Porter Collins

THE MARK WALTER CAPER Insurance money, hidden affiliations, and the $12.5 billion flip of a sports franchise. A decade of related-party finance built a sports empire. And now Federal prosecutors are unwinding it. BUILDING THE INSURANCE EMPIRE: 2011 to 2015 Guggenheim Partners grew rapidly after the financial crisis by acquiring several insurance companies. Annuity writers hold large pools of long-duration assets, and whoever manages those assets earns lucrative fees on them, often-times for decades. By the early 2010s the Guggenheim orbit included Guggenheim Life and Annuity, and Mark Walter, Guggenheim’s chief executive, separately controlled Delaware Life. In 2011, Guggenheim added EquiTrust Life Insurance Company. The Iowa Insurance Commissioner approved an application from Sammons Enterprises and GPFT Holdco, LLC, a Guggenheim vehicle, to acquire EquiTrust from FBL Financial Group for $440 million. The approval order records two things. First, Sammons was deemed a controlling person of EquiTrust because of its large ownership stake in Guggenheim itself. The regulator accepted, however, that Sammons would stay out of EquiTrust’s management. Second, the Guggenheim executive who testified in support of the acquisition was Jeffrey Lange, a senior managing director with a substantial quantitative background; he co-wrote a book on parimutuel finance and holds derivatives-market patents.1Sammons is a Dallas conglomerate that owns its own set of large insurers and was therefore woven into the wider Guggenheim structure. Lange became EquiTrust’s president and chief executive when the deal closed and the story kicks off.2 In 2012, Walter led the Guggenheim Baseball Management group that bought the Los Angeles Dodgers for $2.15 billion. His partners included legendary basketball star Magic Johnson. The partnership carries forward: in January 2014 Johnson was announced as EquiTrust’s incoming controlling shareholder, and in June 2015 Magic Johnson Enterprises closed the purchase of more than 60 percent of EquiTrust from Guggenheim. Guggenheim gave up its equity in the insurer and stayed on as EquiTrust’s investment manager. That arrangement, in which the equity changes hands and the asset management contract stays put, comes up several times in subsequent years.3 STRATEGY 11: 2015 TO 2017 In 2014 Lange recruited Marcos Lopez de Prado, a prominent quantitative researcher, and together they built Strategy 11, an algorithm that recommended corporate bond trades. Beginning in 2015, three insurers used it: Guggenheim Life, Delaware Life, and EquiTrust. At its peak the program’s recommendations guided nearly $13 billion of insurance money, according to an independent audit later commissioned by Guggenheim.4 The unit that ran the program, Guggenheim Insurance Services, didn’t register as an investment adviser to the insurers and didn’t charge them fees. Guggenheim’s position was that the program only produced recommendations and that officers at each insurer made every trading decision themselves. Registration would have imposed a fiduciary duty to avoid conflicts of interest and the SEC later examined whether this would have been required.5 Data reviewed by the agency showed that more than half of the trades Strategy 11 recommended were transactions between the three insurers themselves. Cross-trades between affiliated investors are permitted under securities rules but only at market prices. By early 2018, at least one executive told the SEC that some of the trades appeared to have been priced above what the bonds would have fetched on the open market.6 Some concerns about these practices first surfaced internally. In 2017 Lopez de Prado filed internal complaints about trades Lange had personally executed for the insurers, specifically stock-index futures positions placed after the 2016 election that would have profited from a market decline. The market rallied instead. Guggenheim’s account of what happened is that these were hedges designed by outside consultants. Under either characterization, a Guggenheim executive held the discretion to place directional derivatives positions with the money of regulated insurance companies. Here is where things started to unravel. After making a reported purchase of an $11 million waterfront home in Palm Beach in early May 2017 (according to county property records) Lange died just weeks later. Events following his death moved quickly. In August 2017, executives at Guggenheim and the insurers raised concerns about the cross-trades and put a stop to the practice. In October 2017, EquiTrust’s investment staff recommended in writing that the company stop using Strategy 11 