The
Wilmington Star North Carolina, Thursday, July 22,
2004 Fortress
Re. reaches deal in fraud case By Margaret Moffett
Banks,
Staff Writer Greenboro News &
Record [more on
this] [more such 9/11
fraud stories] TWO Greensboro
[North
Carolina] businessmen
and their now-defunct reinsurance company will pay
more than $400 million -- including proceeds from
the sale of Irving Park's most distinctive mansion
-- to settle a billion-dollar fraud
case.  David
Irving comments: SUMMARY - A CAN OF WORMS FALLS OPEN:
This is the story of two high-flying
Oligarchs, or "philanthropists," from
Greensboro, North Carolina, who embezzled
hundreds of millions of dollars from their
re-insurance company. Chico had 'donated'
$100m of the money thus siphoned off, to
build a Jewish academy from scratch. For
this 'generosity,' he was named a top
"philanthropist" by Business Week
magazine! All would have been well except
for those blasted Arab hijackers in their
flying machines.
The Oligarchs of North
Carolina had taken millions of dollars
from the Japanese insurers, to reinsure
their insurance on airplanes. Including
all four of the 9/11 airplanes destroyed
that day. Oops.
Now the philanthropists
didn't have the money to reimburse the
Japanese insurers.
Hardly their fault,
surely? As President George W Bush
says, who could have foreseen such an
event?  |
Millionaires Maurice "Chico" Sabbah and
Kenneth Kornfeld will hand over cash,
antiques, luxury vacation homes and commercial
property from the North Carolina coast to Israel to
three Japanese insurance giants.Those insurers are trying to reach a settlement
with the American Hebrew Academy, the boarding
school Sabbah financed with $100 million -- money
the Japanese claim Sabbah defrauded from them. The
companies will pursue the lawsuit against the
academy if they can't reach a settlement, said
Howard Hawkins, an attorney for one of the
Japanese companies. "(Sabbah) didn't have the lawful ability to gift
those assets," said Hawkins, a partner with
Cadwalader, Wickersham & Taft in New York
City. Sabbah and Kornfeld declined to be
interviewed. Glenn Drew, their attorney and Sabbah's
nephew, declined to discuss the settlement, saying
it was confidential. He said the academy is working
on a settlement and is planning for the upcoming
school year. Forty-five new students will arrive in
August, bringing the school's enrollment to 130
students, Drew said. Hawkins said the $400
million is only an estimate of the final total.
The amount could be higher, he said. He called the amount "tremendous. Greater than
what we realistically expected. (Sabbah and
Kornfeld) decided to live out their lives in peace
rather than fight the action until all their assets
were taken," he said. Matthew Wulf, an attorney for the trade
group Reinsurance Association of America in
Washington, D.C., said "even in the insurance and
reinsurance industry, $400 million is a lot of
money." Wulf said it's an especially large sum for one
company to pay. The settlement ends a nearly three-year-long
legal struggle between Sabbah, Kornfeld and the
Japanese. Fortress Re was a reinsurance manager, a
complicated business that provides insurance to
insurance companies. For years, it was virtually
unknown outside of reinsurance circles, operating
from a nondescript brick building near downtown
Burlington. Few people knew the company was a thriving,
multibillion dollar business. Even fewer understood what Fortress Re did:
manage an aviation-reinsurance "pool,'' a
risk-sharing insurance group, for the three
Japanese companies. The company was the pool manager for the four
airplanes hijacked on Sept. 11, 2001; accountants
estimated that the pool lost $1.4 billion that
day. The Japanese companies claim the tragedy
revealed years of deception by Fortress Re: It
couldn't pay those losses because Sabbah and
Kornfeld kept hundreds of millions for themselves
instead of saving it to cover claims. In December, a three-man arbitration panel in
New York City awarded the Japanese companies $1.12
billion in damages. The $400 million, which
includes a $265 million down-payment the men made
in January, represents what Sabbah and Kornfeld
agreed to pay out for that billion-dollar
award. The process of paying the settlement already has
begun. Hawkins said Kornfeld's Irving Park mansion
has been deeded to the Japanese and is for
sale. The house at Country Club and Cleburne drives
was built in 1936 by Cone Mills President Herman
Cone, the son of Cone Mills co-founder
Ceasar Cone. During their ownership, the
Cone family kept the lawn open -- convenient for
gawking Sunday drivers. Kornfeld changed the
3.5-acre estate to suit his personality. An
intensely private man, he landscaped the lawns with
trees and shrubs that block the house from
view. When the News & Record sought to
interview the Kornfelds when they bought the home
in 1992, they declined through their attorney. At
the time, the $2.15 million sale price was believed
to be the largest for a North Carolina
residence. The Kornfelds already have moved out of the
house, said Alan Duncan, a local attorney
representing one of the Japanese companies. Duncan
said people have "expressed interest" in the
house. Realtor Katie Redhead, who has handled
the sale of many Irving Park properties for Yost
& Little Realty, says she estimates the
Kornfeld house would bring $6 million to $6.5
million. "It's a signature Irving Park property and
it speaks for itself,'' she said. The price would be high but there are certainly
people willing to pay it, Redhead said. She said rumors about the house have been
swirling for weeks and at least five clients have
called her wanting to know the status. Kornfeld will keep one
of his four apartments in New York City's
exclusive Millennium Tower, Hawkins said. The fate of the American Hebrew Academy is less
certain. The school, which rests on 100 wooded acres
along Hobbs and Jefferson roads, is lavish even by
private-school standards. To design the academy, Sabbah reached across the
continent to hire Aaron Green, an
82-year-old San Francisco architect and one of
Frank Lloyd Wright's last surviving associates. Hawkins said academy officials want to keep the
school in business, but that his clients' want to
get their money back. Last year, Business Week magazine named
Sabbah to its list of the 50 most generous American
philanthropists. The magazine cited his donations
to the academy, estimated at $100 million. Sabbah, who shuns publicity, was unfazed by the
honor. "For years I operated anonymously. I really
don't consider myself newsworthy," Sabbah said at
the time. "I'm just a private individual who lucked
up and earned a bunch of money. "I guess my ego is good enough that I don't need
you telling me, 'Chico Sabbah, you're a nice guy.'
