Two former private equity executives have been charged for their alleged participation in an insurance investment scheme that prosecutors said resulted in hundreds of millions of dollars in victim losses.
Andrew Scherr, of Livingston, New Jersey, and Robert McGraw, of Long Island City, New York, who both were executives with Southport Lane, L.P., a New York private equity investment holding company specializing in managing investment portfolios for insurance companies, each were charged in an indictment filed in the Northern District of Texas with one count of conspiracy to commit crimes by or affecting persons engaged in the business of insurance, one count of conspiracy to commit wire fraud affecting a financial institution, and five counts of wire fraud affecting a financial institution.
The indictment alleged that Messrs. Scherr and McGraw and their co-conspirators defrauded insurance companies by causing them to exchange cash and other liquid, valuable assets for illiquid and fraudulently overvalued securities created by the defendants and their co-conspirators.
As alleged in the indictment, Messrs. Scherr and McGraw and their co-conspirators perpetrated the scheme, in part, by acquiring insurance companies and acting as an investment advisor for insurance companies, thereby gaining access to the management of the investment portfolios of victim insurance companies.
Messrs. Scherr and McGraw and their co-conspirators used Southport and affiliated entities to create fraudulently overvalued securities and replace assets held by victim insurance companies with these fraudulently overvalued and illiquid securities, prosecutors alleged.
The indictment further alleged that as a result of the scheme, victim insurance companies have collectively suffered hundreds of millions of dollars in losses.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].