Allianz Exec Admits $7 Billion Fraud Scheme

NEW YORK, NY – Gregoire Tournant, 57, of Basalt, Colorado, has pleaded guilty to investment adviser fraud in a scheme that saw investors lose over $7 billion, U.S. Attorney Damian Williams announced today. The former chief investment officer and co-lead portfolio manager for Allianz Global Investors U.S. LLC (AGI) admitted to systematically deceiving investors about the true risks associated with the Structured Alpha Funds.

The guilty plea marks a significant culmination of a multi-year federal investigation into AGI’s fraudulent practices. Williams minced no words, stating that Tournant and his co-conspirators “lied to investors, secretly exposed them to risk, and…sent victims altered risk reports.” This wasn’t a simple oversight; it was a calculated deception designed to conceal the precarious nature of the funds’ investments, particularly their lack of sufficient hedging against a market downturn.

Between 2014 and 2020, Tournant oversaw the Structured Alpha Funds, heavily marketed to institutional investors – including pension funds representing the retirement savings of American workers. The scheme unraveled spectacularly in March 2020, as the COVID-19 pandemic triggered a market crash. The funds hemorrhaged over $3.2 billion in principal, exceeding $7 billion in total losses, triggering margin calls and forcing a complete shutdown. The altered risk reports, it turns out, were a desperate attempt to mask the looming disaster.

This isn’t an isolated case. AGI previously pleaded guilty to securities fraud on May 17, 2022, and was slapped with a staggering penalty: a criminal fine of approximately $2.3 billion, a forfeiture of roughly $463 million, and restitution exceeding $3 billion to the defrauded investors. Two of Tournant’s co-defendants, Trevor Taylor and Stephen Bond-Nelson, previously copped pleas on March 8, 2022, and March 3, 2022, respectively. The web of deceit is finally being untangled.

Tournant now faces a maximum sentence of five years in prison on each of the two counts of investment adviser fraud. As part of his plea agreement, he’s agreed to forfeit approximately $17 million in compensation earned through his fraudulent activities. Sentencing is scheduled for October 16, 2024, before U.S. District Judge Laura Taylor Swain. The judge, not Congress, will ultimately determine the final sentence.

Williams praised the collaborative effort of the U.S. Postal Inspection Service, the Special Agents of the U.S. Attorney’s Office, and the Securities Exchange Commission, which initiated a related civil proceeding. The case is being prosecuted by the Office’s Securities and Commodities Fraud Task Force, led by Assistant U.S. Attorneys Margaret Graham, Nicholas Folly, Allison Nichols, Thomas Burnett, Sarah Mortazavi, and Nicolas Roos. This prosecution serves as a stark warning: even the most sophisticated financial crimes will be pursued relentlessly.