Ex-Allianz Fund Manager Seeks Dismissal of Fraud Charges

February 1, 2023 by

The former Allianz SE hedge fund manager charged with fraud over billions of dollars in investor losses asked a judge to throw out the case, claiming lawyers wrongly betrayed him to protect the company.

Gregoire Tournant claims in a Monday filing in federal court in Manhattan that lawyers at Sullivan & Cromwell who initially represented both him and Allianz misused their client relationship with him, gaining information they used to push the government to focus on him instead of the company.

Tournant was chief investment officer and co-lead portfolio manager of a US-based group of Allianz hedge funds that collapsed. He has pleaded not guilty to charges including securities fraud and conspiracy to obstruct justice.

Allianz to Pay Over $6B for Structured Alpha Fraud, Former Fund Manager Indicted

The Allianz unit that managed the failed funds, Allianz Global Investors US LLC, in May pleaded guilty to a single count of securities fraud and agreed to pay $5.8 billion in fines and restitution.

But Tournant claims that allowing AGI to plead instead of Allianz itself was a favorable deal for the German insurer. Allianz believed it faced a “corporate death penalty” if it were charged, he argues, but could only avoid that fate by cooperating with prosecutors against him.

“In an effort to prevent the government from imposing the worst sanctions on Allianz, Sullivan & Cromwell switched sides and employed a strategy of building the government’s case against Mr. Tournant through the creation of a false and misleading narrative that shifted blame to Mr. Tournant,” the ex-fund manager claims.

Tournant is seeking dismissal of the charges or, failing that, a hearing to determine the facts of the government’s interactions with his former attorneys.

A spokesman for the US Attorney in Manhattan declined to comment on Tournant’s claims. Sullivan & Cromwell didn’t immediately respond to phone and email messages seeking comment.

Prosecutors claim Tournant lied to investors in AGI US’s Structured Alpha hedge funds, which were supposed to have been structured to provide protection against a market crash. Instead, the funds ended up losing $7 billion during the tumultuous early days of the pandemic in March 2020.

Two executives who worked with Tournant, Stephen Bond-Nelson and Trevor Taylor, agreed to plead guilty to charges and are cooperating with prosecutors. The government claims Tournant conspired to obstruct an investigation by the US Securities and Exchange Commission by telling Bond-Nelson to lie to the company’s lawyers, knowing the information would be passed on to the regulator.

Tournant says he met with Sullivan & Cromwell lawyers on June 3, 2021 to prepare for planned testimony to the SEC, even though the firm was already aware it had a conflict of interest representing both him and Allianz. The lawyers subsequently passed the information provided by Tournant in the meeting to prosecutors, he claims.

According to the Monday filing, government notes taken at a March 22 meeting show Sullivan & Cromwell’s lead lawyer on the case offered to help with the prosecution of Tournant in exchange for leniency for AGI.

“Tournant may file disciplinary claim against us because we gave you info,” the lawyer was recorded saying at the meeting, Tournant claims.

The case is US v. Tournant, 22-cr-00276, US District Court, Southern District of New York (Manhattan).

Photograph: The Allianz SE logo sits on a top of a building in Berlin, Germany, on Wednesday, Jan. 4, 2017. Photo credit: Krisztian Bocsi/Bloomberg

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