Guggenheim accused of siphoning annuity unit’s cash for LA Dodgers
July 2, 2018 by Jennifer Ablan, Jonathan Stempel
NEW YORK (Reuters) – Guggenheim Partners, overseen by billionaire Mark Walter, is facing a lawsuit claiming it defrauded annuity investors by saddling an insurance affiliate with risky assets, and siphoning cash for purposes including Walter’s purchase of the Los Angeles Dodgers baseball team.
The complaint, which has drawn little media attention, closely mirrors in substance and language a lawsuit filed in Chicago in February 2014, only to be withdrawn a day later.
It came as Guggenheim, which said it has more than $305 billion of assets under management, tries to quell client concerns after a year of bad press over its corporate culture.
Guggenheim in April said it was cooperating with a U.S. Securities and Exchange Commission probe into an asset management unit.
In his proposed class-action complaint, which was filed on May 22 and amended last month, Albert Ogles accused Guggenheim of deceiving customers at its insurance companies including Security Benefit Life, from which he had bought a $145,000 annuity in July 2012.
Ogles, who lives in Alabama, said Guggenheim’s financial “machinations” left the insurers in “hazardous” financial shape, locking investors like himself into poorly performing investments while letting Guggenheim promote its self-interests.
He said the alleged scheme included how Guggenheim, Walter, then-Guggenheim president Todd Boehly and Texas oil tycoon Robert “Bobby” Patton Jr used the insurers as a “cash machine” to fund the $2.15 billion Dodgers purchase in 2012.
This sum included $1.2 billion “financed by policyholder and annuity holder money,” the complaint said.
Guggenheim, with offices in New York, Los Angeles and Chicago, bought Security Benefit Life in 2010. It has until Aug. 8 to respond in court to the complaint, which also alleges racketeering.
