wrong way on a Vero
Beach, Fla., road and crashing head-on into a sport-utility vehicle
containing two 17-year-olds.
"I should never ever put myself or anyone else, including the
two young people in the other car, at risk," Lower said. "It's
never happened before. It will never happen again."
He also apologized to his wife and family, and said: "I've put
the 2,000 employees of my company in jeopardy and the shareholders
of my company." He said he'd recently been dieting and lost 37
pounds, which exacerbated the effects of the alcohol.
The prosecutor in the case, David Dodd, said in an interview,
"in all negotiations, the state indicated they would be seeking
incarceration." He added, "There was a chance the judge wasn't
going to give him jail time. But they knew all along that's what we
were seeking."
Ivan "Doc" Holiday, the head bouncer at Vero Beach's Riverside
Cafe, said in an interview that a bartender cut Lower off from
drinks around 11 p.m. or 11:30 p.m. on the night of the crash, and
that Lower was ejected at around midnight when the staff felt he
had become a "nuisance" to other patrons.
At the scene of the accident less than a half mile from the bar,
Lower refused police requests to perform field sobriety tests or
give a breathalyzer, so police obtained a warrant to take his
blood. Video taken by police at the scene captures Lower repeatedly
asking for an attorney, while police repeat that he isn't entitled
to one at that stage of their investigation.
When the blood was drawn more than three hours later, a police
lab determined he had a blood-alcohol content of .21 - almost three
times the legal limit of 0.08.
Lower's family and friends describe the incident as wildly
out-of-character for a well-respected, long-time insurance
executive. Lower has been CEO of Horace Mann for a decade, and
previously headed Allstate Corp.'s (ALL) life insurance
operation.
"He has taken full responsibility. He is a man of faith, a man
of family, and a man of his company," his wife of 40 years,
Adrienne Lower, said in an interview. "If you look at the
individual and the record, other than this one incident, you cannot
find fault."
A Horace Mann spokesman said Thursday the board, as previously
stated, continues to consider additional disciplinary action. For
the first time, the spokesman added that the board's review process
"includes its own investigation."
-By Erik Holm, Dow Jones Newswires; 212-416-2892;
erik.holm@dowjones.com
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