Commissioner Michael Pieciak of the Vermont Department of Financial Regulation (VDFR) has filed a federal lawsuit in the US District Court for the District of Vermont against Jasbir Thandi, the former president of Global Hawk Risk Retention Group.
The lawsuit also involves several of Global Hawk’s outside professional advisors including its former financial advisor and insurance broker. These are Global Century Insurance Brokers (GCIB), the QuantBridge Capital LLC, and QuantBridge’s owner, Jaspreet Padda.
Global Hawk is a captive insurance company, based in Vermont and provides insurance coverage to its members who are commercial trucking companies all located outside Vermont.
The lawsuit is brought in the commissioner’s capacity as the liquidator of Global Hawk to recover damages for violation of the Racketeer Influenced and Corrupt Organizations Act (RICOA), breaches of fiduciary duty, conversion, fraud, breaches of contract and accounting.
It is alleged that the defendants “falsified bank documents to conceal the financial condition of the company from the VDFR".
The VDFR outlined that by taking part in this scheme, it allowed the defendants to continue operating the insolvent company for their benefit and at substantial risk to its members.
Commissioner Pieciak alleged that Thandi initiated a scheme to obtain a line of credit by pledging the assets of Global Hawk as collateral and that the line of credit was used for his benefit.
This action caused Global Hawk to become insolvent. Further, it is alleged that Thandi enlisted the help of his financial advisor to falsify financial documents that were ultimately filed with the VDFR.
The VDFR alleged these falsified documents were intended to mislead the VDFR into believing that Global Hawk remained solvent.
It gave an example, by stating “Thandi allegedly overstated contributions that were made to Global Hawk by at least $10 million to conceal the company’s true financial position.”
Commissioner Pieciak also alleged that a pervasive scheme of falsifying bank statements ultimately filed with the VDFR.
For example, commissioner Pieciak explained: “Thandi allegedly made a deposit totalling $300 but represented the deposit as totalling $3,000,000. Similar alleged actions resulted in $9,000,000 in falsely reported deposits in 2018 and a similar amount in 2019.”
Commissioner Pieciak also further alleged that for several years, Thandi and its insurance broker sold fraudulent Global Hawk insurance policies that were never identified on corporate records and provided no coverage.
Based on the allegations, the lawsuit claimed that the defendants violated the RICOA, breached fiduciary duties to Global Hawk, converted Global Hawk funds to their use, breached contracts with Global Hawk, and committed fraud.
Commenting on the claim, commissioner Pieciak said: “Our department will not tolerate financial impropriety of any kind, let alone the severity of the conduct alleged in this complaint.”
“This matter demonstrates the rigorous oversight the department provides to those who engage in our financial marketplaces, it was the department’s demand for capital contributions that ultimately led to this filing,” he added.
Deputy commissioner David Provost noted: “As Vermont continues to be the leading domicile for captive insurers, the department has zero tolerance for the behaviour outlined in the complaint.”
“Our job is to look out for the interests of policyholders, whoever they are and wherever they may be,” he concluded.
