A U.S. unit of one of the world's biggest insurers will plead guilty to a years-long fraud in its investment funds, worth billions of dollars, that affected New York City bus drivers and subway conductors among others.
The blockbuster plea from Allianz Global Investors U.S. LLC (AGI US), a wholly owned subsidiary of the German insurer Allianz SE, includes $6 billion in forfeiture, restitution and fines.
According to a Statement of Facts that AGI US accepted as part of the plea deal, the company engaged in a scheme for at least six years to understate the risk being taken by its Structured Alpha Funds, overstate the level of supervision of those taking the risk, and conceal information about the risk.
When markets tanked at the onset of the pandemic in March 2020, investors lost billions of dollars in the funds.
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The Manhattan U.S. Attorney's Office said the fraud affected a number of NYC Transit employees, via their pension funds' investments in the Structured Alpha funds.
Concurrent with the plea deal, federal prosecutors also unsealed an indictment against Gregoire Tournant, the former chief investment officer of the funds, charging him with conspiracy, fraud and obstruction of justice.
His attorneys issued a lengthy statement saying he was being unfairly targeted and had suffered significant losses himself.
"We have faith that the justice system will reject this meritless and ill-considered attempt by the government to criminalize the impact of the unprecedented, COVID-induced market dislocation of March 2020," they said in part.
Two of Tournant's colleagues, Trevor Taylor and Stephen Bond-Nelson, agreed in early March to plead guilty to a variety of charges, according to papers unsealed Tuesday.
This is a developing story.