altogether, citing among other things, a lack of transparency in how the program selected bonds. In January 2018, Lopez de Prado sued Guggenheim, Guggenheim Life, Delaware Life and a slew of executives in federal court under the whistleblower-retaliation provisions of Dodd-Frank. The suit was sealed, then withdrawn after a settlement. Later that month, an audit by ACA Performance Services concluded that the strategy had returned 5.9 percent annualized from mid-2015 through 2017 and had beaten its benchmark. Guggenheim also retained an unnamed independent expert who found that essentially all of the cross-trades had been executed at or near the midpoint of the day’s bid-ask spread. When the Wall Street Journal reported the SEC examination in February 2019, Guggenheim’s explanation for the program’s shutdown was simple: Lange had died. The insurer’s own staff, however, cited transparency reasons four months after his death.7 3. THE NIRVANA ON THE CARVANA AFFAIR: 2016 TO 2019 While Strategy 11 was running, the same insurer balance sheets were being used for a different purpose. Carvana, the online used-car retailer founded by Ernest Garcia II’s through DriveTime, funds itself by originating subprime auto loans and selling them. Walter was an early Carvana investor through a vehicle called CVAN Holdings, and in 2016 that funding channel absorbed 89 percent of the receivables Carvana sold.8 From 2017, Carvana sold its lowest-quality loans to a buyer it declined to identify. Transaction documents and statutory filings identified the buyer from transfer agreements as Sonoran Auto Receivables Trust 2017-1. The trust’s notice address: 227 West Monroe Street, Suite 4800, Chicago. It was also the address of Guggenheim’s Chicago office, of CVAN Holdings, and of Franklin Monroe Administrative Services, the firm that keeps the books of the Walter Family Foundation. The named contact for the trust was a managing director of a Guggenheim entity. Statutory insurance filings showed Guggenheim Life, EquiTrust, and Paragon Life, another Guggenheim-acquired insurer, holding equity in the Carvana receivables trust or debt of its affiliate as of late 2018.9 Two features of the arrangement stand out. The disclosed buyer of Carvana’s better loans, Ally Financial, paid about 102 cents on the dollar for paper with an average FICO around 680. For Carvana’s blended reported gains to work, the undisclosed buyer had to be paying more than that for loans in the mid-500s. In addition, twice at quarter end, in August and December 2018, Carvana repurchased loans it had already sold and immediately resold those identical loans to the same buyer at the same price. In the process it collected fees of $4 million and $2.3 million which flowed directly into its reported unit economics at earnings time. Carvana told investors the buyer was unrelated to Carvana, Walter, CVAN Holdings, Delaware Life, DriveTime, or Guggenheim. But it gave no answer when asked whether the debt provider in the transaction was related to Guggenheim.10 These concerns were never publicly answered in detail, and Carvana went on to survive a funding crisis in 2022 and recover. But hold that thought on Carvana. TWO PROBES GO QUIETLY INTO THE NIGHT: FEBRUARY 2019 A separate SEC investigation had been running since 2017, opened after an employee complaint about Guggenheim’s asset-management business. The SEC’s examiners flagged the firm’s disclosure of an investment in Atlas Mara, then referred the matter to the enforcement division. They then demanded documents about transactions involving ABS Capital, a Miami firm run by former Guggenheim managers, and subpoenaed ABS itself. Among the transactions questioned: an $85 million Malibu property that Walter and ABS bought together, a loan ABS made to a fashion retailer, and two other Southern California homes ABS purchased. On February 14, 2019, Guggenheim announced that this specific investigation had been closed with no enforcement action.11 Just eleven days later the Wall Street Journal revealed the Strategy 11 examination. No enforcement action in that matter was ever announced either. By this point the internal complainant had been settled and Prado’s suit withdrawn, the trades had been blessed by a retained pricing expert and a performance audit, and the program itself was terminated. So by early 2019, the SEC had twice taken a swing at the Walter orbit, once at his personal dealings with an intermediary firm and once at cross-trades among his insurers. Both times they struck out. ROOM FOR AGGRESSIVE EXPANSION: 2019 TO 2025 Over the following six years the Walter empire grew considerably. Walter’s TWG Global assembled holdings