DA Vance Announces Deferred Prosecution Agreement With MetLife Insurance Company to Resolve Investigation into Unlicensed Business Operations

March 31, 2014

Manhattan District Attorney Cyrus R. Vance, Jr., together with the New York State Department of Financial Services (“NYSDFS”) today announced the resolution of parallel investigations into violations of the New York Insurance Law and the New York Penal Law by METROPOLITAN LIFE INSURANCE COMPANY, INC., (“MetLife”) through certain subsidiaries. In the Deferred Prosecution Agreement (“DPA”) and Factual Statement, MetLife admitted to conduct that made it and the subsidiaries vulnerable to prosecution for unlicensed insurance business operations and for filing a false instrument with the New York State Department of Insurance.

“This investigation has been resolved by a Deferred Prosecution Agreement – an important tool used by prosecutors to hold companies accountable through fines and requirements that they will commit to policy changes that prevent criminal conduct from occurring,” said District Attorney Vance. “New York is a center of global commerce, and New York authorities have the responsibility to regulate companies that operate within our borders. The privilege of soliciting business in Manhattan carries with it certain rules that must apply to all who benefit from our consumers and economy.”

As a part of the Deferred Prosecution Agreement, MetLife will forfeit $10 million, an amount approximately equal to the profits earned over a two-year period from its unlicensed activity in New York. The DPA takes into consideration MetLife’s prior and continued cooperation with the investigation, MetLife’s entry into a consent agreement with NYSDFS also announced today, and MetLife’s good faith efforts to correct tax underpayments that may have resulted from the illegal conduct of its subsidiaries. As part of a concurrent settlement with the Department of Financial Services, MetLife will forfeit an additional monetary penalty.  

For many decades, the American Life Insurance Company (“ALICO”) and the Delaware American Life Insurance Company (“DelAm”) have provided insurance protection to large companies for employees overseas. Until 2010, when ALICO and DelAm were purchased by MetLife, they were owned by American International Group, Inc. (“AIG”). New York Insurance Law requires insurance businesses that solicit insurance business from within New York to be licensed. ALICO and DelAm used personnel based in Manhattan to solicit insurance business, but neither company was licensed to conduct insurance business in New York. DelAm became licensed in New York during the course of the investigation.  

In 2010, AIG sold the two unlicensed subsidiaries to MetLife. Before doing so, in 2009, ALICO, on behalf of AIG, filed a document with New York State insurance regulators seeking an opinion as to whether ALICO required a license to operate. It was falsely represented in that document that ALICO conducted no insurance business from within New York, but rather, only had administrative and back office personnel acting on its behalf in New York.  

The Manhattan District Attorney’s Office strongly encourages organizations doing business in New York to review their operations to ensure that they comply with New York regulatory and criminal laws and to self-report irregularities. In 2010, the Office published a memorandum entitled, “Considerations in Charging Organizations.” The memorandum is publicly available at www.manhattanda.org, or by clicking here, and provides general guidelines for Assistant District Attorneys to follow when deciding whether to prosecute organizations.

This investigation was handled by Assistant District Attorneys Marc Frazier Scholl, Senior Investigative Counsel in the Major Economic Crimes Bureau and Counsel to the Investigation Division, and Assistant District Attorney Vimi Bhatia, Deputy Chief of the Asset Forfeiture Unit, under the supervision of Assistant District Attorney Judith Weinstock, Deputy Chief of the Major Economic Crimes Bureau, Assistant District Attorney Polly Greenberg, Chief of the Major Economic Crimes Bureau, and Executive Assistant District Attorney David Szuchman, Chief of the Investigation Division. 

Senior Rackets Investigator Behzah Ahdout assisted in the investigation under the supervision of Walter Alexander, Chief Investigator of the Investigation Bureau. Trial Preparation Assistant Alison Ongvorapong also assisted in the investigation.

District Attorney Vance also thanked the following agencies and individuals for their cooperation and assistance in the investigation: Superintendent Benjamin Lawsky of the Department of Financial Services, Joy Feigenbaum, Executive Deputy Superintendent, Financial Frauds and Consumer Protection, and Christopher Mulvihill, Senior Counsel to the Superintendent of the New York State Department of Financial Services; New York State Attorney General Eric Schneiderman, and Assistant Attorney General Lisa White; and the New York State Department of Taxation and Finance.