Marin judge hands Fireman’s Fund retirees big win in suit over nest egg losses

April 05--After four years of grinding litigation and an 80-day trial, a Marin County judge issued a major decision Friday in favor of Fireman's Fund employees who lost millions of dollars in retirement savings.

The plaintiffs, a group of dozens of former and current employees at the Novato-based insurance giant, filed the lawsuit in 2009 and sought $30 million in damages. They claimed they were ripped off by investment seminars held at the company's headquarters off San Marin Drive.

The seminars were conducted by an outside vendor, AGA Financial, which was operated by Gary Armitage and Jeff Guidi. Armitage was eventually sent to prison for what authorities described as a $250 million Ponzi scheme victimizing some 2,000 investors in Northern California. Prosecutors dropped felony charges against Guidi after he agreed to cooperate.

The group of Fireman's Fund employees claimed Fireman's Fund was negligent in choosing AGA over "more reputable companies," such as American Express. The plaintiffs said the insurance company encouraged them to attend AGA's investment seminars over a period of about 10 years when the workforce was being whittled down.

Fireman's Fund eventually reached undisclosed settlements with various plaintiffs. The remaining litigation centered on Successful Money Management Systems Inc., the company that created the seminar materials used by AGA Financial.

The plaintiffs said SMMS bore some liability for their losses because it told AGA its seminar products would convert a lot of Fireman's Fund employees into AGA investment clients. The plaintiffs claimed SMMS had a responsibility to ensure that its products were not being used by unscrupulous licensees.

Lawyers for SMMS, which is now owned by ING North America Insurance Corp., denied the claims. But on Friday, following a trial that dragged from September to late March, Judge Roy Chernus said SMMS had breached its duty to the plaintiffs.

Chernus said SMMS failed to pick out the "bad apples" that were presenting its seminar products at Fireman's Fund. He also said materials and support of SMMS enabled AGA's salespeople to appear as "high-quality trusted professionals."

Chernus' decision was a preliminary announcement on how he plans to rule in the case. The final decision is pending additional input from the litigants.

In addition, a second phase of the trial is set for May 23 to prove financial liability. Fireman's Fund itself might be able to reclaim settlement money it paid the plaintiffs.

The plaintiffs were represented by Jeffrey Lewis, Lindsay Nako, Andrew Lah and Kirsten Gibney Scott of the Oakland firm of Lewis, Feinberg, Lee, Renaker & Jackson.

"We are gratified by the Court's ruling," Nako said in an email. "The seminar company, SMMS, led our clients to Gary Armitage and Jeffery Guidi, and the harm our clients suffered would not have happened without SMMS. We look forward to proving the rest of our case."

Ashley Vinson, a lawyer for Fireman's Fund, said the company is "pleased with the Court's rulings as to both Fireman's Fund and the plaintiffs and is gratified that the ruling recognized the Company worked hard to protect its employees."

ING spokesman Joe Loparco said the company had no comment because the case was still in litigation.

AGA Financial and its principals were not defendants in this lawsuit, although they were sued separately by numerous investors.

Contact Gary Klien via email at gklien@marinij.com or https://twitter.com/GaryKlien

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