The Vermont Department of Financial Regulation (VDFR) has filed a federal lawsuit against former president of Global Hawk Risk Retention Group Jasbir Thandi, alleging fraud.
Global Hawk is a risk retention group (RRG) based in Vermont that provides coverage to its members, all of which are commercial trucking companies not located in Vermont.
The suit claims that Global Hawk, Thandi and his financial advisors falsified documents so they could continue operating the RRG despite it being insolvent.
Global Century Insurance Brokers, who has been the managing general agent for Global Hawk since 2005, and QuantBridge Capital LLC, Global Hawk’s investment advisors, are also listed as defendants in the complaint.
The court documents state that the suit is to “recover damages for violation of the Racketeer Influenced and Corrupt Organizations Act, breaches of fiduciary duty, conversion, fraud, breaches of contract and an accounting.
“The defendants participated in a scheme to defraud Global Hawk through misappropriation of its assets and misrepresentation of its financial condition so it could continue in business for their benefit.
“The scheme concealed Global Hawk’s insolvency from the Vermont Department and damaged the insurer and the policyholders and claimants who look to it for insurance protection.”
The VDFR claims that Thandi attempted to obtain a line a credit for his personal benefit, using the assets of Global Hawk as collateral.
According to the complaint, this caused Global Hawk to become insolvent. Thandi then falsified bank statements submitted to the VDFR that showed Global Hawk in a better financial position.
“The Department alleges these falsified documents were intended to mislead the Department into believing that Global Hawk remained solvent,” a statement from VDFR explained.
“For example, Mr. Thandi allegedly overstated contributions that were made to Global Hawk by at least $10 million to conceal the company’s true financial position.”
The department alleges that Thandi misrepresented the amounts of deposits by $9 million in 2018 and a similar amount in 2019.
According to the VDFR Thandi ran a “a pervasive scheme of falsifying bank statements ultimately filed with the Department. For example, Mr. Thandi allegedly made a deposit totaling $300 but represented the deposit as totaling $3,000,000.
“The complaint further alleges that for several years, Mr. Thandi and its insurance broker sold fraudulent Global Hawk insurance policies that were never identified on corporate records and provided no coverage.”
Insurance Commissioner Michael Pieciak said the suit showed that his department were providing “rigorous oversight”.
“Our Department will not tolerate financial impropriety of any kind, let alone the severity of the conduct alleged in this complaint,” Commissioner Pieciak said.
“This matter demonstrates the rigorous oversight the Department provides to those who engage in our financial marketplaces, in fact, it was the Department’s demand for capital contributions that ultimately led to this filing.”
Deputy Commissioner Dave Provost, said that it was the department’s role to take action in the best interests of policyholders.
“As Vermont continues to be the leading domicile for captive insurers, the Department has zero tolerance for the behaviour outlined in the complaint,” he said. “Our job is to look out for the interests of policyholders, whoever they are and wherever they may be.”