By Jody Godoy
NEWYORK – The former Allianz SE fund manager charged with fraud over the multibillion-dollar collapse of a group of investment funds urged a U.S. judge on Monday to dismiss the criminal case, saying lawyers who once represented him improperly “switched sides.”
Gregoire Tournant, the former chief investment officer who created the now-defunct Structured Alpha Funds, accused the law firm Sullivan & Cromwell of helping Allianz, also a client, make him a scapegoat after the German company decided to cooperate with prosecutors.
In court filings, Tournant’s lawyers told U.S. District Judge Laura Taylor Swain in New York City the law firm was “pushed to the extreme” by the serious penalties facing Allianz, and that prosecutors engaged in “manifestly and avowedly corrupt” conduct by targeting him.
Neither Sullivan & Cromwell nor the office of U.S. Attorney Damian Williams in New York City immediately responded to requests for comment.
Once with more than $11 billion of assets under management, the Structured Alpha funds lost more than $7 billion as COVID-19 roiled markets in February and March 2020.
Prosecutors said Allianz Global Investors US LLC misled pension funds by understating the Structured Alpha funds’ risks, and by having “significant gaps” in its oversight.
Last May, Allianz’s U.S. asset management unit pleaded guilty to securities fraud and its parent agreed to pay more than $6 billion to resolve federal probes.
Tournant has pleaded not guilty to fraud, conspiracy and obstruction charges.
According to court papers, he was charged two months after Allianz’s lawyers met with prosecutors and urged them to defer charges against the asset management unit, arguing that a guilty plea would be a “death penalty.”
Notes from the meeting filed in court showed that Sullivan & Cromwell lawyers told prosecutors that Tournant might seek to have the firm disciplined for sharing information it obtained while representing him, though the lawyers did not think the information was protected by attorney-client privilege.
The law firm was “coerced” to “turn on one client in order to save another” because of Department of Justice policies requiring companies to cooperate against individuals to receive leniency, Tournant’s lawyers said.