Global Hawk Insurance Company Risk Retention Group (Global Hawk) President and Treasurer Jasbir S. Thandi has been indicted in the United States District Court for the Northern District of California. Global Hawk Vice President and Secretary Sandeep Sahota and Jaspreet Padda—an investment advisor for Global Hawk—were also indicted.
The indictment was filed on November 16, 2023, and unsealed on December 19, 2023, and alleges “that between 2017 and 2019, Thandi, misappropriated over $19 million in Global Hawk funds, including sending over $1 million to an entity domiciled in the British Virgin Islands, and over $7 million to other outside entities controlled by Thandi”.
Global Hawk, a Vermont-domiciled RRG, was placed into liquidation by the Vermont Department of Financial Regulation (Vermont DFR) in June of 2020.
Thandi, Sahota, and Padda were charged with conspiracy to commit insurance fraud and two counts of insurance fraud (false statements to regulators). In addition, Thandi faces two counts of insurance fraud (misappropriation) and two counts of bank fraud. Both Sahota and Padda have been arrested.
“The conspiracy count has a maximum statutory sentence of five years in prison and a fine of $250,000. Each insurance fraud count has a maximum statutory sentence of 10 years in prison (or 15 years if the fraud jeopardized the safety and soundness of an insurer and was a significant cause of such insurer being placed in conservation, rehabilitation, or liquidation by an appropriate court) and a maximum fine of $250,000. Each bank fraud count has a maximum statutory sentence of 30 years in prison and a maximum fine of $1,000,000,” as per a press release from the United States Attorney’s Office, Northern District of California.
Thandi was also the president of Global Century Insurance Brokers (GCIB), a California-licensed insurance broker.
“GCIB sold, wrote, and issued insurance on behalf of Global Hawk in the State of California as well as other states. GCIB received an approximately 17.5% commission on each insurance policy it sourced on behalf of Global Hawk. GCIB focused on insuring truck drivers, many of whom worked and resided in the Northern District of California,” as per the indictment.
Regarding the conspiracy to commit insurance fraud, the indictment states that Thandi, Sahota, and Padda (the Defendants) “agreed to and did cause to be submitted false Global Hawk financial statements to the Vermont DFR” through its captive manager, identified as Witness 1. The indictment states these false financial statements “significantly and materially overstated Global Hawk’s assets and concealed the fact that Global Hawk was insolvent” with the purpose of continuing to allow Global Hawk to operate as a Vermont-domiciled insurance company. These actions began no later than May 2018.
The indictment also states that Thandi obtained loans from Stifel Bank & Trust in Global Hawk’s name after falsely asserting that the Global Board of Directors had authorized the use Global Hawk’s Stifel held assets as collateral. Thandi initially took out a Stigel Pledged Asset (SPA) loan that was approved for $6.4 million in August 2016, with the line of credit later increased to $14.0 million in December 2016. Thandi withdrew $13.9 million from the first SPA account over a period ranging from August 2016 to February 2017, transferring the funds to a GCIB account at Bank of the West.
In March 2017, Thandi applied for a second SPA loan of $14.8 million, once again falsely asserting that he had the approval of Global Hawk’s Board of Directors. Thandi used the funds from the second loan to pay off the first Stifel SPA loan.
No later than August 2017, Thandi began to misappropriate insurance funds from Global Hawk by transferring funds from Global Hawk accounts at Mechanics Bank, Bridge Bank, and Stifel into outside accounts unrelated to Global Hawk and GCIB’s insurance business. “Some of these funds were derived, directly or indirectly, from the funds withdrawn from the first Stifel SPA loan,” as per the indictment.
These transfers include:
- On or around August 15, 2017, a $4.5 million cashier’s check signed by Thandi from Global Hawk’s Mechanic Bank account to a separate company controlled by Thandi.
- Wire transfers of $3.1 million from Global Hawk’s Bridge Bank account to an entity formed in Liverpool, California and registered with the California Secretary of State around April 5, 2016. The business listed Thandi as the president and stated its purpose as real estate investment.
- A transfer of $1.2 million from Global Hawk’s Stifel account to a Bridge Bank account that held the accounts of an entity domiciled in the British Virgin Islands.
In February of 2019, the Defendants began to create false documents for submission to the Vermont DFR with the goal of concealing “Global Hawk’s dire financial situation.” These statements misrepresented the assets held in Global Hawk’s Stifel accounts by tens of millions of dollars. “By falsifying the amount of capital Global Hawk held, Thandi, Sahota, and Padda prevented the Vermont DFR from obtaining an accurate view of Global Hawk’s financial situation and from adequately protecting those insured by Global Hawk,” as per the indictment.
The indictment also alleges that further false statements were made by Thandi and Sahota in Global Hawk’s 2019 financial statement. The Vermont DFR became concerned that Global Hawk was undercapitalized in 2017 and 2018. The Vermont DFR set forth these concerns in letters and other communications to Thandi, Sahota, and Global Hawk. “To address these concerns, the Vermont DFR demanded and Global Hawk explicitly agreed that it would not write more than $15.5 million in new insurance policies for calendar year 2019.”
The Global Hawk Financial Statement for 2019 affirmed that Global Hawk only wrote $15.5 million in new insurance policies. This was a misrepresentation. According to the indictment, Global Hawk wrote more than $15.5 million in new insurance policies through “ghost policies.” The ghost policies’ “were off-the-book policies that were never reported to the Vermont DFR.”
The captive manager for Global Hawk resigned on May 6, 2020, after discovering that Global Hawk held no assets at Stifel. “Shortly thereafter, Global Hawk collapsed, affecting hundreds of victims who lost insurance funds as a result.”
As per the press release from United States Attorney’s Office, Northern District of California: “An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.”
This is a higher standard of proof than required in the lawsuit filed by the Vermont DFR against Thandi and GCIB in the United States District Court for the District of Vermont. The Vermont DFR was awarded $66.7 million in that lawsuit.
According to the fifth status report of Global Hawk’s insolvency filed on June 9, 2023, Global Hawk’s total assets as of May 31, 2023, were $3.4 million. The “ballpark” estimate for Global Hawk’s total policy-related liabilities is $23.8 million. There is additional difficulty determining total liabilities due to the presence of “ghost policies.”
The Vermont DFR has also filed a lawsuit against Global Hawk’s auditor Crowe, Inc. alleging that the firm breached its duty of care by conducting negligent audit reports for Global Hawk in 2016, 2017, and 2018. The Vermont DFR also alleges that those audit reports negligently misrepresented Global Hawk’s financial condition from 2016 to 2018. In addition, the Vermont DFR is seeking damages for breach of contract by Crowe from 2016 to 2018.
Global Hawk Special Deputy Liquidator J. David Leslie of Verrill wrote the following regarding the Crowe lawsuit in the Fifth Status Report for Global Hawk:
“Following removal (Ed. Note: The Case was Moved from Superior Court of Washington County, Vermont, Civil Division, to the Vermont District Court in November 2022) Crowe filed a motion to dismiss that was denied by the Federal District Court on October 17, 2022. Subsequent motion practice (e.g., motions to strike and quash) has been significant and Crowe has indicated an intention to seek intensive and wide-ranging discovery. Given the multimillion stakes at issue, the Liquidator anticipates that the Crowe litigation will be a lengthy and expensive matter to pursue to conclusion. Because the potential recovery from Crowe may be the largest asset in the Global Hawk estate, however, the liquidator believes that a commensurate investment of time and resources in the Auditor Lawsuit is appropriate and necessary.”