The German insurance firm Allianz will pay more than $6 billion over the implosion of a group of hedge funds two years ago that stuck public pensions, religious organizations, foundations and other investors with heavy losses.

An American subsidiary of the insurer, Allianz Global Investors U.S., pleaded guilty Tuesday to securities fraud for failing to stop the scheme, which came to light after the funds collapsed early in the pandemic, losing more than $7 billion before they were shut down, according to court filings by federal prosecutors.

The fraud involved three former portfolio managers, including the funds’ former chief investment officer, who misled investors for at least four years by concealing the risk they faced, prosecutors said. Gregoire Tournant, the former chief investment officer, tried to cover up the scheme and mislead investigators in spring 2020, prosecutors said.

Mr. Tournant was charged with fraud and obstruction of justice in an indictment unsealed on Tuesday. The other portfolio managers, Stephen Bond-Nelson and Trevor Taylor, pleaded guilty in March and are cooperating with the government, prosecutors said.

Damian Williams, U.S. attorney for the Southern District of New York in Manhattan, said the three men gave investors faked documents that “hid the fact that they were secretly exposing investors to substantial risk.”

Those investors included a number of pension funds: the Teamster Members Retirement Plan, the New England Health Care Employees Pension Fund, the Arkansas Teacher Retirement System, the Milwaukee City Employees’ Retirement System and Blue Cross Blue Shield’s national employee benefits committee. Under its plea agreement, Allianz said it would pay more than $5 billion in restitution to investors and more than $1 billion to the government, federal officials said.

But the consequences of the case reach beyond those affected investors. As a result of its guilty plea, Allianz said it would no longer be permitted to advise certain kinds of funds in the United States. The company said Tuesday that it had reached a preliminary deal to transfer management of approximately $120 billion in assets to a new partner, Voya Financial. Allianz said an agreement would be finalized in the coming weeks.

Allianz, which is the parent company of the giant mutual fund bond firm PIMCO, said it did not expect its other operations in the United States to be disrupted. Allianz said it expected to get a waiver from the Securities and Exchange Commission that would ensure the guilty plea will not affect the operation of either PIMCO or Allianz’s insurance business in the United States.

“We accept our corporate responsibility for the isolated but serious wrongdoing of these three former employees,” Allianz said in a statement. The firm said it supported investigators’ efforts and sought to reach “fair settlements” with clients who had been lied to.

A lawyer for the Allianz investment subsidiary entered the guilty plea on its behalf Tuesday afternoon. A statement of facts included in the plea documents said it had “made false and misleading statements to current and prospective investors that substantially understated the risks being taken by the funds.”

The Justice Department and the S.E.C. began examining the firm’s Structured Alpha Funds after they took heavy losses at the start of the Covid-19 pandemic, when stock prices nose-dived as lockdowns caused widespread economic upheaval. Authorities said the seeds of that destruction were planted years earlier by the funds’ managers, who fabricated risk reports, altered performance data and manipulated spreadsheets to lie about their investment strategy.

Prosecutors laid out a series of attempts to mislead investors. In one instance, authorities said, the portfolio managers reported a daily loss at 9.3 percent, halving the actual decline. In another, the portfolio managers told investors that a potential market crash would result in losses of 4.15 percent — a figure reached by dropping a digit from the actual estimate of 42.15 percent.

Investigators said the managers began misleading investors as far back as 2016, helping the firm generate $400 million in net profits from managing the funds, as well as large bonuses for themselves.

“The defendants’ conduct in this case was brazen,” said Gurbir S. Grewal, the director of the S.E.C.’s enforcement division.

Even so, authorities said, the investment firm’s oversight was too weak to catch the problem before it was too late: The company’s controls were riddled with holes that rendered them inadequate to police the managers’ trading.

After the funds came apart, investigators said, the cover-up began.

Mr. Grewal said when Mr. Bond-Nelson was confronted by S.E.C. staff members about a false statement he had made, he took a bathroom break and never came back. And Mr. Taylor met with Mr. Tournant at a vacant construction site to discuss how to respond to investigators’ questions, authorities said.

Mr. Tournant, 55, voluntarily surrendered to authorities in Denver on Tuesday morning to face charges including securities fraud, conspiracy and obstruction of justice. In a statement, Mr. Tournant’s lawyers, Daniel Alonso and Seth Levine, called the case a “meritless and ill-considered attempt by the government to criminalize the impact of the unprecedented, Covid-induced market dislocation of March 2020.”

The lawyers said Mr. Tournant was on medical leave at the time and had sustained losses to the “considerable investment” he had made in the fund.

“While the losses are regrettable, they are not the result of any crime,” the lawyers said.

In addition to his criminal case, Mr. Tournant faces civil charges from the S.E.C., which already agreed to settlements with Mr. Bond-Nelson and Mr. Taylor.

“The victims of this misconduct include teachers, clergy, bus drivers and engineers, whose pensions are invested in institutional funds to support their retirement,” said the S.E.C. chairman, Gary Gensler. “This case once again demonstrates that even the most sophisticated institutional investors, like pension funds, can become victims of wrongdoing.”