State Also Defeats Attempt to Seal Complaint Permanently

Settlement Agreement

TRENTON — Attorney General Matthew J. Platkin announced that the State of New Jersey secured over half a million dollars from a surety company, International Fidelity Insurance Company (IFIC), and its parent, I.A.T. Insurance Group (IAT), to resolve a whistleblower lawsuit accusing them of improperly keeping monies of New Jersey residents in the form of unused collateral in violation of the New Jersey False Claims Act and the New Jersey Uniform Unclaimed Property Act. The suit alleges that for years, IFIC withheld New Jersey residents’ unused collateral that should have been available to claim through New Jersey’s Unclaimed Property Administration (UPA).

IFIC, which IAT acquired in 2018, engages in the business of producing or underwriting construction surety bonds, commercial surety bonds, subdivision bonds, and customs bonds.

The whistleblower, Anthony Manganiello, was formerly employed by IFIC, and his responsibilities included reviewing the company’s collateral accounts as part of the due diligence process for IAT’s acquisition of IFIC.

In 2022, Manganiello filed a qui tam, or whistleblower, lawsuit on behalf of New Jersey and the United States against defendants in the United States District Court, District of New Jersey. Manganiello alleged that between 2015 and 2021, IFIC and IAT violated the New Jersey False Claims Act by improperly holding onto millions of dollars of collateral that should have been returned to the UPA, in violation of the New Jersey Uniform Unclaimed Property Act.

Following an approximately two-year investigation, New Jersey found that the defendants wrongly retained some of the collateral, instead of turning the funds over to the UPA. New Jersey intervened in the whistleblower lawsuit to settle with defendants for a total settlement amount of $575,964. Of that, and consistent with the False Claims Act, the UPA received the full $383,976 that defendants failed to remit, Manganiello received $115,193 as a whistleblower share, $57,596 was allocated to the False Claims Prosecution Fund, and $19,198.60 was allocated to the State’s General Fund.

In addition, the defendants agreed to implement procedures in their business practices to ensure that these violations do not happen again.

“Fraud has no place in the bond business and a lack of transparency erodes the public’s trust,” said Attorney General Platkin. “By unlawfully holding onto these funds, the defendants in this case denied the rightful owners the ability to reclaim their collateral in a timely manner, as required by law.”

In addition to the return of the collateral and a change in business practices, the State won another important victory in this case. Once the terms of the settlement were reached, defendants made a motion with the court to keep the case under seal indefinitely, arguing that the lawsuit was privileged, mainly because allegations in the complaint were the product of an internal investigation. The State opposed the motion. The court agreed with the State, finding that the complaint contained no privileged information and ordering it to be unsealed. The court’s decision makes clear that defendants in sealed whistleblower actions under the False Claims Act cannot keep the public from learning about the facts underlying an internal investigation set forth in a complaint simply by claiming they are privileged because they are the product of an internal investigation.

The State was represented in this matter by Deputy Attorneys General Christina Garfield and Brian DeVito, and Assistant Attorney General Lara Fogel.

Current or former customers of IFIC and IAT may search for unclaimed property by visiting https://unclaimedfunds.nj.gov/app/claim-search.

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