The revelations come less than a week after Alabama defeated the University of Texas to win the BCS national championship game in Pasadena, California.
Stewart was convicted in December 1997 on 135 counts of racketeering, mail and wire fraud, and money laundering. His conviction was upheld on appeal in 1999, and his motion to vacate the sentence was denied in 2001. Stewart forfeited about $17 million in 2003.
The Alabama connections to the Stewart case were so strong that a prosecutor named Michael Rasmussen and a forensic accountant named Thomas Gober, both in Birmingham at the time, worked the case. The lead prosecutor was Philadelphia U.S. Attorney Linda Dale Hoffa, who now works in the office of U.S. Senator Arlen Specter (D-PA).
Jones is a University of Alabama graduate, and our sources say he has done legal work for Paul W. Bryant Jr. Jones now is with the Birmingham firm of Haskell Slaughter.
We can find no record of the mainstream press reporting on Paul Bryant Jr.'s connections to the Allen W. Stewart case. Documents showing the connections, however, are readily available on the Internet.
A 2001 memorandum opinion from the U.S. District Court for the Eastern District of Pennsylvania lays out the scheme involving Stewart and Alabama Re, which involved counts 24 through 32 of the 135-count indictment. Footnote No. 11, which begins on page 16 of the opinion, addresses Alabama Re's role in the fraud:
11. The relevant portions of the charge read as follows:
Counts 24 through 32 charge a wire fraud scheme to deceive state insurance regulators involving reinsurance. The superseding indictment alleges that in late 1992 or early 1993 the defendant devised a scheme to deceive state regulators and others regarding the true and complete reinsurance arrangements involving Summit National Life Insurance Company, its subsidiary Fidelity General Life Insurance Company, and the Alabama Reassurance Company in order to inflate their financial statements.
The gist of the offense? Stewart worked with Alabama Re, Paul Bryant Jr.'s company, to deceive state regulators and inflate financial statements.
A 1997 civil case, styled Linda S. Kaiser v. Allen W. Stewart, provides more details about the arrangement with Alabama Re. At the heart of the case was a Stewart-owned company called Summit National Life Insurance Company (SNLIC). The Kaiser document states:
A fraudulent reinsurance agreement, disapproved by the California Department of Insurance, was nonetheless entered into between Summit and Alabama Reassurance. This transaction caused a false surplus of $15 million on SNLIC's balance sheet.
What was the end result of this financial skulduggery? The Kaiser document puts it in stark terms:
In a span of less than five years, the defendants, through various acts of malfeasance, misfeasance and nonfeasance, systematically siphoned assets from and mismanaged the affairs of SNLIC and [Equitable], turning what were financially healthy insurance companies into companies with millions of dollars in deficits and leaving in their wake overburdened insurance guaranty funds and, most tragically, uncovered claims.
The bottom line in everyday terms? Allen W. Stewart, with the help of Alabama Reassurance, left policyholders holding the bag. Sounds a lot like Enron, WorldCom, and others, doesn't it?
Allen W. Stewart is paying a heavy price for his crimes. But what about those who run Alabama Re, including Paul W. Bryant Jr.? There is no sign that they have been held accountable in any way.
In fact, Bryant surely will be at Bryant-Denny Stadium in Tuscaloosa on Saturday to celebrate the Crimson Tide's latest national championship. Stewart will be in decidedly less pleasant surroundings.
All of this leaves us with some intriguing questions:
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