MetLife has settled some cases with its own customers who were duped by the Diversified Lending Group (D.L.G.), but a current batch of lawsuits involves people who did not buy its insurance, the New York Times reported today. D.L.G. crashed in 2008, when the Securities and Exchange Commission sued Bruce Friedman, accusing him of misappropriating millions of dollars in investor funds. According to court documents, he operated a Ponzi scheme that defrauded hundreds of investors, including a sitting congressman, of more than $200 million. Claimants in the current lawsuits were not customers of MetLife, but put their money in the D.L.G. investment that was pitched to them by sales people, some who were affiliated with MetLife and some who were independent contractors approved to sell its products. As such, the legal fight raises questions about how far a large company’s liability should extend. MetLife has argued in court documents that it “had no relationship with D.L.G.” and that it “did not sell, or materially assist in the sale” of the D.L.G. financing program. Neither was it legally obligated to supervise the brokers who made the sales, MetLife said, because they were contractors and licensed through another, unaffiliated broker-dealer, even though authorized to sell MetLife insurance products.
