The billionaire Los Angeles Dodgers owner Mark Walter’s sprawling investment empire is facing scrutiny from U.S. prosecutors, who have been investigating potential financial improprieties at two of his insurance companies and at Guggenheim Partners LLC, according to people with knowledge of the matter.
Last year, federal prosecutors in Manhattan began examining Guggenheim’s $362 billion money management arm, said some of the people, who spoke on condition of anonymity to discuss confidential matters. Prosecutors have more recently shown interest in Walter’s Delaware Life Insurance Co. and Clear Spring Life and Annuity Co.
The insurers received grand jury subpoenas in February, according to previously unreported regulatory filings. Prosecutors want to know whether the companies failed to disclose that certain private credit investments backed other parts of Walter’s business empire, the companies said in the June 26 filings. That investigation is being conducted in parallel with the U.S. Securities and Exchange Commission, the companies said.
The Federal Bureau of Investigation executed at least one search warrant in September to seize a mobile phone, some of the people with knowledge of the matter said. It couldn’t be determined which part of the investigation the seizure related to.
Probes by prosecutors and regulators can end without charges or enforcement actions.
Walter controls the insurers and has a stake in Guggenheim through his TWG Global holding company. Walter is best known for his ownership stakes in premier sports teams, including Major League Baseball’s Dodgers, the Los Angeles Lakers basketball team and the UK’s Chelsea soccer club.
“TWG is aware of and cooperating with the investigation,” the firm said in a statement. A Guggenheim representative had no immediate comment. Group 1001, the parent company of Delaware Life and Clear Spring, said it’s cooperating with investigators and that its financial condition remains strong.
The SEC, FBI and U.S. attorney’s office in Manhattan didn’t immediately respond to requests for comment.
As chief executive officer of Guggenheim Partners, Walter helped lead Wall Street’s conquest of the life insurance industry, with money managers taking control of carriers and using policyholder funds to bet on sometimes opaque and illiquid private credit investments.
The development has prompted scrutiny from state regulators, who worry about the safety of investments and about conflicts of interest between fund managers and policyholders. Treasury Secretary Scott Bessent has met with insurance regulators to discuss the industry’s growing exposure.
Key to Walter’s financial empire are Delaware Life, with $69 billion of assets as of March, and Clear Spring, with $16 billion.
The investigation into the insurers revolves around whether they failed to properly characterize some of their private credit investments as involving related parties, the companies said in the June filing. After getting the subpoenas, the companies conducted an internal investigation and discovered “errors” in financial reporting, the companies said. This led them to reveal that they’re far more intertwined with other parts of Walter’s businesses than previously known.
For instance, Delaware Life revealed that it had $16 billion more private credit assets linked to affiliates than it had previously reported, the filing shows. That restatement caused Delaware Life’s total related party investments as of Dec. 31 to jump to at least $17 billion, or at least 39% of total invested assets, compared with the $1.4 billion, or 3%, reported earlier this year.
Delaware Life is now carrying out a “remediation plan” to reduce its exposure to affiliated investments and to improve financial controls, according to a note last week from S&P Global Ratings that cited the filing. S&P lowered its outlook on the company from “stable” to “negative” because of the disclosures, while affirming a credit and financial strength rating of A-.
“Our capital position and liquidity remain strong, and our financial strength ratings are unchanged,” Group 1001, the insurers’ parent company, said in its emailed statement to Bloomberg News. “We remain focused on delivering exceptional value and service to our contract and policyholders and their financial representatives.”
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