Securities Fraud Blog | Find out if your broker is liable for your losses

TAG | insurance fraud life policy

May/11

20

Susan Mae Karn Fined and Suspended by FINRA

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Susan Mae Karn (CRD #5218398, Registered Representative, Wimbledon, North Dakota)

submitted a Letter of Acceptance, Waiver and Consent in which she was fined $5,000 and suspended from association with any FINRA member in any capacity for six months. The fine must be paid either immediately upon Karn’s reassociation with a FINRA member firm following her suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Karn consented to the described sanctions and to the entry of findings that she allowed a customer to sign relatives’ names on life insurance applications, and before Karn submitted them for processing, she signed the insurance applications and certified that she had witnessed each of the proposed signatures on the insurance applications. The findings stated that Karn falsely certified on the Representative’s Information Supplement document for each insurance application that she had personally seen each proposed insured at the time the application was completed. The findings also stated that one of Karn’s clients completed an application to purchase a municipal bond fund by signing her name on an electronic signature pad, and later that same day, Karn signed the client’s name on the electronic signature pad and thereby affixed the client’s signature on an application without the client’s authorization, consent or knowledge.

The FINRA findings also included that the application Karn’s member firm processed and sent to the client reflected the signature Karn had affixed rather than the client’s authentic signature. FINRA found that when the firm questioned Karn about the authenticity of the client’s signature, Karn initially stated it was the client’s original signature, but when questioned further, admitted she had signed the client’s name and in doing so, Karn misled her firm during its internal investigation into a customer complaint.

The suspension is in effect from March 7, 2011, through September 6, 2011. (FINRA Case #2010022067901)

This information was obtained on FINRA’s website.

If you or a family member have become  victims of the alleged fraudulent schemes of Susan Mae Karn, or have experienced a similar situation, call a Securities Arbitration Lawyer for a free consultation on how you could potentially recover you losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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May/11

6

Florida and California Insurers’ Death Benefit Payout Practices Targeted

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In an April 26th, 2011, article from InvestmentNews.com, Darla Mercado writes that attorneys have set their sights on life insurers as state regulators investigate the carriers for their failure to pay out death benefits or submit the money to the state in a timely fashion, allegedly while still collecting fees in some cases, and leading the way is California’s controller and insurance regulator, which announced jointly a subpoena and investigative hearing of MetLife Inc.’s practices on paying death benefits.

Ms. Mercado goes on to say that the preliminary findings from a three-year audit by the state revealed that for 20 years, the carrier failed to pay benefits to named beneficiaries or the state after learning that a customer had died. MetLife’s hearing has been set for May 23. That same audit, which covered 21 life insurers, led to a settlement between John Hancock Financial Services Inc. and California on Friday. That day, Florida’s Office of Insurance Regulation announced a May 19 hearing on the same topic. That office also had subpoenaed MetLife and Nationwide Life Insurance Co., asking that the companies bring representatives to discuss the carriers’ practices.

The regulatory activity has garnered the attention of plaintiff’s attorneys, who are watching the drama unfold and expect some litigation fallout as a result. According to the InvestmentNews.com article, the key legal question is what exactly were the insurer’s responsibilities in performing the due diligence to find the beneficiaries. Carriers use the Social Security Administration’s death master list database for reference.

The beneficiaries of these policies are supposed to submit a claim for the death benefits, but if a carrier doesn’t hear from a beneficiary and has information on hand to show that an insured person has died, then at what point does the company escheat the money to the state?

It was noted that aside from following regulatory and statutory requirements, the insurer used its electronic death master file in 2006 and 2007 to identify individual life insurance policies for which a death benefit was due but no claim had been filed to date. The carrier will expand its use of the electronic death master file to identify potentially payable policies this year.

Depending on applicable state law, when beneficaries can’t be located within 3 to 5 years after the company receives notice of a death, the policy proceeds are considered unclaimed and go to the appropriate state. MetLife escheated $51 million to the states in 2010.

If you or a family member have become victims of this alleged 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 www.stockmarketlawsuit.com. 
We stand up and fight for the rights of consumers. Representing Insurance Fraud Victims in Federal Court, State Court and before the Financial Industry Regulatory Authority (“FINRA”).

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Apr/11

26

Florida’s Office of Insurance Regulation to Hold Public Hearing on Life Insurance Companies’ Practices

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 On Friday, April 22, 2011, on Florida’s Office of Insurance Regulation’s website, the following article appeared:  The Office will conduct a public hearing to evaluate a potential industry practice that involves claim settlement practices, use of the U.S. Social Security Administration’s Death Master File and compliance with unclaimed property laws.

It was announced that the Florida Office of Insurance Regulation (Office) delivered investigative subpoenas to Metropolitan Life Insurance Co. and Nationwide Life Insurance Co. requesting that a corporate representative appear in Tallahassee to explain their company’s business practices regarding these issues. Although these are the first companies to receive subpoenas – the Office is examining other companies on this issue because the Office’s information encompasses a substantial part of the life insurance industry.

The Florida Office’s ongoing industry examinations have revealed that some companies may use the Death Master File to stop annuity payments, but fail to use this same information to investigate claims for life insurance proceeds to the detriment of policyholders and beneficiaries.
                               
Call a Securities Arbitration Lawyer for a free consultation on how to recover your investment losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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Jan/11

17

Stranger Originated Life Insurance (STOLI)

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Insurance Fraud Alert-

Stranger Originated Life Insurance or STOLI.

Brokers and financial advisors promising big profits on resale of universal life policies.

 Many stockbrokers and financial advisors are having their clients purchase large universal life insurance policies with the promise of a big profit on resale after the two year contestability period passes. There is a promise that the profit from the sale would not only cover the premiums but would put a profit in the insured’s pocket with enough money to purchase another policy and do it all over again. Unfortunately, these brokers are over promising and grossly over representing the legality and liquidity of the resale of the insurance policy especially when it was purchased for the sole purpose of reselling. 

Another common insurance scam facilitated by ignorant or greedy stockbrokers or financial advisors is the Stranger Originated Life Insurance or (“STOLI”) life insurance transaction. STOLI’S are heavily regulated transactions where a lot of illegality can take place if not executed correctly. Many states have made laws or are making laws prohibiting STOLI transactions. STOLI policies are life insurance policies where an insurance investor has their client (usually an elderly person) put their name as the beneficiary on the life insurance policy even though the insurance investor has no insurable interest in their client. This means that the insurance investor is not a relative and is only making the STOLI transaction in order to make money off of the insured person after they die.

STOLI transactions are marketed towards the elderly, especially the elderly who may not live much longer. These insurance investments are generally held for the two year contestability period then resold on the market. Many stockbrokers and financial advisors have been getting involved in the sale of life insurance due to the excessive commissions generated off of universal life insurance policies. Investors who probably don’t need life insurance are being pressured into purchasing these policies and listing the insurance investors as the beneficiaries. The elderly may be “wined and dined” by the insurance investor and told that they can get a cash bonus by making the STOLI transaction. Unfortunately, seniors are often times unaware that they have to pay taxes on the cash bonus and could be charged with theft by agreeing to the transaction. Also, STOLI transactions may make it harder for seniors from getting other life insurance in the future.

In addition, STOLI policies can be bought and sold to more than one person so many insurance investors are, in a sense, wagering on someone’s death.

If you purchased a STOLI or a viatical investment or your broker convinced you to purchase a universal life insurance policy for the purpose of reselling it you may be able to bring a legal claim for recovery of your money. For more information call Soreide Law Group at 1- (888) 760-6552 or visit www.stockmarketlawsuit.com.

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