Court Affirms Fireman’s Fund Employees Were Defrauded
March 15--A state appeals court has affirmed the verdict and damages in a Marin County fraud trial involving a group of former employees at Fireman's Fund Insurance Co.
The plaintiffs, who worked at the insurance giant when it was based in Novato, 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." 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, later owned by ING North America Insurance Corp., denied the claims. After extensive litigation and a trial in Marin Superior Court, Judge Roy Chernus ruled in 2014 that SMMS had breached its duty to the plaintiffs.
Chernus awarded the plaintiffs $36.8 million in damages. A related batch of litigation involved a dispute between Fireman's Fund and ING over damages and attorneys' fees.
Attorneys for both companies appealed the case on various grounds to the 1st District Court of Appeals in San Francisco. In a decision released on Wednesday, a three-judge panel affirmed the outcomes in Marin Superior Court.
"We are extremely pleased that the court of appeal affirmed the trial court's thorough decision in favor of our clients, who lost substantial parts and in some cases, virtually all of their hard-earned retirement savings," said attorney Jeffery Lewis, who, along with Val Hornstein, has been representing the plaintiffs. "They have not been paid."
An attorney for ING did not respond to a request for comment.
Fireman's Fund, which was absorbed by the Germany-based conglomerate Allianz, sold its building and moved to Petaluma in 2015 after years of staff reductions.
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