LAWFUEL – The SEC prevailed in the first case to go to trial involving the abuse of so-called finite insurance to commit securities fraud. The case involved a round-trip insurance transaction between Brightpoint and AIG that was designed to enable Brightpoint, an Indiana company, to conceal a substantial loss and inflate its net income. The defendant, Timothy Harcharik, was the Director of Risk Management at Brightpoint who conceived the scheme. Following a four-day trial, a jury in federal court in Manhattan today returned a verdict in favor of the SEC and finding Harcharik liable for aiding and abetting Brightpoint’s fraud and other violations of the securities laws. The sanctions to be imposed on Harcharik will be determined by the judge, Honorable Harold Baer, Jr., at a future point.
Mark K. Schonfeld, Director of the SEC’s New York Regional Office, said, “I am gratified with this result. Cracking down on the abuse of so-called finite insurance and reinsurance to cook the books of public companies has been a priority for us. This verdict makes clear that such conduct is fraud, plain and simple.”
Below are links to the prior press release, litigation release and complaint in this case.