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Short-seller sends Globe Life shares plunging 53% as insurance giant calls report ‘defamatory,’ threatens legal action

The Globe Life logo appears behind a smart phone whose screen shows the company's fluctuating stock price

Photo illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images

  • A report from short-seller Fuzzy Panda Research today sent Globe Life stock plummeting.
  • The report alleges fraud, kickbacks, and sexual assault at subsidiary American Income Life.
  • Globe Life issued a statement after the close of trading calling the report “wildly misleading.”

Shares of insurance giant Globe Life Inc. plunged 53% today and trading was halted eight times after a short-seller issued a damning narrative on the company.

In a 36-page investigative report, Fuzzy Panda Research described “extensive allegations of insurance fraud” at Globe’s wholly-owned subsidiary American Income Life, repeatedly citing Business Insider’s coverage.

Last year, BI reported that agents at a leading AIL sales agency, the Pittsburgh-based Arias Organization, had forged signatures and opened accounts in the names of dead people.

Today’s short seller report says “dozens of former executives and agents told us that the problems of fraudulent insurance production for Globe Life is an AIL problem, not limited to Arias” and claims Fuzzy Panda uncovered allegations of fraud at many of AIL’s largest agencies.

Globe issued a statement after the close of trading calling the Fuzzy Panda report “wildly misleading” and saying the company “strives to act in accordance with the highest level of ethics and integrity at all levels of the organization and to comply with all government regulations.” The company said it intends to “more fully rebut” allegations in the report soon and will “explore all means of legal recourse.”

Fuzzy Panda sent people undercover to apply for jobs at AIL agencies. They reported back that one recruiter had a criminal record, another suggested the applicant use a fake address to avoid seeking a license in a state where standards were high, and a third appeared to offer cocaine if the recruit had great sales in his first week.

The report also said Globe and AIL executives directed recruits to a single company for exam prep — Xcel Testing. Fuzzy Panda cited a 2022 lawsuit filed against AIL, Globe Life, and other parties by an Xcel competitor that estimated that AIL managers had made at least $43 million in Xcel “kickbacks.” (Globe Life, AIL, and the other defendants denied the allegation in a legal filing.)

The report describes “an exhaustive array of financial malfeasance” that took hold once CEO Steve Greer and President Dave Zophin took over AIL in 2017 and 2018. It characterizes AIL as a “pyramid scheme” where agencies were incentivized to write more and more bad policies each year to fuel growth. “If you thought it could not get any worse,” Fuzzy Panda writes, “American Income Life has also fostered an environment permissive of sexual assault, rape, racism, and widespread illicit drug activity.”

Trina Orlando, a spokesperson for Arias and the Arias Organization, said Arias is “deeply troubled by the inaccurate and false statements” in the Fuzzy Panda report.

Allegations of sexual assault, consumer deception

The report mentions several other lawsuits, including the shocking sexual assault and sexual harassment complaints of a former Arias agent, Renee Zinsky, first reported by BI. Zinsky told Fuzzy Panda that favored agents had special access to customer information that allowed them to put through charges for new policies without customers’ knowledge.

Zinsky had sued AIL, Arias Agencies (now the Arias Organization), Simon Arias, her boss Michael Russin, and his companies in federal court in 2022 over sexual harassment, sexual assault, and job misclassification, but AIL and Arias prevailed in a motion to remove Zinsky’s complaint to private arbitration, where a protective order, her attorney Amy Williamson said, has kept all aspects of the proceedings hidden from view.

On March 3, the eve of the arbitration hearing, Zinsky withdrew her claims against AIL and Arias, surrendering her ability to bring them in any legal forum, according to court documents and a regulatory filing by Globe.

The American Arbitration Association panel dismissed the case on March 4. There was never a hearing on the merits.

Zinsky’s claims against Russin remain in federal court; the Equal Employment Opportunity Commission separately reopened an investigation into her charges after BI’s reports appeared.

Last October, Pennsylvania’s insurance regulators fined AIL $130,000 for engaging in deceptive consumer practices; in March, BI reported that the Department of Justice had subpoenaed Globe and AIL, seeking information about Arias. Meanwhile, Warren Buffett’s Berkshire Hathaway sold all 6.35 million shares of Globe Life stock the investor once held.

An 11th-hour subpoena for confidential information

Zinsky’s withdrawal from arbitration appears to have been a tactical effort to prevent disclosure of her settlement negotiations with Russin.

On March 3, the day before the hearing was to begin, Zinsky’s attorneys learned the arbitrators had subpoenaed Russin and demanded that he share a confidential document when he arrived to testify. That document contained information about settlement negotiations he and Zinsky had agreed to keep confidential, according to a transcript of a March 4 arbitration meeting. John Kane, a lawyer for Zinsky, said he did not want her to be forced to break that confidentiality agreement when it was her turn to testify.

