Alan Beurger: Philanthropist, Entrepreneur, Con artist? His Philadelphia company, which goes by the name of Coventry, got sued by an American International Group Inc (NYSE:AIG) unit which accused Alan Beurgers company of commiting a whopping $150 Million fraud which involved numerous elderly individuals exchanging their policies for life insurance for a quick buck.

The lawsuit was filed in the Manhatten Federal Court on Friday and stated that Lavastone Capital from American International Group Inc (NYSE:AIG) had paid over $1 Billion since the beginning of 2006 to Coventry First of Fort Washington, Penn to acquire these life insurance policies, which are called life settlements when exchanged for payment by the holder of the policy.

Visiting Coventrys’ website what strikes you as most interesting is the claim of being the creator! And leader of this industry for life settlement …what they do is act as investors, buying the policies and becoming responsible for the premiums till the death of the original policy holder after which they get the payout from the company which issued the policy originally.

American International Group Inc (NYSE:AIG)’s Lavastone claimed in his lawsuit that what this company did was to artificially inflate the price of the policy by using numerous non-operating firms instead of doing what was the official procedure: identifying the right policies and putting them on sale for the American International Group Inc (NYSE:AIG) at the asking price of the original policy holder.

The lawsuit explaining with an analogy of how Coventry used manipulation to inflate the price to the price it knew to be American International Group Inc (NYSE:AIG)’s maximum capped pay out price. When an auction house knows a bidders price ceiling while he is bidding at a lower price, they use stooge bidders hired by that particular auction house with the intention to artificially increase the price to the bidders maximum possible bid.

This lawsuit went as far as calling Alan Beurger and his company scam artists, engaged in fraud, racketeering, conspiracy, contract breach and numerous other violations! Beurger however did not comment on this, saying he had not read the lawsuit yet. Looks like he is not in any hurry to read the document!

American International Group Inc (NYSE:AIG)’s Lavastone quoted the figure of $150 Million in the lawsuit, which he believes to be only the tip of the iceberg. The lawsuit also brought into focus two early settlements by Coventry, which were civil fraud actions commissioned by the NY AG office as well as Florida insurance regulator. Besider Coventry and Beurger, the lawsuit nominates numerous other businesses and family members. The Beurgers being prominent Philadelphia philanthropists, some of the fraud money from the East Coast went to the betterment of the Childrens Hospital of Philadelphia when they donated $50 Million towards it last year.

Over the last ten years Lavastone has spent more than $6.5 Billion to acquire 7000 life insurance policies, their face value being $20 Billion. According to the lawsuit American International Group Inc (NYSE:AIG) has been forced to wound down the life settlement branch of its business.

 

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