The suit alleges that from 1996 to 2007, Fireman's Fund encouraged its employees to attend investment seminars conducted by a group of investors who last week were arrested and charged by Attorney General Jerry Brown with "callously swindling thousands of individuals out of $200 million."

Two of the men arrested, Gary T. Armitage, 59, of Healdsburg, and James Stanley Koenig, 57, of Redding, each remain in custody on $5 million bail. In 1986, Koenig pleaded guilty to two counts of mail fraud and was sentenced to two years and six months in a federal penitentiary.

Allianz SE of Munich, Germany, one of the world's largest providers of property and casualty insurance, acquired Fireman's Fund Insurance Co. in 1991. Fireman's Fund, which as recently as 2001 employed about 2,400 people in Marin, currently has 950 Marin employees.

According to the suit, filed Tuesday in Marin County Superior Court, Fireman's Fund Insurance Co. began to shrink its United States employee base during the mid-1990s.

"To accomplish this," the suit says, "Fireman's Fund encouraged its employees to retire early. Fireman's Fund selected and retained investment advisors to deliver this message and promoted those advisors to its employees."

The suit alleges that Fireman's Fund selected the company

The suit says that Fireman's Fund promoted AGA Financial's seminars to its employees via flyers, brochures and e-mail messages, encouraging employees to attend them "in order to receive advice on early retirement in light of the changes in the Fireman's Fund's pension plan."

Val Hornstein, the San Francisco lawyer who filed the suit, said that during this time some employees were switched from a defined benefits plan to a cash balance plan, which was less lucrative for older employees. Employees vested in cash balance plans may access their account balance in a lump sum at any time.

The suit says that employees were allowed to sign up for the seminars using computer kiosks in the insurance company's offices, and that seminars were conducted at the company's offices in Novato. The suit also says that members of Fireman's Fund's human resources staff were assigned to assist the AGA Financial team with its administrative needs during the seminars.

In a press release, Fireman's Fund spokeswoman Susan Murdy responded, "We contracted with a national vendor to offer voluntary retirement planning training. That vendor was responsible for bringing local instructors to Novato to conduct the training. Individuals associated with AGA were among these local instructors. Our contract required the use of standard generic training material that did not endorse particular products."

Murdy added, "We continue to believe that we are not responsible for these losses."

According to the suit, the AGA Financial team encouraged the insurance company's employees to "retire earlier than previously planned; take lump sum distributions of their retirement benefits; take early and high distributions from their IRAs; take out mortgages or home equity lines of credit on their properties and invest them in unsuitable, high risk, undiversified, imprudent investments," which "were part of a Ponzi scheme."

As a result, the suit says, "many plaintiffs are without a source of income and without the retirement funds that they need to live. Some plaintiffs have been subjected to foreclosures on their homes, have had to declare bankruptcy, take out reverse mortgage on their homes and if they could find jobs to return to work. Most of the plaintiffs are elderly, some are infirm, and most have no remaining assets and no chance of ever recovering their losses."

Interviewed by the Independent Journal last month, one of the plaintiffs, Dilla Sunderland, 70, of Novato, said, "When this hit I was devastated. It almost took my life away."

Contact Richard Halstead via e-mail at rhalstead@marinij.com