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California, Survivors Slap Italian Firm with Subpoenas, Suit

February 9, 1998
See Original Daily Bulletin From This Date

One of Europe’s largest insurance companies has been hit with subpoenas by the state of California — and with a $135 million suit by a family — for allegedly stonewalling demands to pay out on policies taken out by Holocaust victims and survivors.

The Italian company, Assicurazioni Generali, was charged at a news conference last week with 50 years of evasive action to avoid its responsibilities to Jewish policy-holders and their heirs.

California Insurance Commissioner Chuck Quackenbush said that after inviting Generali representatives to three separate public hearings and not receiving a response, he has issued subpoenas to four top officials at Generali’s New York headquarters to appear at an investigatory hearing Feb. 19 in San Francisco.

“We’re 50 years behind and wasting time, which is why I am ordering Generali to come forward,” said Quackenbush. “I demand a public accounting.”

If Generali fails to cooperate, the commissioner warned, he was ready to “pull their license” to do business in California, which currently amounts to $22 million in the state.

Generali’s business totals $125 million across the United States.

A company spokesman, Dan Leonard, said in a phone interview that the company was ready to meet with Quackenbush in a private session, as it had with insurance commissioners of other states. Leonard added that Generali could not meet in front of the media because it is a defendant on similar charges in a class-action suit pending in a New York federal court.

Dramatic, and at times emotional, testimony was given at the Feb. 4 news conference at the Simon Wiesenthal Center by the descendants of Moshe Stern and his wife, Regina.

Stern, an affluent wine and liquor producer in Hungary, had six sons and one daughter. Between 1929 and 1939, he took out large insurance policies — and a dowry policy for his daughter — through the Prague office of Generali.

He prepaid premiums through 1944 on policies worth about $1.5 million. That sum, with accrued interest, is now worth $10 million, his heirs believe.

Moshe Stern, his wife and three sons perished in Auschwitz. The couple’s oldest son, Adolf, was liberated in Buchenwald. One month after the end of the war, in June 1945, Adolf Stern made his way to the Generali office in Prague to claim his family’s life and annuity insurance proceeds.

His reception by the insurance company’s officials, as described in an affidavit, was “less than kind. They mocked me. They were arrogant. They stated that I would have to produce a death certificate and copies of the relevant insurance policies before they would process the claims.

“I explained that Hitler did not pass out death certificates and that all family insurance policy documentation was confiscated by the Third Reich. They declined my request to retrieve from Generali’s own files the insurance and annuity policies that they sold to my family. The officials said that Generali could not help me and they had me forcibly removed from the premises by a security guard. I was humiliated.”

During the next five decades, the surviving children of Moshe Stern and his grandchildren, who live on three continents, repeatedly petitioned Generali. They were constantly rebuffed with claims that no records of the policies could be found, that the assets of Generali’s Prague branch had been nationalized and that the time limit for claims had expired.

Then, in 1996, the Sterns found a copy of one policy issued to Moshe Stern in 1929 in a large Generali warehouse in the Italian city of Trieste that was jammed with old policies. A few months earlier, Generali had claimed that no such policy existed.

At the news conference, Alan Stern, a Los Angeles businessman and grandson of Moshe Stern, and his wife Lisa, an attorney, described their family’s long legal odyssey, which he termed a battle of “David fighting a corporate Goliath.”

Lisa Stern, holding up a piece of stone from an Auschwitz crematorium, described Generali’s actions as “the financial crime of the century.”

Their attorney, William Shernoff, a well-known expert on insurance consumer rights, said that Generali’s behavior “is one of the most abusive in my 25 years of practice.” He also believes that the suit, in which he is seeking $10 million in actual damages and $125 million in punitive damages, represents the largest “bad faith” suit filed against any insurance company.

Shernoff said that because of the age and physical condition of some of the plaintiffs, a hearing in the suit could be accelerated under California law. He hopes that a trial date will be set within four months and the case submitted to a jury within a year.

Generali spokesman Leonard said the company had not received a copy of the Stern suit and that, therefore, he could not comment on it.

Generali, whose net worth is estimated to be $4.3 billion, has a long history of involvement with the Jewish community and Israel.

The company was founded in 1831 by a group of Jewish merchants in Trieste and quickly established branches in the major cities of the old Hapsburg Empire.

It employed thousands of Jewish agents and, according to Quackenbush, wrote 80 percent of all policies taken out by Jews in Central and Eastern Europe.

In the 1930s, Generali helped found Migdal, now the largest insurance company in Israel, and last year paid $320 million to buy a controlling interest in that company.

At the time of the Migdal takeover, Generali announced establishment of a $12 million philanthropic fund, “in honor of Generali policy holders who perished in the Holocaust.” The company publicized the fund through large ads in Jewish newspapers and also established an information center for claimants.

However, speakers at the news conference observed that even this gesture is suspect. For one, said Alan Stern, the only money disbursed so far has been $1 million for advertisements.

In addition, attorney Shernoff stated in his brief, in making future disbursements from the fund, Generali specifically denies any legal or moral obligation to do so and requires recipients to forgo any future claims against the company.

In the separate class action suit pending in New York, Generali is among 15 German, Swiss, French and Italian insurance companies named. Most of the companies have operations and subsidiaries in the United States and thus may be subject to American law.

The subpoenas issued for Generali officials may not be the last.

At last month’s public hearing in California, only one of 10 companies asked to attend sent a spokesman — Germany’s Alliance AG, which owns the Fireman’s Fund insurance company. Quackenbush said at the hearing that he would subpoena officials from the other companies.

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