Root Inc., the parent company of Root Insurance, has followed up its investigation into nearly $10 million in unauthorized payments with a lawsuit against its former chief marketing officer.
According to the lawsuit, filed in U.S. District Court for the Southern District of Ohio, Root Brinson accuses Caleb “BC” Silver and others of a “brazen and sophisticated scheme to defraud Root of at least $9.4 million.”
Silver served as the CMO of insurtech Root from November 8, 2021 to November 9, 2022, when he was fired as part of company-wide layoffs.
The lawsuit alleges that Silver (formerly known as Brinson Bernard McDaniel, according to the lawsuit) contacted another man, William Campbell, the CEO of advertising agency Quantasy, “within days of starting his job at Root.” At Silver’s direction, Root paid Quantasy approximately $1.2 million for services. However, Silver and Campbell then, via text messages via WhatsApp, “set up an arrangement whereby Quantasy would transfer money to Silver’s company, Collateral Damage,” claims Root.
Root is investigating at least $9.5 million in unauthorized payments by former employee
Columbus, Ohio-based Root said it had no knowledge of Collateral Damage or that it was Silver’s business. The lawsuit includes text messages between Silver and Campbell, as well as a series of invoices and payments between the two men.
After the first contract, Root said that in April 2022, Silver led “Root” to sign a second contract with Quantasy worth $14.7 million. The Campbell and Silver exchanged emails to begin drafting a new agreement between Quantasy and Collateral Damage, Root claims. Quantasy allegedly transferred $9.1 million in Silver’s Collateral Damage.
“At no point did Silver disclose its affiliation with Collateral Damage – or the existence of Collateral Damage, let alone any work Collateral Damage allegedly did for Root or Quantasy – to other members of the Root management” Root said in the lawsuit.
Silver used the money to make several purchases, including high-end properties in Miami and Venice, California bought a public company called Eclipse that is also controlled by Silver, Root claimed.
Root said the finance department started noticing some “unplanned expenses from the marketing department” last year and began investigating. Silver and Campbell “issued a series of change orders in an attempt to cover their tracks.”
In July 2022, Quantasy agreed to return $1.2 million to Root, but never disclosed its relationship with Silver or Collateral Damage or that “the $14.7 million was actually not in Quantasy’s hands at all, but months had previously been transferred to Silver’s company and then spent by Silver on its luxury coastal homes,” court documents said. When Root’s finance department questioned Campbell about the work it had done for the insurtech, Campbell allegedly continued to lie, Root said.
Root said Silver sent Campbell text messages regarding the company’s communications and audit findings that had failed to uncover the alleged fraud at the time. Silver wrote to Campbell, “We are literally good. I just want you to trust me and keep me on the phone.”
Root said it continues to investigate Silver and that fraud may exist between Silver and at least one other seller who transferred funds Root paid to Collateral Damage.
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