Peter Bennett, a Duke University anesthesiology professor, takes over an emergency hotline for injured divers. Using a telephone on his desk and federal grants, Bennett names the service “Diving Accident Network” and fields 305 phone calls.
The organization changes its name to “Divers Alert Network.” In August, after grants run out, it begins enrolling divers for a $10 fee to support medical research and training related to diving.
DAN launches the first scuba-specific insurance. DAN offers its members the option to buy policies that cover the high costs of emergency evacuation from remote dive sites and specialized medical treatment of “the bends”. That year, the hotline receives 3,554 calls–738 for emergency treatment guidance and 2,816 non-emergency questions.
May 2, 1990
With 80,000 divers enrolled, DAN incorporates as a tax-exempt non-profit organization based at Duke, naming Bennett and Durham attorney and DAN corporate counsel Wes Covington to its initial board of directors, with Bennett serving as CEO, president and chair of the board.
The 11-year-old organization moves its headquarters off the Duke campus to University Tower on Fordham Boulevard and forms an international affiliate to expand its efforts into Europe, Japan and Australia. DAN initiates its oxygen-treatment training, which quickly becomes a cornerstone of its education programs, teaching 5,000 people on seven continents by 1996.
July 22, 1999
Bennett, Covington and another DAN employee, Chris Wachholz, form a private, for-profit company separate from DAN called Travelers Emergency Network that sells travelers’ insurance.
May 24, 1993
The DAN board creates Accident & General Insurance (AGI), a wholly-owned for-profit subsidiary based in the Cayman Islands. Bennett is the president of AGI and Covington takes a seat on the board of directors.
Dec. 22, 1993
Bennett and Covington create a for-profit corporation in Delaware called Insurance Management Resources International (IMRI), with Bennett owning 51 percent interest and Covington, 49 percent.
Feb. 21, 1994
Covington and Bennett tell board members that DAN’s non-profit tax-exempt status may be jeopardized by owning its captive off-shore for-profit subsidiary, AGI. Covington then proposes a solution: that the board consider selling AGI to “a Delaware group of investors.”
July 18, 1994
DAN board members receive a formal proposal from IMRI to buy AGI in a complicated deal that calls for IMRI to control AGI’s assets–including the insurance policies sold through DAN–in exchange for funneling a set amount of its profits to DAN’s mission. To ensure DAN’s best interests are met, IMRI (quietly owned by Covington and Bennett) offers to give DAN’s corporate counsel and CEO (Covington and Bennett) “reasonable access to its books and records.”
June 30, 1994
The fiscal year ends, with DAN reporting $4.5 million in revenue for the year. AGI, in its first full year of business, reports revenues of $682,452 from insurance premiums.
Aug. 31, 1994
Covington reports the IMRI proposal is “on hold.” As an alternative, Covington floats the idea of turning AGI over to a private charitable trust in the Cayman Islands that could run the insurance business and make donations to DAN with more favorable tax implications.
Feb. 20, 1995
DAN board member Bill Lovin urges his colleagues to scrutinize the trust idea, which later evaporates. Lovin directly questions Covington’s motives, telling Bennett that he has independently discovered that IMRI was created just a few months before it offered to buy AGI and, contrary to Covington and Bennett’s glowing description of the experience of the anonymous “Delaware investors,” IMRI seems to have no previous record in the insurance business.
March 19, 1997
Board member Glen Egstrom raises concerns about AGI’s finances, specifically questioning the appropriateness of Bennett, Covington and DAN chief operating officer Dan Orr receiving salaries to sit on the board of DAN’s for-profit subsidiary, which also pays Covington for legal advice. The three AGI board members split 10 percent of AGI’s profits–a total of nearly $100,000 that year, according to meeting minutes.
In July, DAN moves to its new, 27,000-square-foot, $3 million “Peter B. Bennett Center” headquarters along U.S. 15-501 in Durham.
Also in 1997, leaders of scuba diving’s largest organization, the Professional Association of Diving Instructors (PADI) allege that Bennett and Covington are personally profiting from the non-profit and its subsidiary, and that Bennett is abusing his position at DAN to generate income from other private companies he and Covington own. PADI leaders privately confront DAN leaders and the two groups negotiate a private settlement.
June 10, 1998
DAN forms a second for-profit subsidiary, called DAN Services, to separate the retail end of insurance and other products and services from the non-profit.
Jan. 1, 2000
The North Carolina State Bar suspends Covington’s license to practice law for six months, punishment for inappropriate conduct in a highly publicized Durham DUI case in which Covington was accused of negotiating a back-hallway deal. Covington’s partner, Bob Idol, takes over as DAN’s primary corporate counsel.
June 30, 2000
The fiscal year ends with DAN and AGI reporting combined revenues of $13.2 million.
Board members begin discussing Bennett’s retirement, and Bennett says he wants to stay until 2005. Board members want an earlier date. On Nov. 2, the board reduces Bennett’s power by separating the board chairmanship from the president/CEO role.
Dec. 26, 2000
After meeting with Bennett about his retirement and succession plan, board Chairman Michael Emmerman resigns. A financier who worked to bring DAN and AGI finances and operations under closer board scrutiny and control, Emmerman tells Bennett he is leaving the board because he no longer trusts the CEO to act in DAN’s best interest.
Bennett, fearing that the board will try to terminate him, presents a 12-chapter “succession plan” for himself, which he had already circulated to top staff at DAN and its international affiliates. Bennett proposes remaining as CEO until 2005, and retaining a large role at DAN after that, including continuing compensation for consulting.
June 30, 2001
The fiscal year ends with DAN and AGI reporting a combined total of $14.3 million in revenue.
May 2-3, 2001
The DAN board meeting erupts in chaos when Bennett, one voting board member who supports him and two non-voting board members on staff (including Bennett’s son) walk out of the discussion of Bennett’s proposed departure from DAN and the search for his successor. The five remaining voting board members suspend Bennett for 10 days until a special meeting on his contract, succession plan and exit strategy can be held on May 12. The board also discharges Covington’s firm as corporate counsel.
May 7, 2001
Bennett and his supporters file suit in Durham County asking a judge to remove the five board members who oppose him and invalidate their actions of the previous week.
June 25, 2001
Durham Superior Court Judge Orlando Hudson grants a temporary injunction preserving Bennett’s power and control while the case is argued. Hundreds of pages of motions, affidavits and other documents are filed over the following months as the two sides seek a resolution to Bennett’s career and a plan for DAN’s future.
July 6, 2001
The defendants file counter-claims accusing Bennett of spending DAN’s and AGI’s funds for personal benefit of himself, his friends and family. They also allege he engaged in “self-dealing” by trying to take control of AGI through IMRI, the company he owned with Covington, and of engaging in favoritism and nepotism at the non-profit while blocking the board’s requests for key financial data and its ability to fulfill fiduciary oversight duties.
Oct. 12, 2001
The court appoints a committee of two respected dive industry professionals to investigate the claims and counter-claims and recommend a plan for DAN’s leadership to the court.
In mediation, Bennett proposes retiring in December 2003 in exchange for $417,833 in severance pay and a five-year consulting contract at $85,000/year, as well as a long list of honoraria.
Sept. 9, 2002
A judge dismisses the lawsuit, following the committee’s successful orchestration of a private settlement. The details are sealed, but the agreement calls for a restructuring of the board, new corporate counsel and a new auditor. DAN announces Bennett will retire on June 30, 2003.
Oct. 24, 2002
At its international convention in Las Vegas, the Diving Equipment and Marketing Association (DEMA) presents Bennett with a “Reaching Out” award, honoring him for his contributions to scuba diving through the Divers Alert Network.