Dodgers Owner Mark Walter Sold the Lakers for $12.5 Billion While Federal Investigators Probe $20 Billion in Insurance Loans

Mark Walter built one of the most recognizable ownership portfolios in American sports: the Dodgers, until recently the Lakers, the Sparks, the entire Professional Women's Hockey League, and a stake in Chelsea Football Club. What most fans never noticed was the insurance and private-credit machinery underneath it, according to Fortune. That machinery is now the subject of a federal investigation.

The Securities and Exchange Commission and federal prosecutors are examining whether insurance companies Walter controls, Delaware Life Insurance Co. and Clear Spring Life and Annuity Co., improperly funneled billions of dollars in loans to businesses tied to Walter without properly disclosing the relationships, according to the Wall Street Journal. Both insurers disclosed in March that they received federal grand jury subpoenas after internal reviews found related-party investments had not been properly reported, Forbes reported.

The numbers involved grew fast once regulators started asking questions. Related-party transactions that were originally reported at $1.4 billion, or about 3% of invested assets, turned out to be more than $17 billion, or at least 39% of total invested assets, according to Fortune. The Los Angeles Times, citing people with knowledge of the matter, reported the U.S. attorney's office for the Southern District of New York has found more than $20 billion of loans on the insurers' books funded affiliated entities.

Companies owned by the same person can legally lend to one another. That's not illegal on its own, Forbes noted. But when insurance companies are involved, those loans have to be disclosed, because insurers hold money meant to cover future policyholder claims. Regulators need to know how much of that money is tied up in the owner's other ventures in case things go sideways.

Investigators are reportedly focused on four intermediary companies that funneled loans from Walter's insurers to other Walter-linked businesses: ABS Capital, Amistad Financial, Bradford Allen and Hudson Trading, according to the Journal. Those four firms are not controlled by Walter himself, per Forbes' reporting.

The Los Angeles Times also reported that federal investigators have gone outside Walter's TWG Global holding company entirely, subpoenaing Egan-Jones Ratings Co., a small credit-rating firm that provided the only known ratings on more than a fifth of some of the insurers' bond holdings. Egan-Jones said in a statement it is "not the subject or target of any investigation at the SDNY" and that receiving subpoenas "in the ordinary course" is not unusual for the firm.

More than $1.2 billion of the financing Walter used to buy the Dodgers came from insurance companies he controls through Guggenheim Partners, according to a Los Angeles Times breakdown of that transaction.

A week after the scrutiny became public, Walter agreed to sell the Lakers to a partnership led by Josh Kushner, brother of Trump son-in-law Jared Kushner, and Dis