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Insurers Took the Money & Ran, Builders Say

HOUSTON (CN) - Insurance salesmen took premiums from real estate developers and kept the money for themselves, costing the developers more than $7 million in lost projects, they claim in Harris County Court. The developers' lenders placed them in default for not getting insurance, and foreclosed their liens against their properties and they were forced to abandon several projects, the plaintiffs say.

KBS Insurance Group and Superior Insurance Group "fabricated paperwork to deceive plaintiffs and their lenders into believing that insurance was in place," according to the complaint.

Wajahat Ali Khan aka Ray Ali Khan and McKinley Shumate aka Mack Shumate, principals of Superior Insurance Group and KBS Insurance Group, are also named as defendants.

The plaintiffs are Catera Development, Catera Villas; Missouri Lofts, Villas on Portsmouth, Catera Square, Gary Mosley and Terry Charlton.

They demand more than $7 million in actual and exemplary damages, and are represented by Richard Melamed of Bellaire, Texas.

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