Prudential Insurance Confirms Federal Subpoena of Records

Prudential Insurance Co. confirmed Monday that federal prosecutors have subpoenaed records relating to a real estate fund that may have overcharged its investors by up to $50 million.

Prudential spokesman Robert DeFillippo said the U.S. attorney in Manhattan had subpoenaed records in February relating to the Prudential Property Investment Separate Account, known as Prisa, a real estate investment fund used mainly by big institutional investors.

The New Jersey-based insurance giant recently acknowledged that Prisa overvalued many of the properties it acquired by 10% or more and called on managers of the fund to resign. The firm also offered to reinstate a whistle blower, former Prudential executive Mark Jorgensen, whom Prudential had sued for making internal documents public.

The subpoenas, first reported Monday by the New York Times, indicate a broadening of the criminal investigation of Prudential, which initially focused mainly on limited partnership sales by the insurer’s Wall Street brokerage subsidiary, Prudential Securities.

DeFillippo said that in February federal prosecutors subpoenaed Jorgensen’s personnel file and a memo he had written to Prudential management complaining of alleged wrongdoing by Prisa managers. Last month, Prudential voluntarily turned over to prosecutors the results of two internal investigations that showed the properties had been overvalued, the spokesman said.

Assistant U.S. Atty. Kenneth Vianale, who heads the Prudential investigation, has declined to comment on the subpoenas.