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.
Yes, please do investigate this further and get this story to the NY times. Corruption runs deep at many levels of the state of Alabama's government. Doug Jones is a spineless weasel who will jump trains with all types of corrupt characters in this state (look at his track record). Paul Bryant, Jr is the power and godfather behind the University of Alabama's "win-at-all-cost" athletic program. Bryant has become very wealthy off of the poverty stricken rural blacks who spend their SS checks at the Greentrack dog track he owned for years. Bryant now has established his legal way to launder money, Bryant Bank, chartered in this state as well. Ask any bumpkin in rural Alabama and they have moved their checking and savings account (to pay their trailer park rent) to Bryant Bank to support "thu univusutee". What a corrupt group of people, go get em!
ReplyDeleteTo ajc, whine moron whine. FTR, Our "win at all costs" program happens to be one of the top APR schools in the conference while the "other" school in the state was the one that was threatened with losing their accreditation when they had Bobby Lowder and his cronies micro-managing Auburn Universtiy(of which I assume you are a fan unless you are that lowlife Furman Bisher). Whatever the case, suck it. As for the author of this blog, make damned sure you know what you are spewing forth before you make any accusations. The Bryant family has a record of destroying irresponsible journalists(see Saturday Evening Post).
ReplyDeleteJust for your moderation, thanks for wasting my time. If I knew you were a coward, I wouldn't have wasted any of my time writing the last post.
ReplyDeleteAJC:
ReplyDeleteWhat was it you were saying about my moderation?
You are welcome to look back over my posts about Bryant Jr. and please notice the links to court documents. This all is a matter of public record, but the mainstream press has chosen to ignore it.
Kudos, I am actually glad to see you have to stones to allow dissenting opinion. I understand needing to filter for language, so I guess that is your reasoning. I am just saying to be careful when it comes to Bryant, Jr. If your blog on this does garner any real attention, just make sure it is all factual and not speculation. I have seen all sorts of speculation out of the fanbase of Auburn University in the past few years. When they pushed it far enough and they got their wish of an investigation, it blew up in their faces. Sorry, if I come off a bit defensive, just heard these morons spew baseless accusations for too long now.
ReplyDeleteAJC's Daddy:
ReplyDeleteNo problem. I think most responsible bloggers almost have to moderate comments. If you don't, things just get out of control, with all sorts of crazy stuff being written--not to mention lots of spam getting in.
But I don't have a problem with running comments from anyone who sees things differently from the way I do. As long as they are reasonably coherent and respectful, and you were, I try to keep an open dialogue.
Your point about reporting on Bryant, or anyone, is well taken. What I've written about Bryant's company, Alabama Reassurance, is based on a court case from 1997 that is a matter of public record.
For the record, I'm not an Auburn guy. Went to the U of Missouri. I used to be an employee in the UA system--at UAB--until someone mysteriously cheated me out of my job. And I'm hardly alone in being treated unlawfully in the workplace at UA.
Bryant is a member of the BOT, and the way the university currently treats its employees, is a matter of major concern--for me and many others. The UA System also has had documented problems in recent years with financial and academic fraud--the kind of thing that cheats all taxpayers. That is another area of concern.