Editor’s Note: Whitmore v. Guggenheim Partners LLC was dropped one day after filing. View the follow-up story here.
(Bloomberg) — Guggenheim Partners LLC and three insurance companies it controls were accused in a fraud and racketeering lawsuit by annuity buyers of concealing the true state of the carriers’ finances.
Lawyers for plaintiffs Clarice Whitmore and Helga Maria Schulzki claimed the asset manager raided the insurers’ cash reserves after taking control of them, threatening the security of the annuities they sold, according to their complaint filed yesterday in federal court in Chicago.
“Guggenheim’s plan was pernicious,” they alleged, “acquire insurance companies weakened by the recession and use them to sell seemingly safe and secure annuity products” while “funneling cash” to Guggenheim, its friends, affiliates and associates, the women alleged.
Lawyers for the women likened the defendants’ conduct to that of the collapsed Houston-based energy firm Enron Corp., claiming they used complex accounting to create an appearance of financial strength and stability where there was none.