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[SBNation] Pablo Torre’s Dodgers bombshell reveals real threat to every American: teased deepdive into financials of Walter & Dodgers, an alleged shell game of investments & insider deals which are now under scrutiny of federal government, which could wind up with Walter and Magic Johnson in prison
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The allegation is that Walter may have used ordinary people's life-insurance and annuity money as a giant financing pool to help buy and inflate the value of sports franchises he controlled, while hiding or inadequately disclosing some of the related-party transactions.
Yeah public pensions and life insurance companies are like the biggest institutional investors on earth. They have billions of dollars to manage and the only way to manage all of that responsibly is to invest it in a whole bunch of different asset classes. Sports is just the latest frontier for private equity I guess
Magic was the owner of Equitrust (a life insurance that Walter basically gave him, also the company that made him a billionaire) which is intertwined in this. Also Magic and Walter have been intertwined in this since the original Dodger purchase. It is an exaggeration to say he will end up in prison though
Walter paid off Magic to join the offer to convince MLB to allow the sale to an unknown guy. Magic + Dodgers was s done deal and 2 years later Magic ends up owning an insurance company.
More or less correct and that is allowed to a certain point- their issue is that they blew past that line and lied about it. But again that is more of a Dan Towriss/Group 1001 issue than a Walter/Magic issue. Presumably if they raise the cash to meet the SEC’s minimums they’ll be more or less ok.
Or Magic and Walters having to do with the Dodgers what Walters did with the Lakers, sell the team to some politically connected cronies to escape being indicted.
Remember that the only consequence for the reveal of the Panama Papers which showed how rich and politically connected people were systematically cheating taxes by hiding their wealth offshore via shell companies was that the Pulitizer Prize winning journalist behind them died in a car bomb
I mean no because the journalist is still very much alive, his name is Bastian Obermayer and he is still reporting on similar issues, also much of Russia's FSB foreign interference, Intelligence, and business networks in Europe were totally exposed and shut down by the Panama Papers and they never recovered before the invasion of 2022 which was one of the reasons for their total failure because their spies had no networks to use so just made things up and pocketed the money.
Was going to respond the same. In fact, the conspiratorial among us might say that the only reason he's getting away with reporting this is PRECISELY because it directs our attention away from certain politicians and makes us feel like "journalism is real again!"
edited to say: He won't get killed though, right? He will accidentally fall off a balcony, get in a car accident, or "OD"
Yeah any time I see “federal investigation” under this administration, it’s either in an attempt to undermine the opposing party, or a shakedown. This will be the latter.
“The thing about prison is you can’t just leave whenever you want. They lock you in the building, sometimes your cell. I have a couple houses here. So they won’t send me to prison, because I live in California already.” - Magic Johnson
So we’re all just waiting for Magic and Walter’s to throw some money at the President and immediately see all of this swept under the rug, right? Because that’s what’s gonna happen.
Tonight on the Dodgers, it’s a laugh-a-rama when Mark makes a machine that takes the cherry out of chocolate covered cherries and replaces it with mayonnaise
Starring: Rob Schneider was a staple, then he was a sousaphone, and now he is the 2nd base. And he’s now about to find out that being second base is harder than it looks. Hurdeedurdurdurrrrrrrrrrrrrrrr
less a bribe, more a "if you sell the team to <insert close friend/family memeber/confidant> at a reasonable price, there wont be any federal probes" just like what happened with the Lakers
It makes sense when you realize how many of the protections we took for granted were just gentleman's agreements with no rules or enforcement behind them. We all just assumed there was something there. There never needed to be until now since we never assumed someone this destructive, selfish, and stupid would be put into power. It's like how there are some places where cannibalism is technically legal (though most of the things involved in it probably still are) because it never occurred to anyone that someone would actually do it.
