Federal probe into Mark Walter's $16B insurance deals sparked by whistleblower

A whistleblower complaint inside Guggenheim Investments set off a federal probe into how $16 billion in loans to Mark Walter-linked entities ended up on his insurance companies' books as unaffiliated assets.

Federal prosecutors in Manhattan and the Securities and Exchange Commission are examining whether Walter's conglomerate, TWG Global, committed fraud by funneling loans through a third entity before they landed on the books of his insurance firms, according to people familiar with the matter. The probe, which began after an internal whistleblower questioned how Guggenheim booked revenue from dealings with its own insurance companies, has expanded to focus on private-credit investments that helped finance Walter's 2012 acquisition of the Los Angeles Dodgers.

"The investigation revealed that these were TWG entities that were the ultimate borrowers," said Jamie Tucker, a senior director at Fitch Ratings, which placed Delaware Life on negative watch in July. Delaware Life executives have since told at least one credit-rating firm they did not know the loans they had invested in were made to Walter-related entities, Tucker said.

Delaware Life Insurance, one of two insurers Walter controls, disclosed in June regulatory filings that it was reclassifying $16 billion in investments as affiliated — up from a previously reported $1 billion, or no more than 3% of its portfolio. Affiliated assets now account for 42% of Delaware Life's holdings, a share exceeded among large U.S. insurers only by Berkshire Hathaway, according to a Wall Street Journal analysis of S&P data. The insurer has until the end of the year to divest most of those investments under a remediation plan with Delaware's state insurance regulator.

The Whistleblower's Complaint

The internal complaint questioned how Guggenheim Investments, the asset-management firm Walter co-founded, booked revenue from dealings with the insurance companies it controlled. By last September, FBI agents had seized at least one mobile phone related to the probe, people familiar with the matter said. In February, Delaware Life and Clear Spring Life and Annuity, Walter's other insurer, received subpoenas. The insurers wrote in statements that "errors were identified related to the identification and presentation of certain related-party investments."

The probe comes as regulators increase scrutiny of the private-credit industry, which has grown into a $1.7 trillion market since the 2008-09 financial crisis. Life insurers have become a major source of funding for private-credit firms, with Apollo Global Management and KKR among those that have acquired insurance units to fuel their lending operations. The arrangements have led to a surge in affiliated transactions where asset managers invest on behalf of their own insurance subsidiaries.

A Sports Empire Under Scrutiny

Walter, 66, built one of the most valuable sports portfolios in the world using the fortune he amassed on Wall Street. He led the group that bought the Dodgers out of bankruptcy in 2012, became majority owner of the Los Angeles Lakers last year in a deal valued at about $10 billion, and was part of the consortium that paid £2.5 billion ($3.36 billion) for Chelsea Football Club in 2022. He also owns the WNBA's LA Sparks and is the primary financial backer of the Professional Women's Hockey League.

A TWG Global spokesperson said the company is cooperating with authorities and "confident these matters will be resolved favorably." The spokesperson added that "Mark Walter and TWG have always acted in good faith, and those who have done business with Mark know him as honest and straightforward. Nothing about these transactions was any different."

Both Fitch and S&P have revised their outlooks on Delaware Life to negative, signaling the company faces downgrade risk. The outcome of the probe could have broader implications for how insurers disclose related-party investments across the private-credit industry, where opaque transaction structures have drawn increasing attention from regulators in Washington.

This article is for informational purposes only and does not constitute investment advice.