Financial empire of Dodgers owner Mark Walter reportedly being probed
Dodgers and Lakers owner Mark Walter’s business empire is reportedly under investigation by the U.S. Attorney’s Office and securities regulators for over $16 billion, possibly over fraudulent loans.
Loans from two Delaware life insurers owned by Walter were made to him or to companies affiliated with his TWG Global holding company but were not properly disclosed as “related party” transactions. Wall StreetJournal It was reported on Sunday. Related party transactions by insurance companies must be reported in order to limit conflicts of interest and protect policyholders who have an interest in the financial strength of insurance companies.
Walter, 66, a managing director at Chicago investment firm Guggenheim Partners, led a group that included Todd Boehly, another Guggenheim executive, and Magic Johnson to buy the Dodgers for $2.15 billion in 2012; this was a record for a professional sports team at the time. Last year, Walter and TWG acquired a majority stake in the Lakers at a $10 billion valuation; This is a new record. Walter also owns the Chelsea football team in the English Premier League.
The financial and sports mogul celebrated the Dodgers’ World Series victory at the White House last week. This was the second time in two years that followed back-to-back World Series wins.
The majority of the money used to buy the Dodgers — more than $1 billion — came from insurance companies run by Guggenheim Partners and controlled by Walter, the Times reported.
A number of state insurance regulators investigated the purchase in 2014 and found no irregularities, the Wall Street Journal reported in 2020.
Guggenheim Partners entered the insurance business after recognizing investment opportunities following the 2008 financial crisis in America. Walter thought he could boost the returns insurers received from typical corporate bond purchases by tying them to his deal pipeline, according to the Wall Street Journal, which found that five insurers had provided more than $10 billion in deal financing over the years.
The current investigation began after an internal whistleblower filed a complaint questioning how Walter’s asset management firm, Guggenheim Investments, booked proceeds with insurers, and FBI agents seized at least one cellphone related to that investigation, the Journal reported this week.
The investigation then expanded to examining $16 billion in loans that were funneled through a third party before being acquired by companies affiliated with Walter or TWG, the Journal reported. Insurers, Delaware Life Insurance and its subsidiary, Clear Spring Life and Annuity, Announced the investigations Regulatory filings in June. Delaware Life, which had previously stated that affiliated investments were only about $1 billion, or 3% of its portfolio, increased that figure to $16 billion.
Delaware Life executives told a credit rating firm that they were unaware the loans were made to entities affiliated with Walter, the Journal reported. The companies said they received grand jury subpoenas in February related to an investigation by federal prosecutors in the Southern District of New York, and that the Securities and Exchange Commission is conducting a parallel investigation.
Investigations by prosecutors and securities regulators often result in no action.
The Dodgers, TWG and Guggenheim did not immediately respond to messages seeking comment.
A TWG spokesperson told the Journal that “Mark Walter and TWG have always acted in good faith,” have cooperated with authorities and are “confident that these matters will be resolved in a positive manner.”
Delaware Life said it would restructure some related-party loans, address internal control deficiencies and streamline its business plan after conducting an internal investigation, according to S&P Global. The rating agency maintains Delaware Life’s “A-” financial strength and credit rating. downgraded its outlook to ‘negative’ Due to possible high credit risk following changes in the insurance company’s portfolio.
“In addition, such consequences could weaken Delaware Life’s regulatory relationships and harm its reputation, which could erode its competitive position,” S&P said.
“Our capital position and liquidity remain strong and our financial strength ratings remain unchanged,” Group 1001, the insurers’ parent company, said in a statement.
“We continue to focus on delivering exceptional value and service to our contract, policyholders and their financial representatives,” the statement said.
Bloomberg News contributed to this report.
