The latest statements were prompted by an article in The Intercept – the second in a series -- detailing the claims listed in a lawsuit filed by three former employees acting as Aflac shareholders due to small distributions of Aflac stock received as part of their compensation. (The allegations are separate from the class-action suit filed by these employees as well as six other former employees, claiming pervasive fraud and other misconduct.)

The derivative shareholder lawsuit, filed in December in the federal court for the Southern District of New York, accuses former Aflac president Paul Amos II and other board members of insider trading while knowing of the “pervasive fraud” committed at the company, but failing to investigate those allegations properly, concealing them from the public, and letting the fraud continue.

The lawsuit, provided by the plaintiffs’ attorney, Dimitry Joffe, alleges that when Amos last June “suddenly resigned” from his position as president -- one month after being re-elected to the board -- and sold $17 million worth of Aflac stock, “the board stood by silent,” even after the employees named in the lawsuit demanded the directors take action against the insider trading and other misconduct.

Moreover, the other directors named in the lawsuit either directly participated in, had direct knowledge of, or knowingly failed to prevent or remedy that fraud; issued or caused to be issued materially false and misleading statements in the company’s 2017 proxy statement and in its annual report and the year in review report for 2016; engaged in insider trading while in possession of material nonpublic company information; and authorized a 56 million share repurchase in July and August 2017, artificially boosting the company’s stock price and increasing the value of the defendants’ Aflac securities.

A year before the employees filed the lawsuit, they sent a dispute notice to Amos and his father, Aflac’s CEO and Chairman Daniel Amos, as well as the company’s general counsel Audrey Boone Tillman, detailing the alleged fraud and other misconduct.

Among numerous other wrongdoings, the dispute notice alleged Aflac’s manipulation of one of its “key operational metrics” – the number of average weekly or monthly producers, i.e., sales associates actively selling Aflac insurance during the reporting period – that Aflac had represented to the market as an important indicator of the company’s growth and earnings potential.

“These numbers are inherently inflated due to the large-scale fraudulent recruiting and the resulting extremely high attrition rate within the first year,” the lawsuit states. “Moreover, these numbers are further inflated because they include the newly recruited associates as ‘producers’ even though many of them do not produce anything during their short stay at the company. In order to count them as ‘producers,’ at the end of a reporting period Aflac falsely assigns a minimal amount of production – as low as $1 – to the non-producing associates in order to count them towards the ‘average producer’ metric by taking that production amount from other, producing associates.”

The lawsuit alleges that Aflac would manipulate its bonus and compensation structure to incentivize its coordinators to pad those numbers.

Paul Amos was also aware of another fraudulent practice occurring at Aflac: the conversion of pre-existing individual policies into nearly identical new group policies, according to the lawsuit.

“The only plausible explanation for this individual-to-group conversion is to allow Aflac to report the $100,000 as its ‘new annualized premium sales,’ which is the key indicator of the company’s growth rates and earning prospects, without disclosing that Aflac’s ‘new’ premium is in fact the result of cannibalizing Aflac’ own pre-existing business,” the lawsuit states.

Another alleged fraud is the company’s issuance of policies to policyholders without their knowledge, authorization or consent – much like Wells Fargo’s ‘cross-selling’ fraud.

On Dec. 14, 2016, Aflac responded to the dispute notice through its in-house counsel Catherine Coppedge, stating that “we take these allegations seriously and will be looking into them thoroughly,” according to the lawsuit. Three weeks later, Aflac sent another letter to the plaintiffs’ counsel stating that “Aflac unequivocally denies the allegations raised in your Dec. 10, 2016 letter,” and labeling them “wholly without merit.”

Then on Jan. 27, 2017, Aflac internally decommissioned the average weekly producer reports, and in its FY2016 annual report omitted the average producers number from the list of its “key operational metrics,” renaming the list as “key sales metrics.”

“The decommissioning of the AWP reports, followed by the disappearance of that metric from Aflac’s public filings, constitutes an implicit admission by Aflac that plaintiffs’ allegations had merits,” the lawsuit alleges.

“Aflac is committed to always doing the right thing, acting with ethical behavior and ensuring we put our policyholders and claimants first," Sullivan said. 'Several third-parties have recognized Aflac for doing the right thing, including being named a World’s Most Ethical Company for 11 consecutive years by Ethisphere magazine; recognition as one of the World’s Most Admired Companies for 17 years as well as one of the Best Companies to Work For for 19 years and one of the 100 Best Workplaces for Millennials by Fortune.

“Again, the independent special committee (SLC) found the claims that it has investigated to be without merit. Aflac plans to fight them vigorously, using every legal means available,” Sullivan concludes.