831(b) captive conspiracy lawsuit has no merit, claims Gallagher
Arthur J Gallagher has hit back at the Arizona-based lawsuit accusing it and its subsidiary Artex Risk Solutions of selling and managing illegal tax-advantaged captives, the firm said in a statement.
"Gallagher and Artex are aware of the recent filing of a class action lawsuit relating to our 831(b) captive business," the statement read. "We have disclosed the ongoing IRS audit and related customer litigation involving our 831(b) captive management business in our SEC filings and to our clients. This class action lawsuit appears to be related to the IRS audit. We believe it has no merit and will deal with it accordingly."
The case, Shivkov v Artex Risk Solutions, was filed in the US District Court for the District of Arizona - Phoenix Division. The complaint alleges that Gallagher and Artex had disguised tax shelters as legitimate 831(b) captives and extracted money from their clients.
Furthermore, the suit also alleges that the defendants had entered into undisclosed, illegal business arrangements with each other and a nationwide referral network of investment, accounting, and legal advisors to refer clients to them.
Gallagher added that the firm, along with Artex, have successfully defended individual claims involving similar allegations.
"831(b) captives are important insurance vehicles that have been part of the Internal Revenue’s code for decades," the statement continued. "Gallagher and Artex have diligently and consistently striven to comply with the legal requirements in forming and managing captive insurance companies."
For the full story on the lawsuit, click here.