Subpoena of Trump’s broker carries lessons for allPosted On: Mar. 12, 2019 7:05 AM CST
The intended if indirect target of the New York authorities’ subpoena of Aon PLC last week for documents related to President Trump’s family business likely was the Trump Organization rather than the broker, but insurance industry firms should be aware that they risk entanglement in investigations of clients, observers say.
The subpoena by the New York State Department of Financial Services, which does not suggest that Aon or its employees engaged in wrongdoing, demands materials about Aon’s dealings with President Trump and the Trump Organization dating to 2009, according to a report. Aon is the Trump Organization’s insurance broker.
An Aon spokeswoman said in an emailed statement: “We can confirm that we received a subpoena from the New York State Department of Financial Services and, as is our policy, we intend to cooperate with all regulatory bodies. We do not comment on specific client matters.”
The Trump Organization did not respond to a request for comment.
The subpoena followed testimony by former Trump attorney Michael Cohen before the House Oversight and Reform Committee last month.
Mr. Cohen responded “yes” during his day-long testimony to a question by Congresswoman Alexandria Ocasio-Cortez, D-New York, as to whether the president had ever provided inflated assets to an insurance company.
In response to further questions, Mr. Cohen said Trump Organization officials Allen Weisselberg, Ron Lieberman and Matthew Calamari would know about the alleged asset inflation, and the committee could find more information at the Trump Organization.
Sherilyn Pastor, a partner with McCarter & English LLP in Newark, New Jersey, said she suspects the subpoena does not reflect a concern “for Aon’s conduct so much as it is to develop information to understand when Trump or the Trump Organization were insuring their assets, how they valued them,” in the event they were lost or destroyed, “so they can compare and contrast that information with allegations that were made about falsely evaluating them in other, noninsurance settings,” she said.
By demanding information from Aon, which would have prepared various insurance applications, authorities avoid having to seek information from individual insurers on the Trump account, Ms. Pastor said.
She added insurance applications are typically signed “by someone senior in management” at the policyholder.
The investigation by state authorities “suggests any time there is any financial inquiry by the government that the insurance sector can be the target of a subpoena, so brokers need to be careful to do their due diligence to underwriters,” said Richard Bortnick, senior counsel, Traub Lieberman Straus & Shrewsberry LLP in Red Bank, New Jersey.
They “can no longer take their policyholders’ word or their clients’ word for everything they’re told. Certain things may require them doing their homework,” Mr. Bortnick said.
Kirk Pasich, an attorney with Pasich LLP in Los Angeles, said the subpoena highlights the need to be accurate in insurance applications and the risk inaccurate information poses to coverage.
There is a “real problem” if information is misrepresented, he said, adding that in most states insurers can cancel policies based on inaccurate applications, even if a mistake is innocent.
“I don’t know where this is going to go,” Mr. Pasich said. “We do see frequently in coverage disputes brokers getting subpoenaed, and they get requests for information, so I don’t think it’s unusual” for a broker to receive such a request, although “it doesn’t usually come from a government agency,” he said.
“Aon is kind of in the middle” here, although there is “a question, I suppose, of what a broker knows or doesn’t, and what it says or doesn’t when it submits applications. I think it’s fair to say that brokers cannot stick their heads in the sand,” Mr. Pasich said.
Mark G. McCreary, a partner with Fox Rothschild LLP in Philadelphia, said also New York may be investigating whether the information submitted by Aon was a matter of “actual willful ignorance or willful disregard of information on the broker’s part.”