Top executive of Knights of Columbus abruptly resigns amid fraud lawsuit

Front and eastern side of the Knights of Columbus Building in Gary, Indiana. | Wikimedia Commons/Nyttend

A top executive of the Knights of Columbus had reportedly resigned as the Catholic fraternal organization faces a lawsuit alleging that it has committed fraud and breach of contract.

Thomas P. Smith, who serves as the organizations Chief Insurance Officer, had informed Supreme Knight Carl A. Anderson on May 11 that he has decided to step down from his position, Hartford Business Journal reported.

Kathleen Blomquist, the senior director of corporate communications for the fraternal order, had confirmed Smith's decision to retire, but she declined to provide further details.

The latest tax filings of the Knights indicated that Smith had received almost $900,000 in compensation in 2016.

The Knights of Columbus, which is said to be the world's largest fraternal order, also operates an insurance business that primarily caters to its members.

Smith, who joined the Knights of Columbus in 1974, became the head of the insurance operation in 2012, according to Anderson's email to agents.

Anderson noted in the email that Smith's position will temporarily be delegated to Thomas Burkhard, senior vice president of field management, and Ronald Franzluebbers, senior vice president and chief actuary.

Smith's retirement came as the fraternal organization faces a lawsuit filed by Colorado-based IT company UKnight Interactive in 2017.

The lawsuit alleges that the Knights of Columbus had tried to conceal its true membership figures to give the impression that its members were sufficient to cover future insurance payments.

Additionally, the fraternal order is also facing accusations of breach of contract, racketeering and theft of trade secrets.

According to the complaint filed by UKnight, the fraternal order had prevented its 15,000 local councils from removing inactive members from its roster.

UKnight claimed in the suit that the IT firm has been picked to be the "designated vendor for the entire Knights of Columbus fraternity" in 2011.

Under the agreement with the Knights of Columbus, the IT company would draw revenue from subscriptions to its services that will be "paid individually by each subscribing insurance agent, local council, assembly, and others."

The suit contended that the Knights of Columbus had failed to endorse UKnight as a designated vendor as the company moved forward with its project for the Catholic organization.

Despite the promise to endorse UKnight to affiliates, the Knights of Columbus reportedly informed the company in January 2016 that it is searching for a new vendor.

UKnight contended that the Catholic organization decided to drop the IT firm because it found out that the UKnight system would disclose fraudulent membership figures.

U.S. District Court Judge R. Brooke Jackson had allowed UKnight to look into the fraternal order's membership information last March to prove its allegations of fraud. According to Church Militant, the Knights of Columbus has not yet provided its membership figures to the firm.

The lawsuit has been stayed in April to allow UKnight to secure a new lawyer after the previous attorney withdrew from the case due to health reasons.