across sports and media. Here is the list: the Dodgers, a stake in Chelsea FC through BlueCo, the Cadillac Formula 1 entry with General Motors, Andretti’s racing operations, the Professional Bull Riders, and in capstone June 2025 an agreement to buy the Buss family’s controlling stake in the Los Angeles Lakers at a whopping $10 billion valuation. Dan Towriss ran both Group 1001, the insurance holding company for Delaware Life and Clear Spring (the renamed Guggenheim Life), as well as TWG’s motorsports arm, signing the insurers’ financial statements while operating the racing teams.12 EquiTrust, which launched this whole caper, changed hands again in 2025. Amistad Financial, a firm led by Eric Holoman, bought the insurer with roughly $3 billion of debt. Holoman had been EquiTrust’s chief executive since at least 2019, and before that he and Magic Johnson had founded JLC Infrastructure, a fund into which EquiTrust, Delaware Life and Clear Spring placed roughly two-thirds of its capital within days of its 2017 launch. None of it was labeled as “affiliated” in statutory filings. Fitch and S&P assigned EquiTrust negative outlooks on account of the acquisition debt.13 Around the same time at Sammons (in late 2024), the company converted its voting interest in Guggenheim, roughly 46 percent of votes and 30 percent of the economics, into non-voting economic shares. After the conversion, Guggenheim could be classified as unaffiliated, and the related-party disclosures naming Guggenheim dropped out of Sammons’ 2025 filings, even though Guggenheim continued to manage about 88 percent of the Sammons insurers’ portfolio for roughly $75 million a year in fees.14 Throughout this period, according to what has since emerged, the balance sheets of Delaware Life and Clear Spring accumulated billions of dollars of private-credit investments whose repayment depended on other parts of the Walter empire. The loans reached the affiliated ventures through intermediary firms. Press reporting names four: ABS Capital, the same Miami firm from the 2017 investigation; Amistad Financial, Holoman’s vehicle; Bradford Allen, a commercial real estate broker; and Hudson Trading. Reported destinations for the money include American Media Productions, the vehicle for the Dodgers’ television rights, whose notes sat on five Walter-connected insurers for a total of about $1.45 billion as well as TWG’s bull-riding and media operations. In statutory filings, Delaware Life reported its related-party investments at $1.4 billion, about 3 percent of invested assets. Much of the insurers’ bond book carried ratings from a single small agency, Egan-Jones, and those ratings determine the capital charges the insurers must hold.15 THE SURPRI(Z)E: 2026 A whistleblower complaint about revenue accounting at Guggenheim Private Investments reportedly set the current investigation in motion. In February of this year, the U.S. Attorney’s office for the Southern District of New York issued grand jury subpoenas to Delaware Life and Clear Spring. The SEC opened a parallel investigation. The FBI executed at least one search warrant on the asset-management side of the inquiry. The central question? Whether the insurers concealed that billions of dollars of their investments backed other parts of Walter’s businesses, and whether Walter or his companies committed fraud by hiding those connections while borrowing from the insurers. The Justice Department has also gathered records on Egan-Jones’s ratings work; Egan-Jones has stated that it is neither a subject nor a target.16 On June 26, 2026, the insurers disclosed the subpoenas in their statutory filings and restated their numbers. Delaware Life’s related-party investments went from $1.4 billion to at least $17 billion. That figure is around 40 percent of invested assets, against roughly $4 billion of capital. Clear Spring’s went from under $4 million to $3.8 billion. Group 1001 described the prior figures as “errors” discovered through an internal investigation. AM Best and S&P subsequently moved the companies to negative outlook, with AM Best citing weaknesses in internal controls over financial reporting. The insurers then announced plans to shed roughly $6.5 to $8 billion of affiliated assets.17 It didn’t take long for the market to react. Guggenheim’s $1.18 billion term loan traded down from the mid-90s to about 73 cents on the dollar. Guggenheim, with little sense of irony and presumably to reassure creditors, said that affiliates might buy the loan in the open market. Walter then reportedly pledged his roughly 20 percent stake in Guggenheim as collateral for short-term borrowing at double-digit yields. Then Walter