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Michael Pieciak, the commissioner of the Vermont Department of Financial Regulation, has filed a suit against Global Century Insurance Brokers (GCIB) and Quantibridge Capital, as well as individuals Jasbir Thandi and Jaspreet Singh Padda, for allegedly participating in a scheme to defraud Global Hawk Insurance Company Risk Retention Group.
The commissioner was acting as the liquidator of Global Hawk, pursuant to the order of liquidation entered into on June 8, 2020 by the Vermont Superior Court, Washington Unit.
The defendants have been accused of misappropriating assets and misrepresenting Global Hawk’s financial condition in violation of the Racketeer Influenced and Corrupt Organizations Act. The scheme allegedly concealed Global Hawk's insolvency from the Vermont Department and damaged Global Hawk and its policyholders and claimants.
Thandi is president and treasurer of Global Hawk and has been president of GCIB since 2014. Padda is a managing member and chief compliance officer of QuantBridge, which acts as an investment advisor to Global Hawk.
According to a court filing, on August 17, 2016, Thandi, purporting to act for Global Hawk and Global Hawk Property and Casualty Insurance Company, applied for a loan from Stifel Nicolaus & Company, falsely claiming that he had been authorised to use Global Hawk assets as collateral. The loan was granted and the defendants allegedly used the loan to mislead Global Hawk’s captive manager, Global Insurance Management & Consulting (GIMC), about the true state of its accounts.
According to the court filing: “Thandi borrowed more than $14 million from Stifel in Global Hawk's name, used all but $175,000 of the borrowed funds for purposes unrelated to Global Hawk, and repaid the loan with Global Hawk funds.”
During 2017 and 2018 the Vermont Department also requested that Global Hawk improve its capital position. In September 2017 and January 2018 Global Hawk submitted updates to its company action plan, signed by Thandi, to the Vermont Department, stating that its sponsor, American Freight Forwarders & Transportation (AFF), had agreed to make additional capital contributions to Global Hawk. Thandi is also president and sole stockholder of AFF.
The filing alleges that Thandi reported that AFF had made contributions of $13.6 million to Global Hawk, when in fact no more than $3 million was contributed.
The court filing also references “ghost policies”, coverages sold by GCIB in Global Hawk’s name but that were not included in premium reports sent to GIMC in its capacity as captive manager. Global Hawk allegedly received no premiums or capital contributions related to these policies.
The filing alleged there are 512 such ghost policies, the first of which was effective in June of 2019. “More than half of the new policies issued by GCIB during the last eleven months of Global Hawk's operations were not reflected in Global Hawk's records,” it said, leaving Global Hawk with an unknown exposure.
Global Hawk was originally formed as a risk retention group in South Carolina in 2003 but redomiciled to Vermont in 2009.
Vermont Department of Financial Regulation, Global Century Insurance Brokers, Quantibridge Capital, Jasbir Thandi, Jaspreet Singh Padda,Global Hawk