Vermont Files Federal Fraud Suit Against Captive Executive, Advisers

Vermont's Department of Financial Regulation (DFR) has filed a federal suit against a captive insurance executive and financial adviser alleging a multimillion-dollar fraud against policyholders.

The suit, filed Friday, names Jasbir Thandi, the former president of Global Hawk Risk Retention Group, and several of Global Hawk's outside professional advisers, including its former financial adviser, QuantBridge Capital, LLC, and insurance broker, Global Century Insurance Brokers, Inc.

In a statement, the Vermont department said Global Hawk is a Vermont captive insurance company providing insurance coverage to members who are commercial trucking companies, all located outside Vermont.

The lawsuit alleges that defendants falsified bank documents to conceal the financial condition of the company from the Department of Financial Regulation, allowing the defendants to continue operating the insolvent company for their own benefit and at substantial risk to its members, the statement said.

"Our department will not tolerate financial impropriety of any kind, let alone the severity of the conduct alleged in this complaint," Michael S. Pieciak, commissioner of the Department of Financial Regulation, said in the statement. "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."

Vermont's suit alleges that Mr. Thandi initiated a scheme to obtain a line of credit by pledging the assets of Global Hawk as collateral and used that line of credit for his personal benefit. The action caused Global Hawk to become insolvent, according to the suit, which further alleges that Mr. Thandi enlisted the help of his financial adviser to falsify financial documents that were ultimately filed with the Vermont department.

The DFR alleges that the falsified documents were intended to mislead the department into believing that Global Hawk remained solvent. Mr. Thandi overstated contributions that were made to Global Hawk by at least $10 million to conceal the company's true financial position, according to allegations in the suit.

The state also claims Global Hawk engaged in "a pervasive scheme of falsifying bank statements ultimately filed with the department," said the Vermont DFR statement.

The complaint also alleges that for several years, Mr. Thandi and Global Hawk's insurance broker sold fraudulent Global Hawk insurance policies that were never identified on corporate records and provided no coverage.  

"As Vermont continues to be the leading domicile for captive insurers, the department has zero tolerance for the behavior outlined in the complaint," Deputy Commissioner David Provost said in the statement. "Our job is to look out for the interests of policyholders, whoever they are and wherever they may be."