I mean the laws are there. But enforcement requires a non complicit congress and high court. Since they're all stacked with the same corrupt bastards on the same side there is no one to enforce this law. As a country we have been propagandized into voting away nearly all our civic power. There is literally no law or punishment for breaking the laws you can write that would solve this problem if the entire operating government is complicit in the lawbreaking.
There is, impeaching the president is a thing. We just don’t have a policy in place where the entirety of congress is controlled by the president and they refuse to do anything to stop him.
I mean we have something for that too but you get banned for mentioning it on here, I’ve been.
i agree with everything except $12.5B being a reasonable price lol
I think $12.5B is absolutely a reasonable price for these elite pedos. They get a global brand that can be wielded to shape public opinion and whitewash their own images, they get a money-printing machine that can also easily launder their blood money, and they get something with deep roots in the community of the rich-and-famous LA elite, which is what they've always wanted; an invite into the room with the cool, conventionally-beautiful people.
It's not like they don't effectively have infinite money now anyways. The Trumps/Kushners sit at and steal unimpeded from the busy intersection of American money and American power. They're surrounded by, and more or less own the adjacent billionaire class whose money is also effectively infinite nowadays, thanks to their outsized control of the economy. $12.5B is, somehow, just a drop in the bucket.
Of course! Hakeem Jeffries had that secret meeting with Jared Kushner because he just wanted to tell him in person how committed he is to holding Kushner accountable.
Literally just said this out loud before I opened the comments. Straight up cackling right now seeing it as the top comment. But obviously not really funny that our administration is just the giant greasy palm of a blood stained hand.
It’s also the reason why George Santos got ejected from Congress. It wasn’t the fraud, that’s all part of the game, it was defrauding other republicans
well, he lost rich people's money. it's a miracle he wasn't bumped off.
rich people may be able to handle being made fun of or getting caught being sleazeballs but threaten them with the possibility of making less money and you better hope your will is in order
If the dodgers are committing massive financial crimes to find the largest payroll in baseball history, the other MLB owners will make sure they pay. See the NFL and Dan Snyder.
That's the thing it ain't fucking with the other owners. According to Pablo's video they lowkey love this because it raises the valuation on their prospective franchises.
FYI the harm to American people is the life insurance that normal people are purchasing to help their family. This life insurance premium could easily be turned worthless because of Walters’ company drawing on them to fund his other enterprises. This is not so dissimilar to what SBF did but without the crypto of it all. This is not how these companies are meant to function and use of funds needs to be reported or regulators will begin to notice some funny business in finances because of how money moves in the financial services business.
It’s unlikely the billionaires will get in trouble but average every day Americans may be left without something that’s meant to support their family if anything happens to them. A lot of people get life insurance policies with their jobs, etc.
I'm super dense with financial stuff, so forgive me being slow on the uptake. I'm trying to understand this story, and I think this comment is the closest I've come to understanding it so far. Tell me if I'm off anywhere:
Basically, he is the steward of normal people's money through this life insurance business. Different than if he had profited off a regular transaction like a restaurant meal or movie tickets because that money is expected to pay out at some point. He goes to buy the Dodgers (and a bunch of other sports teams) saying "I've got a ton of money to buy this team" but he doesn't disclose that a good chunk of the money is from life insurance premiums, which is essentially borrowed from ordinary people. Not disclosing that is illegal.
This is bad because if the Dodgers, MLB or any of these other sports leagues he's got teams in suddenly tank in value, he's lost a bunch of money that wasn't really his to go buying things with. That could leave the ordinary people on the hook -- not getting life insurance payouts even though they've been paying their premiums. Basically a huge breach of contract, or essentially theft.
The key is insurance companies normally invest the premiums, but since actually being able to pay out claims is a cornerstone of the insurance industry and the well-being of policyholders, the government regulates how this money can be invested. The majority of investments will be bonds with specific payments cycles so an insurance company has enough cash on hand at any time to statistically be able to pay expected claims. They can invest some of that money (called float) into riskier investments, but the amount is very limited and regulated, including required diversification so that the insurance money can't all be invested in the same risky investment.
