Alabama Booster has ties to insurance fraud

[Ogre]

There's no time like the present to start the offseason rumor-mongering.

WEDNESDAY, JANUARY 13, 2010
Alabama Football Booster Has Ties to Insurance Fraud
Paul W. Bryant Jr., the most prominent financial booster of the University of Alabama's football program, has connections to a massive insurance-fraud case that resulted in a 15-year prison sentence for a Pennsylvania man.

The revelations come less than a week after Alabama defeated the University of Texas to win the BCS national championship game in Pasadena, California.

Bryant, the son of Hall of Fame football coach Paul "Bear" Bryant and a member of the University of Alabama's board of trustees, is president of Greene Group Inc. One of his companies, Alabama Reassurance, was implicated in a $15-million fraud scheme involving a Philadelphia lawyer and entrepreneur named Allen W. Stewart.

Stewart was convicted in December 1997 on 135 counts of racketeering, mail and wire fraud, and money laundering. His conviction was upheld on appeal in 1999, and his motion to vacate the sentence was denied in 2001. Stewart forfeited about $17 million in 2003.

The Alabama connections to the Stewart case were so strong that a prosecutor named Michael Rasmussen and a forensic accountant named Thomas Gober, both in Birmingham at the time, worked the case. The lead prosecutor was Philadelphia U.S. Attorney Linda Dale Hoffa, who now works in the office of U.S. Senator Arlen Specter (D-PA).

Sources tell Legal Schnauzer that, during the Stewart case, the U.S. Department of Justice was prepared to launch a heightened investigation of Alabama Reassurance. That determination, our sources say, came from Caryl Privett, then U.S. attorney for the Northern District of Alabama. By the time the Stewart case was over, however, Privett had stepped down and been replaced as U.S. attorney by Doug Jones--and the investigation into Alabama Re was called off.

Jones is a University of Alabama graduate, and our sources say he has done legal work for Paul W. Bryant Jr. Jones now is with the Birmingham firm of Haskell Slaughter.

We can find no record of the mainstream press reporting on Paul Bryant Jr.'s connections to the Allen W. Stewart case. Documents showing the connections, however, are readily available on the Internet.

A 2001 memorandum opinion from the U.S. District Court for the Eastern District of Pennsylvania lays out the scheme involving Stewart and Alabama Re, which involved counts 24 through 32 of the 135-count indictment. Footnote No. 11, which begins on page 16 of the opinion, addresses Alabama Re's role in the fraud:

11. The relevant portions of the charge read as follows:
Counts 24 through 32 charge a wire fraud scheme to deceive state insurance regulators involving reinsurance. The superseding indictment alleges that in late 1992 or early 1993 the defendant devised a scheme to deceive state regulators and others regarding the true and complete reinsurance arrangements involving Summit National Life Insurance Company, its subsidiary Fidelity General Life Insurance Company, and the Alabama Reassurance Company in order to inflate their financial statements.

The gist of the offense? Stewart worked with Alabama Re, Paul Bryant Jr.'s company, to deceive state regulators and inflate financial statements.

A 1997 civil case, styled Linda S. Kaiser v. Allen W. Stewart, provides more details about the arrangement with Alabama Re. At the heart of the case was a Stewart-owned company called Summit National Life Insurance Company (SNLIC). The Kaiser document states:

A fraudulent reinsurance agreement, disapproved by the California Department of Insurance, was nonetheless entered into between Summit and Alabama Reassurance. This transaction caused a false surplus of $15 million on SNLIC's balance sheet.

What was the end result of this financial skulduggery? The Kaiser document puts it in stark terms:

In a span of less than five years, the defendants, through various acts of malfeasance, misfeasance and nonfeasance, systematically siphoned assets from and mismanaged the affairs of SNLIC and [Equitable], turning what were financially healthy insurance companies into companies with millions of dollars in deficits and leaving in their wake overburdened insurance guaranty funds and, most tragically, uncovered claims.