agrees to sell the Lakers to Josh Kushner and Bob Iger for $12.5 billion. This just fourteen months after buying in at a $10 billion valuation, with the sale reportedly driven by the need to pay down loans sitting on the insurers’ books. Sammons publicly distanced itself from the situation, saying it had been divesting its Guggenheim interest for years, and its long-serving chief executive announced his retirement. Guggenheim’s President said the firm is fully cooperating and that the accounting at the investigated unit was appropriate.18 ASSERTIONS VS. INFERENCES So what can we establish based on primary documents or multiple independent reports? Walter-connected insurers have repeatedly funded ventures connected to his constellation of companies, his partners, or Guggenheim. They have also purchased each other’s bonds under Strategy 11, Carvana’s loan trust, the Dodgers’ television-rights vehicle, the JLC fund of Johnson and Holoman, and the roughly $17 billion of affiliate-contingent private credit now restated at Delaware Life. In each case the connection was either undisclosed, denied, or reported at a small fraction of its actual size until outside pressure forced additional disclosure. Where pricing was visible, it favored the affiliate side: cross-trades were reported to the SEC as above market, a hidden buyer payed more than Ally for lower-quality loans, and fees generated through same-day repurchase and resale at quarter end. Internal objections were raised at multiple stages over the years. Their concerns were handled privately. EquiTrust’s staff recommendation were contradicted by differing public explanations. And the Lopez de Prado’s suit was sealed and settled. The fact remains that both the 2017 and 2026 investigations each originated with an employee complaints. The inferences, which follow from the public record are these. The structures appear very well crafted. The recurrence of the same techniques across unrelated contexts over decades, always with the affiliation one legal step away from the disclosure obligation; an unregistered advisory unit, a trust with an administrative agent, intermediary lending firms, a voting-to-non-voting conversion. It all points to careful and deliberate structuring. But Group 1001’s characterization of a twelve-fold understatement of related-party exposure as an error is incredibly hard to believe. The 2019 outcomes taught the organization that this approach could survive regulatory scrutiny: the SEC had examined both Walter’s dealings with ABS Capital and the insurer cross-trades, and both matters closed without action. After that episode affiliate lending skyrocketed running through ABS Capital again, among others. At this stage it’s patently obvious that the Lakers sale is a forced liquidity event. Owners rarely sell a marquee asset of that kind within months of acquiring control unless cash is urgently needed. And the reported purpose, repaying loans on the insurers’ books, matches the exact remediation measures the ratings agencies were demanding. Finally, the prior run-ins with the law now form a pattern that feeds into the evidence pool. Prosecutors examining intent in 2026 can point to the 2017 SEC exam letters, the EquiTrust transparency email, the settled whistleblower suit, and the Carvana-era denials as proof that the organization understood exactly what related-party disclosure were required and chose its structures with that understanding. That’s the difference between a reporting deficiency and a concealment case, and it’s why the events of 2015 through 2019, which ended with no finding at the time, now bear directly on how the current investigation is likely to end. THIS IS TOO COINCIDENTAL TO BE A COINCIDENCE Maybe neither here nor there but we thought we would mention it. Thrive Capital’s Carvana position was a distressed public-market trade that was established in 2022 when the stock had collapsed. It grew as Carvana recovered, reaching roughly 80 percent of Thrive’s reported 13F portfolio by early 2025. Bloomberg reported in May 2025 that Thrive had told its investors it gained $522 million on the trade, more than quadrupling its money. The 13F record shows about 90 percent of the position was sold in the June 2025 quarter, the same period as that investor letter. The head of Thrive? Joshua Kushner. Yes the one who bought the Lakers with Bob Iger from Mr. Walter. To be fair the bulk exit predates public knowledge of the Walter investigation and predates Walter closing his Lakers purchase, which makes it consistent with profit-taking on an incredible trade.19 But a residual position of roughly $70 million remained through the March 2026 