Securities Lawyer Blog | Victim of Fraud?

TAG | life insurance fraud

Jan/13

3

Were You a Former Client of Tracey Crownover?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group is currently investigating potential claims regarding the sale of variable life insurance policies and certain Real Estate Investment Trusts (REITs) sold by former Ameriprise financial advisor, Tracey Crownover. Ms. Crownover was terminated by Ameriprise for failing to follow firm policies. Tracey Crownover has over 25 reported customer disputes through the Financial Industry Regulatory Authority (FINRA).

If you feel you may have a claim against former Ameriprise broker Tracey Helaine Crownover, call 888-760-6552.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, represents clients nationwide before FINRA. If you or a loved one have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. Visit our website at: http://www.securitieslawyer.com.

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Oct/11

20

Clyde Benninghoff, Amelia Island, FL, Barred by FINRA

Comments off · Posted by Securities Lawyer in FINRA

Clyde Allen Benninghoff (CRD #18463, Registered Principal, Amelia Island, Florida)
 
submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the
findings, Benninghoff consented to the described sanction and to the entry of findings
that he facilitated securities investments away from his member firm.
 
These findings stated that individuals, who were not customers of Benninghoff’s firm, invested a total of $1,560,531.80 in a secured premium finance plan, which purported to promise a 12 percent return on an accompanying promissory note. The findings also stated that the secured premium finance plan was marketed as an investment that included financing for premiums on life insurance policies. The findings also included that Benninghoff wrote the life insurance policies through his firm’s life insurance company affiliate. FINRA found that the investments were not made through Benninghoff’s firm and were unknown to the firm.
 
Also, FINRA found that Benninghoff did not provide written notice to, or obtain
approval from, his firm prior to facilitating the investments. In addition, FINRA determined that Benninghoff failed to appear for a FINRA on-the-record interview. (FINRA Case #2009019487201)
 
This article was obtained on FINRA’s website listed under ‘Disciplinary Actions’ October, 2011.
 If you or a family member have become alleged victims of life insurance fraud, contact an insurance fraud attorney for a free consultation on how to recover your investment losses.  To speak with an attorney, call 888-760-6552, or visit securitieslawyer.com.  We stand up and fight for the rights of consumers. Soreide Law Group, PLLC, representing Insurance Fraud Victims in Federal Court, State Court and before the Financial Industry Regulatory Authority (“FINRA”).

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Oct/11

10

Life Settlements Fraud Get Long Jail Sentences For Two Scammers

Comments off · Posted by Securities Lawyer in FINRA

Two men from Houston, Texas, have been sentenced to spend more than 45 years in prison for their role in a massive life settlements fraud scheme writes Darla Mercado in an October 7, 2011, article in InvestmentNews.com.

Christian Allmendinger, the co-founder and vice president of A&O Resource Management Ltd., and Adley H. Abdulwahab, a hedge fund manager and part owner of A&O, were sentenced to 45 years and 60 years in federal prison, respectively, on Sept. 27 and 28 in the U.S. District Court in Richmond, Va. The charges against the two also includes conspiracy to commit money laundering, securities fraud and mail fraud.

This case dates back to 2004, when Mr. Allmendinger and another man founded A&O, according to the U.S. attorney’s office in Richmond and the Justice Department.

Ms. Mercado writes that the firm offered individual investors whole and fractionalized interests in so-called bonded life settlements, which were supposedly backed against longevity risk with a reinsurance bond. These bonds were positioned as fixed-maturity investments with a term of four to seven years and marketed as providing a guaranteed minimum compounded annual rate of return of 10% to 12%.

As many as 800 investors, most of them elderly, bought up the investments, and A&O raked in some $100 million in clients’ dollars.

It was reported in the InvestmentNews.com article that Mr. Abdulwahab, who eventually became a partial owner of A&O, entered the picture when his marketing company, CA Houston Investment Center, or HIC, and independent insurance agents who weren’t securities licensed began selling the investments, according to the suit. A&O paid HIC and the agents a commission of 10% of each bonded life settlement purchase, authorities said.

Concerned that the firm was offering unregistered securities, securities and insurance regulators became suspicious in 2006. Federal enforcement agencies said the men set up a phony series of sales of A&O itself in 2007 to place greater distance between themselves and regulators’ scrutiny of the firm. The transactions ended Mr. Allmendinger’s and Mr. Abdulwahab’s ownership interests in A&O, according to law enforcement agencies.

It was reported that A&O went into bankruptcy in September 2009, due to failure to pay down the premiums on its underlying insurance policies.

Mr. Abdulwahab filed an appeal of the sentence last week, and Mr. Allmendinger also will appeal the sentence.

If you or a family member have become alleged victims of life settlement fraud, contact an insurance fraud attorney for a free consultation on how to recover your investment losses.  To speak with an attorney, call 888-760-6552, or visit securitieslawyer.com. 

