The suit also blames the group for "under-reserving and underreporting" claims and losses to state officials and the firm's own auditors and actuaries, and for "the secretive diversion of their time, attention, and other resources" away from the insurer and "to the betterment of multiple real estate development and hotel companies owned and operated by certain Defendants."
Brier and Drauschak were developers of the Fairfield Inn in Millville, N.J., a project backed by state and local financing, according to news accounts covering the hotel's opening in 2010. The lawsuit doesn't link any particular project to First Sealord funds.
Messages left at the Villanova office of Broadlands Financial Group L.L.C., a construction financial services firm affiliated with First Sealord and controlled by Brier and Drauschak, and to Elkins Park lawyer Robert H. Nemeroff, who represents the First Sealord officers, weren't returned. Lawyer Alan I. Becker, who represents lawyer Bragg, said in an e-mail he was traveling and could not immediately comment.
Brier, a former U.S. Army colonel, and Drauschak founded First Sealord in 1992 and hired Cooperman as CFO in 1994, shortly before taking the company public. Its original name was Mountbatten Surety, after Louis Mountbatten, the famed British admiral.
When the construction industry stalled in 2008, Drauschak tried to grow the affiliated company, Broadlands, as an alternative energy construction consultant through expensive global marketing efforts. Company officials called this "elephant hunting." These efforts cost a lot but brought no new business, according to the lawsuit.
By the end of 2010, "Broadlands owed (First Sealord) over $5.5 million," according to the lawsuit. They were able to replace some of the money by appealing to nonexecutive investors in the firm, but not enough to keep First Sealord solvent.
The "diversion of millions" during those years provided "no benefit whatsoever" to First Sealord, according to the suit.
As the company's financial losses mounted, the executives destroyed or removed records, the state suit alleges. A.M. Best, the ratings company, cut First Sealord's ratings, and efforts to sell the firm failed. Finally the state took over.
The lawsuit demands the executives return the money they took from First Sealord. It also alleges "wrongful diversion, raiding cash collateral," and at least one count of "civil conspiracy in breach of fiduciary" duty against each of the First Sealord officers.
Contact Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com, or @PhillyJoeD on Twitter.