Federal prosecutors have said New York-based investment manager Bradley Leifler was instrumental in the collapse of the North Carolina Mutual Life Insurance Company, the oldest black-owned insurance company in the United States.
Last week, a judge sentenced Reifler to five years in prison for charging an insurance company an estimated $34 million.
According to court records and local news reports, U.S. District Court Judge Katherine Eagles said that by diverting funds intended to be used to reinsure the 125-year-old insurance company, Rifler was forced to sell NC Mutual. According to prosecutors, as a result of Reifler’s scheme, NC Mutual was only able to recover part of the money it lost and was unable to pay part of its claims. rice field.
Reifler signed a plea deal in 2021 and pleaded guilty to one count of wire fraud. He could have been sentenced to more than 20 years in prison under federal sentencing guidelines, the plea bargain shows.
The ruling is the latest in the story of NC Mutual, which came under control in October and will soon be liquidated. The company began in his 1898, providing burial insurance to African Americans. He then became one of the largest black-owned life insurance companies and a strong business in the region. The company and its high-rise office buildings have become an icon of what is known as Black Wall Street in Durham, North Carolina.
According to its website, the company was primarily a life insurance company, but it also owned regional insurance agents and intermediaries that sold property and casualty insurance, health insurance and other insurance products.
By the late 2010s, the company was in trouble. The company reportedly failed to keep up with technology, customer service and growth opportunities and was later crippled by fraud. , the financial situation did not improve.
North Carolina Insurance Commissioner Mike Cozy said Leifler and his investment firm were contributing to the deterioration.
“For more than 125 years, NC Mutual has weathered countless storms, but Mr. Leifler’s fraud has not survived,” Cosey said in a statement Friday. “His crime left the company in dire financial straits and proved to be the nail of death for NC Mutual.”
Reifler’s 2020 indictment outlines allegations of fraud. In 2015, NC Mutual ceded approximately $34 million in premiums to reinsurers. Around the same time, Reifler’s Stamford Brook Capital signed an agreement to become investment advisor to the reinsurer. Court documents do not explain how Leifler’s company became an advisor.
To protect the mutual’s assets, investment restrictions were imposed, it had to meet North Carolina’s insurance laws, and obtain a favorable rating from the National Association of Insurance Commissioners. Instead of following the guidelines, Leifler has paid millions of dollars back to other investors, paid overhead for his other company, Forefront Capital Holdings, and invested in risky “junk” securities and proprietary investments. invested in, the indictment said.
In 2016, the State Insurance Department conducted a routine audit of NC Mutual’s finances and found several problems. To cover up his tracks, Leifler provided forged documents to make it appear his investments were in compliance with restrictions, prosecutors said.
As a result of Leifler’s fraudulent scheme, NC Mutual “was unable to recover most of its trust assets. Instead, it was left with low-rated, illiquid securities in its investment portfolio. Substantial financial loss.” was placed in a rehabilitation facility,” court documents read.
According to the Triangle Business Journal, Reifler said he wasn’t fully aware of investment limits and felt he was making a good investment with insurance money. His lawyer said the man had no intention of making himself rich, but he was using the money to buy time to save the company.
The implosion in the actions of NC Mutual and Leifler will be felt for some time, said Cozy, who made a statement to the court before the sentencing about the impact on victims.
“The economic ramifications of his actions will affect state guaranty associations, other insurers, and ultimately taxpayers,” Cozy said. However, we will work to ensure that NC Mutual’s policyholder claims are properly resolved.”
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