One of Platinum’s founders, Murray Huberfeld, was arrested in June and charged with bribing a New York City corrections officers’ union official to make a $20 million investment in one of Platinum’s funds.

Beechwood executives targeted in suit

Although CNO’s suit doesn’t name Beechwood as a defendant, it targets executives Moshe Feuer, Scott Taylor, and David Levy — a nephew of Platinum’s Huberfeld. The suit claims that Feuer, a former Marsh USA Inc. CEO, and Taylor, a former executive at Marsh & McLennan Co., served as front men for Beechwood to drum up reinsurance business.

“The scheme to attract institutional investors in the Platinum funds had succeeded,” wrote Winston & Strawn litigation partner Adam Kaiser. “Plaintiffs gave Beechwood the keys to a $550 million reinsurance trust, without ever suspecting that they were in reality doing business with Platinum.”

The suit claims that Beechwood officials repeatedly concealed connections to Platinum, including the fact that many Platinum employees worked for Beechwood or were seconded at the reinsurance firm.

Beechwood, according to the suit, repeatedly diverted trust assets to Platinum investments and overvalued assets tied to Platinum — including a loan to the principal in a Ponzi scheme, bond investments in failing oil and gas companies and a loan to a payday loan company charged with consumer protection violations by a federal consumer watchdog.

According to the suit, overzealous valuations gave the impression that trusts were fully funded when they were not and allowed Beechwood to remove $134 million from the trusts as purported “surplus.”

‘Baseless innuendo,’ says Beechwood

Beechwood spokesman David Goldin said in an emailed statement that CNO has suffered no losses and that the company has acted properly at all times.

“Beechwood will take every possible step to refute these false claims and regrets CNO’s inappropriate decision to file a meritless lawsuit filled with baseless innuendo as a method of gaining leverage in a business negotiation,” Goldin said.

Defense counsel for the three Beechwood executives have yet to make an appearance in the case.

Winston’s Kaiser didn't respond to a phone message. But in a company release, the Indiana-based CNO said that it had taken action to take control of $550 million in long-term care liabilities by terminating its reinsurance agreements with Beechwood and commencing arbitration against Beechwood itself.

Ross Todd is a reporter for PropertyCasualty360.com affiliate law.com. He can be reached at [email protected].