Investing some of that money into your own businesses can be OK (it's partly how Warren Buffett made his fortune), but it must be disclosed because investing too much into your own businesses is a risk/diversification nightmare that increases the probability that an insurance company can't pay out claims should that company go south.
The disclosure problem isn't that he didn't disclose to the Dodgers and other teams that it was insurance money... it's that he didn't disclose to the government that he was investing insurance money into his own businesses and blew past the amounts that the government allows. Now that he's under investigation, he has to quickly rebalance those investments to meet regulations, and that requires liquidity (why he sold the Lakers).
Yes. And because billionaires go bankrupt all the time, a lot of people are left holding the bag and it’s not them. I cited Sam Bankman-Fried because he was doing a similar thing but with moving crypto currency around and the people ultimately harmed by that scheme were the ones who put their small savings into crypto hoping to hit big.
In this case, these life insurance premiums are not just to help yourself but your family in the event something happens. You’re not supposed to mess around with them this way.
Some people here are implying only rich people buy insurance like this, but that’s not the case. Also, it’s insane that MAGIC JOHNSON was running an insurance company.
I think because it was insurance money, he won’t get away with this or off light. This is the sort of thing that shakes confidence in these policies and, by extension, the institutions that offer them. Those companies have a lot of money and influence. Not to mention state insurance regulators probably are pissed.**
If you have never seen it, which I'm assuming you haven't, go watch "Enron: The Smartest Guys In The Room". One of the first and best documentaries I ever watched.
Enron. If you ever want to read (also on audio book) a fascinating tale of gigantic corporate fraud from 2000's - "The Anatomy of Greed" by Brian Cruver
You'd think that by now lots of people had enough already.
Someone had enough of that CEO and look what happened, a manhunt.
There's what, hundred of cases of these 'billionaires' pushing for things that just try to dry up people's pockets, not only that, basically killing small towns to get permission from corrupt politicians to build data centers, just recently politicians voting to basically suppress voters...
Meanwhile you have a president that can claim on TV that he made billions to his friend Schawb just after he basically manipulated the market and obviously tipped his friends, he can tell 'quiet pig' to a reporter, he can post AI video of him in a warplane literally dropping shit on the American people, he can (insert outrageous thing), he can (outrageous thing), he can (insert stupid thing) and so on and on and on... what the fuck else is enough?
People don’t care about their politicians being stupid.
They care about their own material living standards. Peasants don’t storm Versailles because Louis XVI said something stupid or enriched himself immorally.
They did it because the price of bread rose to 88% of wages. Same with Petrograd in 1917. No material struggle, no broad desire for revolution.
Americans are doing nothing but posting online because their lives are too good, not too bad.
No one is saying enough, because no one is going to risk their incredibly high standards of living, where they have the money and leisure time to consume luxury goods like professional sports, because the racist electorate elected a corrupt moron.
If it doesn’t impact them personally they’re not going to act.
And they refuse to see or acknowledge the havoc and misery the US brings on the global South and the myriad other parts of the world, because it doesn't affect them personally. In fact, it benefits them.
Just stand and sing the anthem and god bless the troops without ever questioning the morality of what the country is doing elsewhere in the world. To other humans.
If he was poor this would be a crime. But since he’s a billionaire this is just business. He’ll unfortunately get a slap on the wrist and told “don’t do that again.”
They shouldn't (majority) own sports teams either.
Gimme some of that German style 50+1 ownership. Especially if communities are out here spending hundreds or millions or even billions of dollars in public subsidies on venues for these teams.
The entire AI boom right now is the cause of a handful of tech companies passing the same mountain of money, that magically appeared out of nowhere, around and calling it profit for one company and an investment by another each time it changes hands. All the while, losing millions of dollars at a faster pace is now seen as a positive in the stock market rather than a sign of a terribly-run unprofitable business.
