New Jersey Secures Over $575k from Surety Co. for Withholding Residents' Funds

State Resolves Lawsuit Against Surety Company for Improperly Withholding Residents' Funds

The State of New Jersey has secured $575,964 from International Fidelity Insurance Company (IFIC) and its parent company, I.A.T. Insurance Group (IAT) to settle a whistleblower lawsuit alleging that the companies improperly withheld unclaimed collateral belonging to New Jersey residents. Attorney General Matthew J. Platkin announced the settlement, which resolves claims that IFIC and IAT violated the New Jersey False Claims Act and the New Jersey Uniform Unclaimed Property Act by failing to turn over funds to the state’s Unclaimed Property Administration (UPA).

Whistleblower Alleges Unlawful Retention of Millions in Unclaimed Collateral

The case was brought by Anthony Manganiello, a former IFIC employee, who filed a qui tam (whistleblower) lawsuit in 2022 in the United States District Court for the District of New Jersey. Manganiello, who worked on reviewing IFIC’s collateral accounts during IAT’s 2018 acquisition of IFIC, alleged that from 2015 to 2021, the company retained millions of dollars in unused collateral that should have been turned over to the UPA.

Following a two-year investigation, the state found that IFIC and IAT wrongfully kept portions of the collateral instead of transferring the funds to the UPA, leading to the settlement.

Under the terms of the agreement, IFIC and IAT will pay $575,964, allocated as follows:

• $383,976 will be transferred to the Unclaimed Property Administration (UPA) to return to affected individuals.
• $115,193 will be awarded to Manganiello as a whistleblower share, per False Claims Act provisions.
• $57,596 will go to the False Claims Prosecution Fund, which helps finance future fraud investigations.
• $19,198.60 will be deposited into the State’s General Fund.

Additionally, the companies have agreed to implement new procedures to prevent similar violations in the future.

“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.”

Court Rejects Motion to Keep Case Sealed

As part of the legal proceedings, the defendants sought to keep the lawsuit under seal indefinitely, arguing that the allegations were privileged because they stemmed from an internal investigation. However, the State opposed the motion, and the court ruled in favor of public transparency, stating that whistleblower complaints under the False Claims Act cannot be sealed simply because they arise from an internal inquiry.

How to Search for Unclaimed Funds

Current or former IFIC and IAT customers can search for unclaimed property that may belong to them by visiting the New Jersey Unclaimed Property Administration website at: https://unclaimedfunds.nj.gov/app/claim-search.

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

This settlement highlights New Jersey’s ongoing efforts to protect consumers and enforce laws that prevent companies from wrongfully retaining funds that belong to residents.