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The Department of Insurance said on Dec. 4 that The Castleton Group's financials dipped to the point of insolvency with its liabilities exceeding its assets by some $6 million and that would affect the company's 89 clients, which included approximately 3,000 employees. In addition, the department reported at the time that evidence showed the company's former chief financial officer admitted to filing false federal payroll tax reports, resulting in an estimated $8 million in unpaid federal payroll taxes.
The Castleton Group had been in a dispute with the department since mid 2005. The PEO had never been licensed under a 2005 law, but it was able to keep operating pending the resolution of its licensing dispute, according to the department.