quarter and was subsequently reduced to zero in the June 2026 quarter. The timing of that final sale is notable because it falls inside the window in which three things were true: the SDNY subpoenas to Walter’s insurers existed and remained nonpublic until the June 26 statutory filings and July press reports; Kushner was negotiating the Lakers purchase from Walter, a transaction announced shortly thereafter; and any due diligence on Walter’s finances would have surfaced the insurers problems, since paying down loans on the insurers’ books was the reason the Lakers were for sale.20 So again three explanations are possible. The simplest is housekeeping: a leftover tail of an already-harvested trade getting cleaned up, and $70 million is immaterial next to a $12.5 billion transaction. The second is “conflict hygiene”: Carvana is the one public company with a documented funding history running through the Walter orbit, via the Sonoran trust and CVAN Holdings as an early investor. Any buyer preparing to transact with Walter at that scale might reasonably want zero economic exposure to Walter-adjacent names while negotiating with him (although in today’s conflict rife world who knows). The third explanation is that the exit was informed by nonpublic knowledge of the investigation. Carvana appears nowhere in the 2026 investigation, its Walter-orbit ties date to 2016 through 2019, and knowledge of Walter’s insurance troubles is of doubtful materiality to Carvana’s stock. The small size of the residual position further argues against a nefarious view. Furthermore such a move would have been illegal so we know its not that. But the relevance here is to the broader fact pattern. The buyer who provided Walter’s $12.5 billion liquidity event had made his firm’s most profitable public-market trade in the company that Walter’s undisclosed insurance channel once funded, exited that position completely in the quarter the investigation gestated, and then completed the franchise purchase. Coincidence? I had the pleasure of being managed by Yogi Berra before he and I both expired. He once famously said that its too coincidental to be a coincidence…….of course he never really said that…. But one thing is for sure. They really do establish that the buyer’s circle was unusually well positioned to understand both Carvana’s funding history and the reason Walter needed to sell. Now how about that… P.S. Compiled from regulatory filings, court records, statutory insurance statements, contemporaneous press reporting, and some forensic examinations of Carvana Inc. financials. Statements of fact are attributed to the record in the notes; inferences are identified as such in the final section. No charges have been filed against any person or entity named, and no wrongdoing has been established. This was written from the perspective of a now deceased former Yankee player and fan…so there is of course an axe to grind…. DISCLAIMER This report is commentary and analysis on matters of public concern, published for informational purposes only. It is based entirely on publicly available materials, including regulatory filings, court records, statutory insurance statements, and press reporting, each cited in the notes. Those sources are believed to be reliable, but their accuracy and completeness cannot be guaranteed, and this report may contain errors. Statements of fact are drawn from the cited record. All other statements, including any characterization of motive, intent, design, structure, or likely outcomes, are statements of opinion, inference, and interpretation, and are identified as such where they appear. Nothing in this report accuses any person or entity of a crime. As of the date of publication, no criminal or civil charges have been filed against any person or entity named in this report, the investigations described remain pending and unresolved, and every person and entity mentioned is entitled to the presumption of innocence. Where the companies and individuals involved have offered denials or explanations, those are reported. Government investigations frequently conclude without any finding of wrongdoing, and nothing in this report should be read to predict or prejudge the outcome of any pending matter. This report is not legal, accounting, tax, or investment advice, is not a recommendation to buy, sell, or hold any security, and should not be relied upon for any investment decision. Readers should conduct their own research and consult their own professional advisers. Material errors of fact will be corrected promptly upon notice; corrections may be submitted through this publication. @ryangrim @PabloTorre @pablofindsout @esaagar