Judge Orders Probe Into New Prudential Allegations

NEWARK, N.J. — One week after fining Prudential Insurance Co. $1 million for allowing the destruction of documents, a federal judge on Tuesday appointed an independent investigator to look into new allegations of document-shredding and the withholding of evidence from regulators.

The action was taken by U.S. District Judge Alfred M. Wolin, who is presiding over a massive class-action lawsuit on behalf of as many as 10.7 million Prudential policyholders. The lawsuit alleges a pattern of fraud by the company in the sale of life insurance.

Wolin on Tuesday gave the newly appointed “special master,” New Jersey lawyer Justin P. Walder, authority to take depositions of Prudential’s general counsel, James R. Gillen, and several other Prudential executives and lawyers.

The judge’s action came in response to allegations first reported in The Times, including charges that a partner in Prudential’s lead defense firm in the class-action suit had personally shredded documents.

In ordering the new investigation, the judge also rejected the company’s contention in court papers that the latest charges warranted no investigation because they were plainly spurious.

Prudential spokesman Robert DeFillippo said Tuesday that the company would cooperate with Walder’s probe.

Walder is to focus on allegations made to Florida regulators by John J. Massaro, a Prudential staff lawyer who testified that in 1995 he had witnessed Michael H. Barr, a top outside lawyer for the company, shredding documents in the Jacksonville, Fla., regional office. He also testified that Prudential withheld for months from state insurance investigators a 1992 internal memo in which former Prudential compliance officer James C. Helfrich urged the company to publicly admit wrongdoing and launch a program to reimburse customers.

In an affidavit, Barr said the shredded papers were merely copies of copies and that no original documents had been destroyed.