So why did company executives, who include University of Alabama trustee Paul Bryant Jr., indicate near the end of 2007 that they intended to merge Alabama Re into its parent company (Greene Group Inc.) and then liquidate it? Why did they indicate that Alabama Re essentially would be replaced by a new entity, Alabama Life Reinsurance Company?
Did this curious move have something to do with the fact that Alabama Re was seriously tainted by insurance fraud? Did Alabama Re executives sense that--in the wake of Enron, WorldCom, and other business scandals--the environment was about to turn nasty in the late 2000s for companies with fraudulent business practices?
The most recent public information about Alabama Re comes from the Alabama Department of Insurance report on the company in 2006. This item from page 68 of the report provides insight about Alabama Re's future:
Company management represented that, as of September 14, 2007:
"Alabama Reassurance Company, Inc. has no insurance liabilities and is in the process of surrendering its licenses. When this is accomplished Alabama Reassurance Company, Inc. will be merged into Greene Group, Inc. and then liquidated.
Alabama Life Reinsurance Inc. is now an Alabama licensed life insurer with two assumed reinsurance treaties (North American Life and Securities Life) in force. There are no plans to add any other insurance or reinsurance business."
Sounds like Alabama Life Reinsurance plans to keep a low profile, doesn't it? Wonder why that is?
Could it be that executives at Greene Group Inc. fear the environment isn't ripe for their kind of activities? Consider this item from mainjustice.com about the Obama administration's concerns regarding financial fraud:
Late last year, President Barack Obama signed an executive order that created an interagency task force to fight financial crime. The Attorney General said the Financial Fraud Enforcement Task Force is the “cornerstone” of the Justice Department’s efforts to combat mortgage fraud, securities fraud, financial discrimination and Recovery Act and rescue fraud.
“To those who see victimization of others as an avenue to wealth, take notice: If you fabricate a financial statement, if you propagate an investment scheme, if you are complicit in an act of financial fraud, you are writing your ticket to jail,” Holder said.
Is the Department of Justice serious about going after financial fraudsters? Mainjustice.com indicates the answer is yes:
The fiscal year 2010 DOJ budget signed into law last month includes funds for 43 positions in U.S. Attorney’s offices to help combat financial fraud. Congress set aside $7.5 million in the budget for U.S. Attorney’s offices to pursue bankruptcy, mortgage fraud, affirmative civil enforcement and other white collar crimes.
The U.S. Attorney’s offices received $2.4 million through the fiscal year 2009 omnibus budget to fight economic crimes, according to a DOJ spokesperson. Congress allocated an additional $10 million to the U.S. Attorney’s offices in the fiscal year 2009 supplemental budget to fight financial fraud, the spokesperson said. The supplemental funding does not expire until fiscal year 2011. DOJ was able to hire 76 new Assistant U.S. Attorneys to handle financial fraud cases with the fiscal year 2009 funds, according to the spokesperson.
Did Paul Bryant Jr. and his colleagues at Greene Group Inc. see this coming? Is that why Alabama Re is no more?
We don't pretend to be experts on business liquidation, but our research indicates it usually occurs when a company needs to be rehabilitated or is on the verge of becoming insolvent. Neither of those seemed to be the case with Alabama Re.
And it's not like Greene Group Inc. is getting out of the insurance business altogether. But with Alabama Life Reinsurance, the company appears to be taking a much lower profile than it had before.
It's undisputed that Alabama Re engaged in fraudulent activity in the 1990s and that a protector in the Clinton Justice Department called off an investigation of the company after a conviction had been obtained in the Allen W. Stewart case in Pennsylvania. It's likely that the company still had protection under the pro-business Bush DOJ from 2000 to 2008.
But the company decides to liquidate in late 2007? How convenient. Is liquidation a fine method for hiding and/or destroying evidence of fraudulent activity?
We would suggest that Obama's financial-fraud fighters might want to sift through the remnants of Alabama Re. And they might also want to check the activities of another entity with close ties to Paul Bryant Jr.
That would be the University of Alabama at Birmingham (UAB), which Bryant helps run as a member of the UA board of trustees. We've already seen signs that UAB is skittish about the Obama administration's plans to get tough on health-care fraud.
Perhaps Alabama's largest employer should be skittish, considering that it engaged in a massive fraud scheme that reportedly totaled some $600 million and got away with barely a wrist slap from the Bush DOJ.
Is the Obama DOJ serious about tracking down financial fraudsters? If so, here's a tip: Do some sniffing on Paul Bryant Jr.'s trail. Public documents indicate that where "Bear Jr." goes--whether it's his personal business activities or at the universities that he helps oversee--fraud is likely to follow.