Russin’s Pittsburgh lawyer, Matthew D. Gailey, did not respond to an inquiry.

The night before, facing the 11th-hour subpoena, Zinsky’s lawyers withdrew her claim. Williamson told BI that the decision came against a backdrop of arbitration proceedings where her client, Zinsky, wasn’t treated fairly. “I’m not able to speak in detail about the arbitration proceedings, but if the public knew what did transpire, they would be appalled and conclude there is no due process,” she said. Michael Clark, a spokesperson for AAA, said in an email that it is AAA’s policy not to comment on its cases.

AAA does not require proceedings to be confidential. But Williamson said that in this case a broad protective order prohibits Zinsky or her lawyers from saying anything about details of the case. “AIL’s focus was silencing Renee much more than addressing the merits of her case,” Williamson said. “AIL was silencing her in every way they could.”

Globe Life spokesperson Jennifer Haworth did not respond to queries about Zinksy’s case.

AIL and Russin sought to obtain the names of BI’s sources through filing motions in the Zinsky case and in another arbitration concerning sexual assault and racism brought by Abeni Mayfield, an agent who worked out of an Arias office in Columbia, Maryland. In the Zinsky case, Russin asked Zinsky to “identify each and every individual that you are aware spoke with Susan Antilla in preparation of the Insider article.” In the Mayfield case, AIL asked arbitrators to order the production of “all communications between claimant and Susan Antilla” and “all communications between claimant’s counsel and Susan Antilla,” according to a letter Williamson sent to an AAA arbitrator in December. Williamson said the only communications Zinsky handed over were text messages she exchanged with BI.

Orlando, the Arias spokesperson, called it “disappointing” that Zinsky “is still publicly speaking on her claims which so completely lacked merit she refused to have them heard.” Orlando said the company intended to “aggressively pursue all parties who continue to defame and spread false allegations related to Arias and the Arias Organization.”

Williamson said the federal court case against Russin “is still pending and we are moving forward.”

The EEOC investigation into Zinsky’s claims against AIL, Arias, and Russin appears to be still underway; Williamson said she spoke about the case with an investigator at the agency as recently as last week. An email from the EEOC to attorneys in the Mayfield case, obtained by BI, says the agency also reopened an investigation into her allegations of sexual assault and other charges at Arias.

Globe Life ‘vigorously’ disputes critical reports

Globe has publicly challenged BI’s reporting. In a statement to the online financial publication Seeking Alpha, Globe said that short-seller Nate Koppikar, who had recommended Globe as a short sale at an April 3 investment conference, had cited “conclusions” in BI’s reporting that were “inaccurate and misleading.” Globe made similar comments to Reuters on April 4, but Haworth, the spokesperson, did not respond to a request for comment on Koppikar’s report.

During an earnings call with investors on February 8, Globe co-CEO J. Matthew Darden said that “an online publication” had posted stories about legal cases against AIL and one of its state general agents and “vigorously” disputed the allegations.

A key allegation against the defendants, though, was Zinsky’s claim of sexual harassment by Russin, which AIL appeared to corroborate in a September 2023 letter to the EEOC. In that letter, obtained by BI, the company said it had investigated Zinsky’s allegations and “based on the investigation, AIL terminated Mr. Russin’s contract.”

Neither Globe Life, nor AIL, nor Arias has requested any corrections in relation to BI’s reporting.

In Zinsky’s recently dismissed arbitration case, AIL and Arias asked the arbitrators to say the case was decided on its merits and to force Zinsky to pay their legal fees. The arbitrators declined.

But in its statement to Seeking Alpha, Globe falsely claimed that Zinsky’s allegations “were dismissed because they lacked merit” and thus AIL felt “vindicated” by the outcome. (Seeking Alpha later scrubbed that portion of the statement; Williamson, Zinsky’s attorney, said she had contacted the publication to point out the error.)

Globe’s stock has declined 62% since BI reported on March 6 that the Department of Justice had sent subpoenas to Globe and AIL seeking information about Arias. The decline accelerated as short-sellers went public with their views.

Koppikar told BI that, after today’s price move, “both the board and the insurance regulators will likely need to take action to address the concerns raised in the various reports that have surfaced in the past year.”

In his April 3 presentation to investors, Koppikar called Globe Life “a dead-end pyramid scheme.”

“The allegations from BI’s reporting are damning,” he said, adding that he couldn’t understand why money managers who “preach the gospel of ESG” still own Globe shares.

He predicted that the DOJ investigation will hinder recruiting, “which is the lifeblood for pyramid schemes like Globe Life.”

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