magic

In February, after getting served with subpoenas in a federal criminal investigation, the billionaire sports mogul Mark Walter’s insurance companies abruptly stopped lending to him.

But within weeks, new loans started rolling in from a different source: a financial firm whose owners include his business protege, basketball legend Earvin “Magic” Johnson.

Amistad Financial Group, a holding company that counts Johnson as a board member and minority shareholder, loaned about $1.26 billion to Walter’s companies between March and June of this year, according to a Bloomberg News review of business records and a person with knowledge of the activity who asked not to be identified discussing sensitive matters. Another $1.06 billion went to intermediaries that routinely serve as conduits for loans to Walter.

The combined $2.31 billion of lending, which hasn’t been reported previously, highlights the way Walter relies on debt to fund his business empire, and Amistad’s role. Even before this year, the firm’s insurance units had provided billions of dollars of loans to Walter affiliates, filings show. It also acted as an intermediary to help him tap loans from his own insurers, Bloomberg reported previously – transactions that are now part of the federal investigation.

Walter himself owns a single-digit voting stake in Amistad but doesn’t control it, participate in its management or sit on its board, according to a person familiar with its operations.

Representatives for Walter’s TWG Global holding company and for Johnson did not respond to messages seeking comment.

A former point guard who led the Los Angeles Lakers to five National Basketball Association championships, Johnson has described Walter as a business mentor. They have done deals with each other for more than a decade, including Johnson’s participation in the Walter-led purchase of the Los Angeles Dodgers baseball team. Johnson doesn’t serve on Amistad’s three-person executive committee, and it’s unclear whether he was involved in or aware of the lending decisions. Some of Amistad’s insurance units are led by Eric Holoman, Johnson’s former business manager.

The federal investigation, being pursued in parallel by the U.S. Department of Justice and the Securities and Exchange Commission, focuses on Walter’s insurance companies’ failure to disclose that more than $20 billion of loans on their books went to his other businesses.

The recent lending came from two Amistad subsidiaries, Equitrust Life Insurance Co. and Heritage Life Insurance Co. It’s unclear whether Amistad executives were aware of the investigation when the loans were made. Walter’s insurers disclosed the subpoena in a regulatory filing on June 26, but the filing did not get much attention until Bloomberg News reported on it in July. Information about lending activity after June 30 won’t be disclosed until next month.

Walter is now scrambling to reduce debts to his own insurance companies, Delaware Life Insurance Co. and Clear Spring Life and Annuity Co., in part to assuage concerns from ratings agencies about the scale of affiliated lending. He has agreed to sell the Lakers at a $12.5 billion valuation to free up cash and proposed a $6.5 billion debt swap with Delaware Life. This week, the insurer said it had regulatory approval to proceed with part of that, swapping $3.8 billion.

Because he doesn’t legally control Amistad, Walter is under no such pressure to reduce his reliance on its money.

His ties to Amistad are deep. Its official corporate address is the Chicago office suite that houses Walter’s family office. Walter’s financial firm, Guggenheim Partners, serves as an investment manager for both Equitrust and Heritage Life.

Walter’s brother-in-law serves as president of Heritage Life. Walter used to control Equitrust when it was owned by Guggenheim. He sold it to Johnson in 2015, and Johnson sold it to Amistad last year.

Recipients of the new Amistad loans include a company through which Walter holds his stake in used-car seller Carvana Co., and another containing his interest in the Billie Jean King Cup, the women’s tennis competition that he has backed since 2023. The destination for most of the money wasn’t clear from regulatory filings.

New LLCs

The federal investigations revolve around how Walter’s insurers came to lend so much money to his other businesses without disclosing the arrangement to their regulator, the Delaware Department of Insurance, as required. As of the end of last year, the amount of money they had invested in affiliates was $24 billion, or about 45% of the companies’ total invested assets.

Much of the money was routed to loans for newly created limited liability companies with no public profile. These LLCs were created by Amistad and other intermediaries, which in turn sent the money back to Walter.

In January and early February of this year, that lending arrangement continued, with Delaware Life loaning $730 million to newly formed LLCs that then sent the money to Walter’s other businesses, regulatory filings show. That stopped after the U.S. Attorney’s Office in Manhattan sent the grand jury subpoenas.

