Is Mark Walter’s sudden sale of the LA Lakers a sign of things to come where private credit meets sport? Could his Chelsea stake be next, and what does the investigation into his finances mean for Todd Boehly?
By Paul Brown
Chelsea and the rest of the UK may be caught in the grip of a heatwave, but stormclouds are gathering for two of the club’s major shareholders, Mark Walter and Todd Boehly (*).
The pair of long-time friends invested in the west London club when Roman Abramovich was forced to sell up in 2022. Josimar has already written about how that deal loaded Chelsea with eye-watering debts at rates the club will not find easy to service.
However, the source of Walter and Boehly’s wealth – their life insurance companies – faces increased pressure from growing regulatory oversight and worsening market conditions. These headwinds could have implications for the Premier League club.
The sudden Lakers sale
Earlier this month, Walter shocked the sports world by agreeing to sell the world-famous NBA franchise LA Lakers to Josh Kushner, brother of US President Donald Trump’s son-in-law Jared Kushner, and former Disney chief Bob Iger, for a total of 12.5 billion USD. Walter had owned the Lakers for less than a year, but needed the cash to help restructure private credit loans sitting on the books of his insurers that are the subject of a probe by the US Department of Justice (DOJ).
Bloomberg reported last Thursday that Walter’s sudden need for cash was so great that he even pledged his stake in investment giant Guggenheim Partners, which has 320 billion USD of assets under management, and of which he remains CEO, in order to try and secure short-term financing.
Then the Wall Street Journal reported what many Chelsea fans suspected: Walter is also considering selling his 12.8% stake in the west London club.
Why sell now? Forbes estimates Walter’s net worth at 7.3 billion USD, but last September federal agents seized the 66-year-old’s phone and laptop after searching his private jet at Chicago airport as part of a wide-ranging probe into his business dealings. Another Guggenheim executive reportedly had their phone seized. No charges have yet been brought.
Then, in June of this year, two insurers, controlled through Walter’s firm TWG Global, disclosed in regulatory filings that they had received subpoenas from both the DOJ and the Securities and Exchange Commission (SEC) over whether a series of investments were not properly recorded as “affiliated” – or, in other words, tied to other parts of his business empire.
A total of 20 billion USD-worth of assets, held by the insurance companies Delaware Life and Clear Spring Life and Annuity, have since been reclassified. As a result, Delaware Life’s affiliated investments jumped from 3 per cent of invested assets to about 42 per cent. In response, S&P Global Ratings revised its outlook on the company to “negative”.
Walter needs to sell or restructure these assets, including loans to his own companies, to reduce the percentage of affiliated investments in the portfolios of his insurers. So far, he has struggled to do so.
What’s the issue?
Insurance companies have strict rules on what kinds of assets they can invest in using policyholder premiums, and must always hold enough cash in reserve (known as their “capital surplus”) to pay out future claims as they come due. Affiliated or related-party transactions can put this at risk.
Affiliated investments occur when a company invests in or lends money to an entity over which it exerts significant control – such as a parent company investing in its own subsidiary.
When an insurer makes an affiliated investment, regulators require it to hold more capital to shield policyholders from the elevated risk. Avoiding the affiliated designation can give firms a capital advantage.
Not reporting that an investment is affiliated can make it look as though the insurer is holding enough of a surplus when in fact it is not, giving a false sense of the financial health of the company.
Insurance regulators also limit how many affiliated investments an insurer can make. Failing to report an affiliated investment allows the company to breach these safety limits without triggering regulatory alarms.
The handbook of the National Association of Insurance Commissioners (NAIC) states that affiliated investments also offer the potential for self-dealing – where the owner of an insurer conducts a transaction that unfairly benefits their own interest, to the detriment of policyholders.
Tom Gober, a forensic accountant and fraud investigator who specialises in the insurance industry, told Josimar: “When an insurer enters into any transaction with an affiliate, this demands full disclosure and increased scrutiny because when you are doing a transaction with yourself, it’s just too easy to set it up where you benefit one party to the detriment of the other. The law says any such transaction must be on terms that are fair and reasonable. So the NAIC needs to know if a transaction is with an affiliate so it can make sure it’s fair and reasonable – and puts strict limits on these affiliated investments as a result.
“There is also a potential conflict of interest because the owner of the insurance company can engineer a situation where policyholders end up investing in affiliated assets that are higher risk, for his own benefit.”
Affiliated transactions played a role in the infamous 2001 bankruptcy of Enron, helped con artist Bernie Madoff profit from the largest-known Ponzi scheme in history, and formed part of the 2 billion USD insurance fraud for which Greg Lindberg is currently serving a prison sentence.
They have also popped up repeatedly in Josimar’s reporting of the collapse of 777 Partners, another private equity firm which tapped insurance policyholder premiums for its investments, which included seven football teams.