We stand up and fight for the rights of consumers. Soreide Law Group, PLLC, representing Insurance Fraud Victims in Federal Court, State Court and before the Financial Industry Regulatory Authority (“FINRA”).

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Aug/11

4

What You Should Know About Life Insurance Contestibilty

Comments off · Posted by Securities Lawyer in FINRA

There are large sums of money involved with life insurance and the industry needs to protect against people setting up fraudulent policies and transactions. There are three  concepts that must be understood as they relate to a senior life settlement. They are; Insurable Interest,  Rescission, and Contestability,.

Insurable Interest and Life Settlements

“Insurable interest” is deals with the legal legitimacy of a life insurance policy and its beneficiary. The intention of life insurance is to provide a financial payment to the beneficiary after the death of the insured. The beneficiaries are typically the family, descendents, heirs, employers, businesses, business partners and charities of the insured. These are legitimate beneficiaries that qualify for “Good Insurable Interest”.

For a life insurance policy to have legitimate good insurable interest, it is required that at the time of purchase, the intent was to benefit a legitimate beneficiary. If it can be shown that a policy was bought with the sole intention of making a life settlement then this would be considered “bad insurable Interest” or a “lack of insurable interest”. In this situation, the policy was issued on fraudulent grounds and the applicant was acting as an agent on behalf of an investor and NOT for the reasons listed on the application form. This situation has the potential for a recession at any time. This could also lead to a contested death claim at any time well beyond the 2 years of contestability.

Contestability Period and Life Settlements

  • The contestability period is the first two years a new life policy is in force. During this two-year period;
    • A death claim may be denied or “contested” due to a fraud on the life insurance application or the suicide of the insured.
    • The life settlement value of a policy is typically higher after the contestability period. 
    • An overwhelming majority of life settlement buyers will not purchase policies during the contestability period.
    • Life insurance companies don’t like life settlements but are particularly averse to life settlement transactions during the contestability period.

    Seniors should be aware that life insurance companies are not proponents of  life settlements. The fact is that life insurance companies profit greatly when a policy lapses without them having to pay a death benefit. When a policy is sold to an investor in a life settlement, it becomes a virtual certainty that the policy premiums will be paid and the death benefit will have to be honored. Also, professional investors pay the absolute minimum premiums until the anticipated death of the insured. These factors lower life insurance company profits.

    Seniors have every right to sell their life insurance policies that have been acquired legitimately and the life settlement market provides them a profitable avenue to do that. However, seniors cannot just buy life insurance with the intention of selling it in a life settlement to make money. To do so may be fraudulent because life insurance applications all ask the intent of the buyer.

     

    Rescission of Life Insurance and Life Settlements

    A rescission is a cancellation of the life insurance contract by the issuing life insurance company. If during the two year contestability period the life insurance company suspects fraud it can rescind the life insurance policy. If the fraud is related to a lack of insurable interest at the time the policy was issued, the recession can take place at any time. Obviously, life settlement investors will only purchase policies that they believe are in good standing and without any fraud in the origination.

    In order to rescind a policy the following conditions need to be met.

    • No death has occurred; i.e, the insured is still alive.
    • The company believes a fraud or misrepresentation was perpetrated on the application.
      • Medical information misstated.
      • Financial information misstated.
      • A misstatement of purpose that indicates bad insurable interest.

     

Arranging a life settlement in advance as part of buying a life insurance policy may lead to fraudulent statements on the life insurance application which in turn may lead to a finding of bad insurable interest which in turn may lead to policy rescission and/or a contested death claim.

Each state is responsible for creating and enforcing insurance laws and regulations. As a result the laws differ state by state and it is important to use experienced life settlement  attorneys to ensure that all laws are being adhered to. Florida has some of the strongest life settlement laws: It is a felony to solicit life insurance for the purposes of creating a life settlement.

Life settlements are a complex area of law and one of the key reasons that seniors need experienced legal professionals. 
 

  • In most states insurable interest must exist only at the time a policy is issued. Afterwards, any owner and beneficiary are just as legitimate as the original beneficiary.
  • Bad insurable interest at the time a policy is issued is a potential reason for a CONTESTED DEATH CLAIM or a policy RESCISSION at any time.
  • A fraudulent statement on the initial life insurance application related to insurable interest could lead to a policy rescission or contested death claim many years AFTER the contestability period has gone by.

If you or a family member have become alleged victims of life insurance fraud, contact an insurance fraud attorney for a free consultation on how to recover your investment losses.  To speak with an attorney, call 888-760-6552, or visit securitieslawyer.com. 

We stand up and fight for the rights of consumers. Soreide Law Group, PLLC, representing Insurance Fraud Victims in Federal Court, State Court and before the Financial Industry Regulatory Authority (“FINRA”).

 

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