But in March, Amistad’s Equitrust sent $500 million to 10 LLCs. These borrowers had been formed days earlier by Federico Hermida, a Miami-based executive at ABS Capital Co., a longtime business partner of Walter’s that has often served as an intermediary in deals between Walter and his insurers. In June, Amistad’s Heritage Life sent $303 million to a subset of the Hermida borrowers. A representative of ABS declined to comment.

Heritage Life also sent about $253 million to LLCs set up by two other intermediaries that Walter has used for loans in the past: the real estate firm Bradford Allen and Hudson Trading, both based in Chicago. Representatives of Bradford Allen didn’t respond to requests for comment, and Hudson Trading declined to comment.

The remaining $1.3 billion of loans were made to companies that are known to be part of Walter’s business empire, or that were formed by a Walter employee, or were confirmed by the person with knowledge of the matter.

Most of the loans carried interest rates of 8 percent or more, and were due to mature in September or earlier. The insurers won’t have to disclose whether those loans were repaid, extended or replaced with new debt until they file their next quarterly financial reports next month.

Despite the borrowing from Amistad, Walter had not significantly reduced his debt to his own insurance companies by June 30, the date of the most recent regulatory filings. After climbing from $24 billion to $25 billion through March, the amount of affiliated investments dropped to about $24 billion as of June.

Mider and Li write for Bloomberg.

Magic Johnson is relentlessly positive, a quality that has served him well as a player, a businessman and even while living with HIV since 1991.

The former Lakers great generally keeps his social media comments upbeat. Yet, a last-second mental lapse Sunday by one of the five professional sports franchises Johnson co-owns prompted him to tweet the equivalent of a distress signal.

“I’m in total disbelief my Commanders had such poor clock management in today’s overtime game against the Giants. All we had to do was kick the field goal and we would have won the game!”

The tweet ended with an emoji of a man facepalming, conveying Johnson’s exasperation over the last play of Washington’s 27-27 tie with the New York Giants.

The Commanders were at the Giants 24-yard line with 12 seconds to play, no timeouts and the clock running. What needed to be done was obvious: Quarterback Jayden Daniels takes a snap, spikes the ball and the field-goal team trots out.

Nope. Daniels took a snap, danced around, was tackled and the clock expired.

Head coach Dan Quinn ripped off his headset and slammed it to the ground. Daniels stood on the field looking stunned. Johnson, who acquired 4% of the team when his pal Josh Harris bought it for $6.05 billion in 2023, vented on social media.

Johnson’s public comments are usually motivational gems such as “When you face a crisis, you know who your true friends are.” Or “Life doesn’t stop because something happens to you.” Or “I’m the one who will take chances, not worry about the backlash.”

When the Commanders lost their first two games this season, Johnson stayed silent. When they upset the Seattle Seahawks two weeks ago, Johnson took to his keyboard to congratulate the team, tweeting a photo of himself in a luxury box.

The last time he had expressed frustration about the Commanders on social media was three years ago, shortly after Harris became majority owner and Johnson had chipped in $240 million as a limited partner. On Oct. 5, 2023, he tweeted “Tonight the Commanders played with no intensity or fire. We didn’t compete in the first half and got down 27-3 heading into halftime. It was too big of a hole to climb out of and that is why we ended up losing 40-20.”

This time, he didn’t need nearly as many words. Quinn and Daniels both took responsibility for the lapse.

“The right call is honestly, we can go clock it early and don’t put ourselves in that spot,” Quinn said. “That’s my responsibility.”

Added Daniels, whose nonchalance after getting tackled seemed to indicate he thought his team had a timeout: “We’ve got to stop the clock. We’ve got to know the situation. We’ve got to relay that as an offense. It starts from everybody, from the top down. Ultimately, you know, it’s on me.”

For his part, Johnson could turn his attention to another of the teams in which he has a financial interest: the Dodgers, who lost Game 1 of the National League Championship Series to the Milwaukee Brewers on Sunday. He remained mum about that game, having last posted several congratulatory tweets when the Dodgers sailed through the NLDS against the Atlanta Braves last week.