Creditors are disputing the true value of those transactions and whether they were properly classified in the first place, after 777 Partners filed for Chapter 11 bankruptcy protection. The Miami firm’s co-founder Josh Wander goes on trial in October after his indictment on fraud charges.
Where does Todd Boehly come in?
Walter is not the only Chelsea shareholder facing increased regulatory and commercial pressure. So too is Boehly.
The pair have known each other since 1999. Boehly joined Walter at Guggenheim two years later and helped him purchase the LA Dodgers baseball team in 2012 before breaking away to set up his own firm, Eldridge Industries. Much like Walter, he has built his wealth and funded many of his investments through life insurers.
One of Boehly’s insurers, Security Benefit Life, has come under scrutiny from regulators for its widespread use of collateral loans – where a borrower pledges an asset as a financial guarantee to secure a debt.
According to the Financial Times, the company has been by far the largest user of collateral loans in the insurance sector in recent years. Nearly all of them, about 12.8 billion out of 12.9 billion USD, were backed by affiliated assets.
In fact, a 2025 presentation by an industry rival showed that 43% of Security Benefit Life’s total assets were affiliated. Independent analysis seen by Josimar shows that figure may be even higher today.
Regulators are pushing for new rules which would make it more expensive for a company to rely on collateral loans, but after lobbying from Security Benefit Life, agreed to delay their introduction, giving Boehly’s firm a window to fix the problem.
The new rules would require the company to hold higher capital reserves to back these investments – but will not now be brought in as planned by the end of this year.
Unlike Walter, there is no indication Boehly or any of his companies are under federal investigation; but both men’s use of affiliated investments is under scrutiny from regulators, and could have an impact on their wealth.
Where it all began
Security Benefit Life used to be owned by Guggenheim until Boehly acquired it when he left the company. The firm was named in court filings from a 2014 class-action lawsuit reviewed by Josimar, alongside two other Guggenheim insurers, including the entity that eventually became Walter’s Clear Spring.
This complaint, filed in the Northern District of Illinois, accused Walter and Boehly of misrepresenting the financial health of these Guggenheim Insurers, saddling them with billions of dollars of affiliated investments and of using them “as a cash machine” to buy the Dodgers with over a billion USD in policyholder funds.
The docket for the case shows it was voluntarily dismissed. But Gober, the forensic accountant who built that case, says it was settled favourably.
He told Josimar: “That complaint put Walter and Boehly on notice twelve years ago that they are supposed to tell the truth on affiliated investments – and that they used related-party investments to route money to the Dodgers.”
Security Benefit Life has since come under scrutiny for other reasons too. Along with the insurers owned by Walter, the firm has relied heavily on the work of the credit ratings agency Egan-Jones.
The Wall Street Journal’s recent analysis showed that Egan-Jones rated 23% of the company’s investments. The only two insurers with higher percentages belong to Walter, who paid them millions last year for their services.
In 2024, Egan-Jones, headquartered in a four-bedroom house outside of Philadelphia, rated more than 3,000 such investments, with a team of just 20 analysts. Two former employees are suing the company, alleging that it pressured staff to inflate ratings to gain business. The higher the rating, the less capital insurers have to set aside to protect against the risk of loss, allowing them to invest more money from policyholders.
Egan-Jones, which also rated many of the investments made by 777 Partners, says it “stands behind the integrity, independence, and rigor of its ratings.” Industry heavyweights however have distanced themselves from the company, which is no longer recognised by regulators in Bermuda, where insurers park a huge amount of capital. The SEC recently questioned the firm’s ability to “consistently produce credit ratings with integrity.” Egan-Jones has been in trouble with the SEC before, agreeing in 2013 to settle charges that they had made false and misleading statements in a registration document. In 2022, CEO Sean Egan settled SEC charges that he had violated conflict of interest rules by paying a 2.1 million USD fine.
The issue of affiliated investments came up again for Boehly last year when Accelerant, an insurance exchange he had backed, lost nearly a third of its value. The drop followed an admission to investors that a single insurer, with whom it shares a private equity sponsor, accounted for most of the company’s third-party premiums.
All of this comes at a time when private credit, the nonbank-lending sector of the economy that Boehly and Walter specialise in, grapples with rising defaults and an exodus of investors.
Yet unlike Walter, for now at least, Boehly seems intent on growing his empire rather than selling bits off. In June, he was reportedly weighing up a $9 billion bid for the NFL’s Seattle Seahawks. Ironically, he had even invited Walter to join forces with him again on the venture.
What all of this means for Chelsea remains to be seen. If Walter sells his stake, Boehly could be a candidate to buy him out. Regardless, the cash cow both men have long milked to fund their sporting investments is under greater scrutiny than ever.
(*) Both Walter and Boehly personally own 12.83% each of BlueCo, Chelsea FC’s holding company.