" FORTRESS
RE SETTLEMENT A
partial list of items included in the Fortress Re
settlement and approximate value, if
known: KENNETH
KORNFELD - House
at 806 Country Club Drive in Irving Park. Tax
value: $4.15 million
- Three
apartments, each valued at about $900,000, in
Figure Eight Island: $2.8 million
- House
in Aspen, Colo. Market value: $8 million to $9
million
- Three
apartments in New York City's Millennium
Tower
- Furnishings
from homes in Irving Park and Aspen, including
various antiques. Estimated value: $1.3
million
- Gulfstream
III jet
- Automobiles:
$120,000
- Cash
and other securities
MAURICE
SABBAH - Cash
and other securities, which comprised the bulk
of his payment
- Commercial
and residential property in Pennsylvania, New
York and Israel. Estimated value: $6
million
- Sources: Guilford County Tax
Department; Lexis Nexis; Cadwalader,
Wickersham & Taft
WILMINGTON
STARThursday, July 23, 2004 Greensboro
businessmen to settle lawsuit for over $400
million The Associated Press TWO businessmen have agreed to pay more than
$400 million to settle fraud allegations by
Japanese insurance companies following the terror
attacks of Sept. 11, 2001, according to a lawyer
for one of the insurance firms.Among the assets to
be handed over by Maurice Sabbah and Kenneth
Kornfeld are cash, antiques, vacation homes and
commercial property.Howard Hawkins, a lawyer for
one of the three Japanese companies, told the News
& Record for a story published Thursday that
the insurers also are trying to reach a settlement
with the American Hebrew Academy.Sabbah financed
the Greensboro boarding school with $100 million
that the Japanese claim he defrauded from them. "(Sabbah) didn't have the lawful ability to gift
those assets," Hawkins said.Sabbah and Kornfeld's
firm, Fortress Re of Burlington, was a reinsurer -
an insurer for insurance companies, allowing them
to pool financial resources they might need in the
event of massive claims. The Japanese firms paid premiums and management
fees to Fortress Re, which was the pool manager for
the four airplanes hijacked in the Sept. 11
attacks.One of the insurers, Sompo Japan Insurance,
sued Fortress Re in federal court, accusing Sabbah
and Kornfeld of taking hundreds of millions of
dollars that should have gone to cover claims from
the losses caused by the planes. Accountants estimated the pool lost $1.4 billion
that day.Fortress Re denied the allegations in the
lawsuit, saying pool members had a long, profitable
relationship with the firm until the terrorist
attacks - an extraordinary event that could not
have been foreseen.In December, an arbitration
panel sided with Sompo, saying Fortress Re leaders
engaged in fraud and "willful and deliberate
misconduct" when doing business with Sompo. Fortress Re was ordered to pay Sompo $1.1
billion.The $400 million, which includes a $265
million down payment the men made in January,
represents what Sabbah and Kornfeld agreed to pay
out for that billion-dollar award.Sabbah and
Kornfeld declined the News & Record's interview
request. Their lawyer, Glenn Drew, who is also
Sabbah's nephew, declined to discuss the
settlement, saying it is confidential.Hawkins, the
lawyer for Sompo, said the settlement was "(greater) than what we realistically
expected. (Sabbah and Kornfeld) decided to live
out their lives in peace rather than fight the
action until all their assets were taken." The two other companies receiving payments are
Aioi Insurance Co. and Taisei Reinsurance Co. One asset that has been deeded to the Japanese
and is being sold is the Greensboro mansion where
Kornfeld lived. He and his family have already
moved out, and a real estate agent estimated the
estate - built in 1936 by Cone Mills president
Herman Cone - could bring between $6 million
and $6.5 million.Drew said the American Hebrew
Academy - the country's only non-Orthodox Jewish
boarding school - is working on a settlement and
planning for the upcoming academic year.  More
September 11, 2001 insurance squabbles, horror
stories, and fraud attempts: 
Dutch
insurance giant resists WJC blackmail, is
threatened with ruin-
Ugly
squabble over who picks up World Trade Center
insurance tab
-
German
insurance giants sue Twin Towers' Silverstein:
Attack was one insurable event, not two
-
World
Trade Center Developer Larry Silverstein Suffers
Insurance Setback
-
Jury discounts tale of
'verbal agreement' - WTC
Leaseholder Silverstein Loses $3.5bn Insurance
Battle: Sept 11 was 1 incident, not 2
-
-
|