Symons and family ordered to pay $34.2 million in fraudulent transfer case

A federal judge has ordered a high-profile businessman and the Indianapolis companies he operated with family members to pay $34.2 million relating to the fraudulent transfer of assets in a business sale.

But the judge on Nov. 20 granted the men and the companies a temporary reprieve from paying the judgment.

Alan Symons, his brother Douglas Symons and their father G. Gordon Symons, along with several of their holdings, including IGF Insurance Co. and Symons International Group Inc., are targets of a lawsuit filed by Chicago-based Continental Casualty Co. 

Continental Casualty is prevented from collecting the judgment until a bankruptcy involving one of the companies named in the suit is resolved. The Symons' lawyer, Arend Abel of Indianapolis-based Cohen & Malad LLP, also has filed an appeal requesting the Seventh Circuit Court of Appeals in Chicago review the October decision from U.S. District Judge Richard L. Young in Indianapolis.

Both Alan Symons and Abel declined to comment on the case, saying the case remains active.

Besides finding the men liable for fraud, the October judgment paints a picture of them using their companies as personal banks, taking out loans and collecting millions of dollars in salaries and bonuses, despite the “precarious financial condition” of those companies and the large debt they owed.

Alan Symons is well known in the local business community and has been named an Ernst & Young Entrepreneur of the Year. He is a founder of Indianapolis-based AGS Capital LLC. With $25 million under management, AGS ranked 7th among Indiana venture capital firms in IBJ’s latest listing.
 
Symons started AGS after stepping aside in 2002 as CEO of Indianapolis-based Goran Capital Inc. and as vice chairman of subsidiary Symons International Group. Both companies are named as defendants in the lawsuit filed by Chicago-based Continental Casualty Co.

The legal wrangling began three years after another subsidiary, IGF Insurance, in 1998 bought two lines of crop insurance from Continental Casualty using a performance-based formula in which the two entities shared the profits of the combined businesses.

IGF began experiencing financial difficulties, and in 2001 Continental Casualty exercised its right to receive full payment of the purchase price. IGF was unable to pay Continental Casualty the debt it owed, according to court documents. Facing severe financial distress, IGF sold its crop insurance business to Acceptance Insurance Companies Inc. in May 2001 for $40.5 million.

The Symons chartered a private jet that was used while that sale was being negotiated and transferred nearly $1 million from IGF to pay for the plane and legal fees associated with the sale, the judge’s order said.

In June 2001, IGF sued Continental Casualty, claiming breach of contract, breach of fiduciary duty and fraud. Continental Casualty then counter-sued IGF, its affiliates and members of the Symons family, saying they fraudulently transferred assets.

In March 2007, the federal court granted Continental Casualty’s motion to dismiss the suit brought by IGF and heard Continental’s counterclaim in November 2008 and again in January of this year.

The judge ruled in October that IGF and the other defendants fraudulently transferred assets relating to the sale agreement with Continental Casualty.
 
“As the controlling shareholders of [their companies] and the recipients of improper post-transaction benefits, Alan, Doug and Gordon Symons were the beneficiaries of the gains in avoiding the large debt to [Continental Casualty],” Young wrote in his judgment.

The judge also said the three Symons fraudulently represented IGF’s financial condition to regulatory agencies and comingled the assets and affairs of their businesses.

“The corporate formalities maintained by [the Symons’ companies], such as holding annual shareholder meetings, holding annual board of directors meetings, keeping minutes of those meetings, and occasionally issuing board resolutions of those meetings, are entirely ‘cosmetic,’” he said in his judgment.

The continuing liquidation of Superior Insurance Co., one of the Symons' companies named in the complaint by Continental Casualty, prompted the judge to delay the judgment.
 
This is not the first time Alan Symons has been the target of a lawsuit. In 2007, a Marion Superior Court judge issued a preliminary injunction ordering a company controlled by Symons to return computer files and other information allegedly taken from a Fishers competitor.

The competitor, Product Action International LLC, claimed in a lawsuit that Symons’ company, Fast Tek Group LLC, used Product Action’s business blueprint to build a similar company. Both firms identify parts defects for manufacturers.

Symons deployed an interesting strategy to sell the company. He pushed Fast Tek into Chapter 11 bankruptcy protection—a move that cleared the way for a suitor to buy the assets without being saddled with the liabilities, including the half-million dollars in legal fees Product Action racked up during the court battle.

"If they win, they lose," Symons told IBJ  then.