McClatchy news seems to be carrying on the investigative tradition of Knight Ridder, which it purchased awhile ago. Today, Marisa Taylor's reporting a big insurance fraud case from which the Bush/Gonzales Justice Department reassigned the lead prosecutor, David Maguire, after he'd worked on it for three years. And then, after spending a cool two million bucks on the investigation, declined to prosecute.
In May 2006, [Maguire] felt strongly enough about his case that he prepared a draft indictment accusing executives from a Virginia insurer, Reciprocal of America, of concocting a series of secret deals to hide its losses from regulators. Although he didn't name anyone from Berkshire Hathaway's subsidiary [General Reinsurance], he described the company as a participant in the scheme.
Cross-posted to ePluribusMedia
McClatchy's the only one reporting this story so far, and fair use limits what I can quote, so I recommend reading it for yourself. The core of the problem was accounting and other Enron-style shenanigans which ultimately led to the company's collapse. And people were hurt by it:
In the Reciprocal of America case, the fallout was clear. More than 80,000 lawyers, doctors and hospitals in 30 states lost their malpractice coverage. As they couldn't expect new insurers to cover them for past cases, some who were sued have claimed losses of hundreds of millions of dollars.
There were guilty pleas in this case. The CEO & Executive VP of Reciprocal of America are currently in jail for fraud and associated charges. The issue here is prosecution of parent (and grandparent) companies, which profited from the fraud. The DoJ's declining to comment, and the company's lawyers of course claim there never was a problem. But Tom Gober, an independent fraud analyst thinks otherwise:
[He] concluded that the Justice Department had buckled under pressure from defense lawyers. Shortly before Maguire was removed, his supervisors were urging him to drop the case against General Reinsurance... Gober's suspicions were fanned by allegations of politicization in the Justice Department after nine U.S. attorneys were fired. He took his complaints to the Office of Professional Responsibility, which investigates Justice Department misconduct.
"It just stinks," he said. "You don't come in out of nowhere and in no time kill three years of sophisticated effort."
A guy named Josh Hochberg (who left the DoJ nearly a year before the case was abandoned) expressed a concern about not wanting to hurt the parent company, General Reinsurance, back in spring 2005. Maguire didn't see it that way:
"Gen Re has been a public menace for a long time," he wrote colleagues. "Their 'I'm not my brother's keeper' attitude has enabled them to make millions by 'aiding and abetting' bad guys." At the very least, Maguire argued, the department should impose a fine of up to $600 million. "If they balk, they should know that we are more than ready to indict Gen Re," he wrote.
The FBI, too, was urging additional prosecution. The agency and the Asst. U.S. Attorney both say there was plenty of evidence. Without going into any detail, the McClatchy article indicates that DoJ lawyers at Headquarters in DC weighed in on the case. For whatever reasons, Gonzales's DoJ deep-sixed the case. John Conyers: Are you listening?
The McClatchy article doesn't give the name of the replacement prosecutor who performed the hit job, but his future under current leadership was probably enhanced by this questionable bit of "justice". One can't help but wonder if Maguire had been a political appointee, perhaps he would have been asked for his resignation, rather than being "reassigned".