Regrettably, Josh Kushner and Thrive Capital became minority owners of the SF Giants last year. Would that conflict of interest be enough to prevent a sale even if it were under the name of another Kushner, or does the league not really care about minority ownerships? Not hard to see which of the two they’d choose, though.
they couldnt do both, a sale would likely be contingent on a sale of their minority stake, but they would probably get a certain amount of time to sell the giants stake after an agreement would be made
Him owning the Mets has been challenging for me. His firm fucked my desk out of a lot of money before we finally realized they had inside information and cut them off, which of course cost me bonus money. He's a cheater and I hate him.
I don't buy it for a second. Everybody on the street knew Madoff was a phony by the end. I noted elsewhere my interactions with SAC, we didn't "trade" with Madoff but one time in the early 2000's I asked what his fund was all about to one of my colleagues and he said "oh he's a fraud, everybody knows this but doesn't want to speak up since he's part of the NASDAQ leadership"
If you watch the PTFO episode, you'll learn that every team kinda knew about it but didn't care because they were making so much money off of the Dodgers' revenue sharing. The first line of defense here was the other owners and the comissioner and they were fine with it because they all made a ton of money here.
I don’t think you truly understand the interconnectedness of our financial system, especially insurance companies.
I wouldn’t be surprised if there is a breadcrumb trail between guggenheims companies and every single other financial company in America.
I
Insurers routinely transfer risk to reinsurers, and those reinsurers can transfer it again through retrocession. On top of that, insurers, reinsurers, banks and asset managers are connected through investments, lending, derivatives and other counterparty relationships.
A Guggenheim related entity could have exposure to one institution, which has exposure to another, which has exposure to MetLife, whose stock, bonds, insurance products and retirement products are ultimately held by or affect millions of Americans.
Multiply those relationships across the financial system and you get a huge network of indirect exposure.
Saying that this would only affect people who own life insurance is like saying the 2008 subprime mortgage crisis would only only affect mortgage lenders.
Obviously this is all hyperbole, it’s very unlikely to be this detrimental to the financial system but these things tend to happen like dominos. One falls, which cascade down to other fragility in the system which makes it possible but (hopefully) unlikely.
The threat isn't about baseball. The threat is how they were using insurance money, that everyone is assured is stable and protected, as their own bank account.
So if I’m reading this correctly, Walter is using monthly life insurance premiums from Guggenheim paid by policyholders to invest back into the team? And this is not allowed because of specific investment restrictions relative to this type of income. Also the TV deal is basically Walter paying himself because he created the network using Time Warner as a safety net in case they couldn’t reach their 300m+ revenue goal? Am I missing anything?
The big federal crime issue here, POTENTIALLY, is the lack of disclosure. If he disclosed this stuff, you'd have scrutiny, and with that, potentially less investment in said ventures.
This is a baseball subreddit, featuring an article by a Pulitzer prize winning sports journalist. I agree with you, but multiple people can work on different things at once.
Both things should be investigated. In this case you’ve got an owner using his insurance companies as piggy banks using the money that’s supposed to go to policies people are paying for.
“in prison” lol. wait until op learns that white collar financial crimes are not punished. it will be adorable watching the story arc play out and observing the emotional roller coaster of those who are sure that justice will be served, as it slowly dawns on them over the course of months and years.
Pablo is a Johnny-come-lately to this story. There is little that is new in his report, and it is still unclear if Walter did anything illegal. His methods do seem to have embraced sleight-of-hand techniques that are common and legal, at a lower level, in his field, but perhaps proof of liquidity to pay insurers is all that is needed to survive the inquiry. Regardless, people will want blood for no other reason than it involves the Dodgers.
I'll get downvoted because of flair but as of yet (I doubt Pablo at my own peril, who knows what he's cooking up), there's no implication that the Dodgers org itself is doing anything improper. This seems squarely on Walter & Johnson and their personal financial situations
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