The bottom line in everyday terms? Allen W. Stewart, with the help of Alabama Reassurance, left policyholders holding the bag. Sounds a lot like Enron, WorldCom, and others, doesn't it?

Allen W. Stewart is paying a heavy price for his crimes. But what about those who run Alabama Re, including Paul W. Bryant Jr.? There is no sign that they have been held accountable in any way.

In fact, Bryant surely will be at Bryant-Denny Stadium in Tuscaloosa on Saturday to celebrate the Crimson Tide's latest national championship. Stewart will be in decidedly less pleasant surroundings.

All of this leaves us with some intriguing questions:

* Is there a connection between Paul W. Bryant Jr.'s fraudulent business practices and the University of Alabama's success on the football field? Has Bryant invested ill-gotten funds into the Crimson Tide program? Does Bryant have an unusual ability to write large checks on short notice to help the Tide gain, and sustain, championship status?

* Who exactly called off the investigation of Alabama Re and why?

* Does someone with Paul W. Bryant Jr.'s history have any business helping to run the affairs of a major university? If Bryant conducts his personal business affairs in a fraudulent manner, what kind of influence is he having over a public institution?

We will be examine these questions, and others, in future posts.

Do you think that the state media would have kept all of this quiet if it was Bobby Lowder instead of PBJr? 

Link

[jadennis]

At first I was thinking "great, the next lame conspiracy from some bored Auburn fan"....but looking into it, this is actually pretty interesting, and most importantly, comes from a guy that graduated from Missouri in 1978...not a 25 year old Auburn fan or student.

I do have one question though...if this Jones fella had done legal work for Bryant in the past, it seems like if he is a federal attorney, he wouldn't be allowed to just call off the investigation because he didn't want to do it. Seems like there would be a conflict of interest that would remove him from the decision process.

Oh wait....that makes sense and this is the government....so never mind.

[Birmingham]

Auburn recruited lights out, Alabama is the defending National Champs and this next season will be even more competitive.


I added more facts in one sentence than the entire first post.

[Token]

Hey RWS,

Please. Don't.

Signed,

My sanity. 

[RWS]

Hey RWS,

Please. Don't.

Signed,

My sanity. 

Don't worry, it didn't even hit a 2 on my "meh" scale.

[The Prowler]

Wanna know something, rws....That story, all of it, wasn't fabricated into something that it isn't.  Go find another picture of an Auburn commitment, but be creative this time....maybe find one of LaDarius Owens when he was three or something.

[RWS]

Wanna know something, rws....That story, all of it, wasn't fabricated into something that it isn't.  Go find another picture of an Auburn commitment, but be creative this time....maybe find one of LaDarius Owens when he was three or something.

You must have misunderstood. I really don't care.

[BZ770]

Bryant owns Green Track one of the few that hasn't been raided. Huh Riley is a homer.

[Token]

Bryant owns Green Track one of the few that hasn't been raided. Huh Riley is a homer.

Remind me again.  Doesn't Riley serve as the president of a board somewhere?

[BZ770]

Actually the Governor has a seat on the board of all public institutions of higher learning in the state of Al.  I worked at Foy Union upteen years ago, and that was where they had the board meetings, they had a special seat for him with his own name tag, Wow. never seen the governor come though.

[Tiger Wench]

never seen the governor come though.

That's what... wait, that's Kaos's line...

What I can't stand is that this is not just "ANY" booster - this is THE booster.  The closest thing bammer has to a Crown Prince, the Spawn of Bahr, holding the DNA of de gray-tist coarch of all tymuh.  And it gets overlooked? Hushed up?  Bullshit.

[Token]

Wow. never seen the governor come though.

Did you work the shaft?

[Saniflush]

Did you work the shaft?

Nobody works me muthafucka!

[Lurking Tiger]

Nobody works me muthafucka!

Shut yo mouth.