Justice Dept. drops massive fraud case

But Maguire never brought those charges.

Months after preparing the draft, he was removed as the lead prosecutor on the case and reassigned.

His replacement, a prosecutor who hadn't been involved in the case until then, soon announced that the Berkshire Hathaway subsidiary, General Reinsurance, wouldn't be indicted. By April of this year, the entire investigation, which the Justice Department once hailed as one of the largest insurance-fraud cases in the history of Virginia, had fizzled.

Former employees and policyholders of the Richmond-based insurer were astounded. Why had the Justice Department spent upward of $2 million to investigate the case only to decline to prosecute? Maguire and his team of investigators had secured two related guilty pleas, interviewed dozens of witnesses and gathered 7,000 boxes of documents.

At the Justice Department, some whispered that Maguire and his team had overreached and had been knocked down. Others heard that the government needed resources for terrorism investigations.

Lawyers for the two companies had another explanation: Prosecutors realized they didn't have evidence of a crime.

"It was a black and white decision," said Stanley Twardy Jr., one of General Reinsurance's attorneys and a former U.S. attorney. "They just called it like they saw it."

But Tom Gober, a certified fraud examiner who worked on the case, thought investigators had gathered plenty of evidence.

Gober, a government-contracted investigator, concluded that the Justice Department had buckled under pressure from defense lawyers. Shortly before Maguire was removed, his supervisors were urging him to drop the case against General Reinsurance, Gober said.

Gober's suspicions were fanned by allegations of politicization in the Justice Department after nine U.S. attorneys were fired.

He took his complaints to the Office of Professional Responsibility, which investigates Justice Department misconduct.

"It just stinks," he said. "You don't come in out of nowhere and in no time kill three years of sophisticated effort."

Maguire and officials with the U.S. Attorney's Office and the FBI in Virginia declined to respond to questions about the decision.

Justice Department spokesman Bryan Sierra said he couldn't comment, either. "As with any investigation, circumstances change day to day, and in the end the decision was made not to charge certain defendants in this case," he said.

Internal documents that McClatchy Newspapers obtained show that Justice Department lawyers in Washington had become locked in an intense debate with Maguire over the case until he was removed from it.

The documents, together with court records and interviews, provide a rare look inside a corporate fraud case and the Justice Department's deliberations on whether to pursue an indictment.