Software firm denies money laundering charges despite federal investigation

A major insurance software provider continues to defend against money laundering accusations as an FBI investigation heats up.



Insurance software company Ebix continues to deny allegations of money laundering even as the FBI and Securities and Exchange Commission investigate the company’s global financial transactions.

In an August 6 statement, Ebix called news reports of unlawful behavior “erroneous” and maintained that “allegations of money laundering were false, inaccurate, and likely to cause significant financial harm to Ebix shareholders.”

Allegations of misconduct first surfaced in June, when the company disclosed that an FBI investigation was underway regarding its accounting and reporting practices. This investigation was prompted by accusations from short-sellers regarding inaccuracies in Ebix’s financial statements dating back to 2011.

The investigation halted Ebix’s planned $820m merger with an affiliate of Goldman Sachs Group and led to a share tumble of nearly 30 percent in early August. It also interrupted CEO Robin Raina’s plans to take the company private.

A former executive contacted by the FBI told Bloomberg the agency asked whether he thought Ebix’s transfer of funds to locations like India, Sweden, and Singapore constituted money laundering.

Two other sources familiar with the probe told Bloomberg that both the FBI and the Security Exchange Commission are particularly interested in the Liechtenstein-based Rennes Foundation – Ebix’s biggest investor. As of July 9, the Rennes Foundation owned 9.6% of Ebix stock. Rennes Foundation leading director Rolf Herter also has voting rights on Ebix’s board.

According to a May 10 SEC filing, the Rennes Foundation stood to rake in $11.4m and a 15% stake in the company as a result of Goldman Sachs’ buyout of Ebix. Additionally, the SEC discovered the Rennes Foundation also serves as directors of companies registered in Panama, where stringent privacy laws attract investors.

Despite the relative power of the Rennes Foundation, nothing is disclosed about its ownership in public records.

Joseph Carcello, co-founder of the Corporate Governance Center at the University of Tennessee, told Bloomberg this information begs the question of whether Rennes’ backers are interested in receiving returns on their investments.

“Where is their money coming from, and how does it continue to flow?” Carcello said. “This doesn’t make economic sense.”

Ebix, however, denies any association with the Rennes Foundation or its affiliates outside of investment.

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