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NEW YORK (CNN/Money) -
New York Attorney General Eliot Spitzer and federal officials are no longer cooperating on parallel probes of the U.S. insurance industry, according to a published report.
The Washington Post reported Tuesday that each has made separate deals with witnesses in their probe of the industry. Such independent deals will likely make the witnesses less useful to the other side.
"If there's a lack of coordination, both prosecutorial entities will see their cases suffer," says Robert Mintz, head of white-collar criminal defense at New Jersey's McCarter & English, told the paper.
New York state and federal officials jointly interviewed insurance executive witnesses until late April or early May, according to the report, but they have conducted separate interviews since then.
The paper reported that the typical intra-agency tensions were made worse by news leaks from a high-profile interview April 11 with investor Warren Buffett, head of Berkshire Hathaway Inc. (Research), whose businesses include General Re Corp., a leading reinsurance firm. The unit is part of a wide-ranging probe into a product known as a finite reinsurance, which has allegedly been used by some buyers such as American International Group (Research) to make their earnings look better.
The three-hour session with Buffett was held at the Securities and Exchange Commission's offices in New York and included federal prosecutors from the Justice Department and the Eastern District of Virginia, SEC lawyers, and Spitzer's staff. But when news reports of the session quickly surfaced, federal investigators blamed members of Spitzer's staff for the leaks, according to the Post.
Spokesmen for Federal investigators refused to comment on the record to the Post, but Michele Hirshman, Spitzer's top deputy, told the paper that any suggestion that state officials leaked information from the Buffett meeting is "inaccurate and ridiculous."
She described the insurance investigations as separate but complementary and said prosecutors on both sides are experienced in dealing with parallel probes by other agencies. "At the end of the day, the investigations are producing good results in terms of finding the wrongdoing that was hidden from regulators for many years," she said.
Spitzer has publicly criticized the federal government for its enforcement track record, though.
"Not a word has come out of the White House about maybe there being a structural problem in the insurance industry," Spitzer said in a May 2, in a speech to business writers and editors in Seattle, according to a Reuters report.
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