Florida Probes a Top Attorney for Prudential

The Florida attorney general’s office is investigating allegations that one of Prudential Insurance Co.’s top lawyers personally shredded copies of documents sought by authorities looking into fraud charges against the company, The Times learned Thursday.

The investigation came after John J. Massaro, a Florida-based lawyer on Prudential’s staff, alerted the state regulators that he had witnessed Michael H. Barr, a partner in the Chicago-based law firm Sonnenschein Nath & Rosenthal, shredding documents in Prudential’s Jacksonville, Fla., regional office.

The Sonnenschein firm is Prudential’s top outside counsel defending the company against numerous charges that its agents defrauded life insurance customers for years.

Massaro said Monday in a deposition taken by the attorney general’s office that he had tried unsuccessfully to persuade senior officials at Prudential to disclose the document shredding incident to Florida regulators--even advising them in writing that he believed their failure to do so might amount to “obstruction of justice.” The incident was the only time he had ever seen a shredding machine in the law department, he testified.

Massaro, who is on leave as an associate general counsel in the Jacksonville regional office, also testified that Prudential’s general counsel, James R. Gillen, other senior staff lawyers, and attorneys from the Sonnenschein firm were directly involved in a decision to withhold a key document from a multistate task force investigating Prudential. The document was a memo indicating that Prudential had been aware much earlier than it had disclosed of widespread misdeeds in the sale of life insurance.

Massaro told investigators he has taken a paid leave of absence because he was concerned about the propriety of his superiors’ conduct and was concerned about his ability to function as a Prudential lawyer. The Times has obtained a copy of his testimony and of documents he submitted as evidence.

In an interview and a subsequent letter to The Times, principals of the Sonnenschein firm said that Barr only destroyed copies of original documents that Prudential still maintains in its files. Other copies of the same documents are also retained by Sonnenschein.

Prudential and the firm said the three boxes of copies had been made to assist Barr in preparing witnesses for depositions in Jacksonville. They were destroyed to relieve him of having to carry the set of confidential papers back with him to his New York office, they said.

Barr was said to be out of the country on vacation Thursday and couldn’t be reached for comment. But in an interview, Reid L. Ashinoff, the lead Sonnenschein lawyer representing Prudential, called “defamatory” and “ridiculous” any assertion that the destruction had been carried out to thwart the fraud investigations.

In a statement issued Thursday in response to questions from The Times, Prudential said the destruction “in no way contravened the subpoenas issued in [Florida’s investigation of the company] or any other document retention policy.”

Both Ashinoff and Prudential declined to disclose the contents of the destroyed documents. But Ashinoff said he couldn’t immediately think of any other example of a Sonnenschein lawyer using a document shredder.

The Massaro testimony could generate a round of serious new legal problems for the giant insurer. For one thing, U.S. District Judge Alfred M. Wolin, who is presiding over a class-action lawsuit alleging fraud in life insurance sales, issued a blanket order Sept. 18, 1995, forbidding destruction of any documents “potentially relevant” to the suit. Although both Prudential and Sonnenschein decline to say when the shredding occurred, Massaro stated he believes it followed the date of the order.

One lawyer familiar with the class-action case said Thursday that the Jacksonville shredding might not have violated the order if only copies of documents were involved. But the lawyer said that if the shredded copies included any handwritten notes made before Sept. 18, then the destruction might be in violation. Ashinoff said Thursday that Sonnenschein lawyers may have made notes on them. “Probably we had scribbled on it,” he said.

Moreover, Prudential is already facing investigations of at least four previous episodes of destruction of documents relevant to the class-action fraud lawsuit and to numerous state inquiries into its sale of life insurance.

Among the states aggressively investigating those sales is Florida, which has already threatened to revoke the company’s license to do business within its borders.

Just last week, Wolin authorized an investigation into Prudential’s admission that its office in Cambridge, Mass., this year had destroyed documents from customer files.

Prudential dismissed the head of that office, John W. Breedlove III, for allowing the destruction. But a Massachusetts official says Breedlove has since testified that he believed that in authorizing the destruction he was carrying out instructions from superiors at Prudential. The official said Breedlove testified that there had been a major incident of document destruction in the office, prior to the one Prudential disclosed, that had taken place on direct orders from his superiors.

Breedlove’s testimony, which came in a deposition in connection with the inquiry ordered by Judge Wolin, “raises serious questions about when and how effectively the Prudential communicated that employees should not destroy records, after it had previously communicated that outdated and unauthorized materials should in fact be destroyed,” according to the official, Charlie Harak, a Massachusetts assistant attorney general investigating the Cambridge incident.

Prudential on Thursday declined to comment on the Breedlove deposition or Harak’s statement.