The terms of the agreement were “so obscure as to be unintelligible” that Breakaway ended up being responsible “for every single loss their injured employees suffer,” according to the complaint. Breakaway paid Berkshire, believing those funds would be set aside into a “protected cell,” which would eventually be returned.

Berkshire Hathaway brk.a and its underwriting company, Applied Underwriters, are in the hot seat after New York City-based Breakaway Courier Systems accused the finance giant of running a “reverse Ponzi scheme.”

“Instead, Berkshire Hathaway illegally siphons off premiums through an unlicensed, unregistered and under-collateralized Hawaiian entity, leaving New York employers and injured workers without the funds that New York State requires to be available to cover losses due to worker injuries,” the complaint stated.

Last Friday, the courier service filed a lawsuit with the N.Y. State Supreme Court for $18 million, claiming it received worker’s compensation coverage that was actually a complex and risky investment vehicle. Breakaway said the discounted Berkshire package it bought in 2009 was really an expensive “reinsurance” program that required employers to cover each other’s losses.

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