Here is the sheriff part..
MetLife investigates, quietly
Not talking: Company mum on role in sheriff's investments.
David McNaughton - Staff
Sunday, April 25, 2004
Fulton County Sheriff Jackie Barrett blames former MetLife broker Byron Rainner for talking her into $7.2 million in questionable investments. But the names of three other MetLife employees, including company officers, show up in county records of scheduled meetings between Barrett and Rainner.
The documents --- pages from Barrett's "Diary and Work Record" that go back to May 2001 --- don't explain what role, if any, Rainner's MetLife colleagues played in the investments.
Curtis Carlson, one of Rainner's lawyers, said Friday his client suggested the meetings to make Barrett "comfortable" with MetLife, one of the biggest insurance and financial services companies in the country.
Carlson also insisted that a $5.2 million investment with MetLife and a $2 million investment with Provident Capital Investments in Hollywood, Fla., were proper. Fulton County Auditor Skip Remter said in March the two investments were illegal.
"The county auditor doesn't know what he's talking about," Carlson said from Miami.
He said Rainner gave MetLife and Provident a list of investments that government bodies in Georgia are allowed to make.
A federal grand jury and state regulators are investigating.
MetLife has not commented. "Our [internal] investigation is ongoing," said company spokeswoman Holly Sheffer.
MetLife has returned the $5.2 million it received from Barrett, but the $2 million investment with Provident, which was based on Rainner's advice, has not been returned.
Carlson said the MetLife investment was in short-term government securities, and that if improper investments were made, they were made by Provident.
MetLife has declined to disclose the investments in the annuity it sold to Barrett. An annuity is a contract that promises to pay investors money at specified intervals.
Neither has the company responded to questions about potential regulatory issues, such as a requirement that the company adequately supervises brokerage employees.
"It's premature to talk about a lot of questions, and this area is one of them," said MetLife spokeswoman Sheffer.
Securities industry regulations set by NASD require brokerage firms to supervise employees to prevent violations. Another rule is designed to ensure that customers are not sold unsuitable investments.
Penalties for violating the regulations range from fines to the loss of the right to do business.
Whether MetLife has protential problems in those areas is open to debate.
Some attorneys say MetLife probably has no liability. One lawyer, however, raised the possibility that Fulton County might be able to sue to recover $2 million Barrett invested with Provident Capital Investments. That investment also was based on Rainner's advice.
Rainner worked for MetLife from February 2000 to January 2004. He is licensed as an insurance agent in Georgia as well as in Florida.
Georgia Insurance Commissioner John Oxendine's office said it is investigating Rainner, but not MetLife.
Glenn Allen, a spokesman for Oxendine, said the insurer is not being investigated because "there's no evidence of criminal intent, at this time." Allen added, "MetLife acted in good faith" by returning the $5.2 million investment "once they learned of possible wrongdoing."
MetLife initially kept more than $360,000 for an early withdrawal penalty. After the sheriff complained, the company also returned that money to Barrett. MetLife did not have to do so, Allen said.
Besides the initial investment, the sheriff's office received more than $153,000 in interest from the MetLife investment. The department has received nothing from its dealings with Provident.
The sheriff's calendar notes that Barrett was to meet Rainner and Eugene Marks of MetLife on April 10, 2003, but a notation said the meeting would be rescheduled. Marks was identified as a MetLife senior vice president.
On April 28, Barrett wrote the $5.2 million check to the insurer.
The next scheduled meeting with MetLife representatives was May 6, with Aris "Art" Harduvel and Diana MacGeorge, along with Rainner.
Harduvel said Tuesday he is a company vice president but referred all questions to MetLife headquarters in New York. Public records show Harduvel is a licensed insurance agent and stockbroker.
MacGeorge, who could not be reached for comment, is listed in Barrett's calendar as a regional vice president, and her name appears as "Dianne George."
MetLife confirmed that Marks, Harduvel and MacGeorge are employees, but declined to comment further.
MetLife also has not addressed:
> The number of MetLife employees involved with the $5.2 million investment.
> The amount of commission Rainner received for selling the annuity.
> Whether the company has a process to determine if investments sold to government agencies are permitted.
> Whether securities regulators have contacted MetLife.
> Whether MetLife will disclose the results of its internal investigation.
Based on what's known, former Securities and Exchange Commission attorney Jacob Frenkel says it's "extremely unlikely" MetLife "would have any liability related to this transaction."
Frenkel, who now heads the Smith, Gambrell & Russell law firm's white-collar crime division, said that is because MetLife is careful to offer low-risk investments to clients like the sheriff's office.
Steven Parker disagrees. "They really do have a possible liability," said the former director of the Securities and Business Regulation Division for Georgia Secretary of State Cathy Cox. He is now with Page Perry, an Atlanta law firm.
"Violation of an NASD rule . . . could give rise to civil liability as a result of a private action or arbitration filed by Fulton County," Parker said. "This would usually be asserted as a claim for negligence, breach of fiduciary duty, fraud, breach of contract, and/or violations of state securities laws." |
