Guggenheim Hit with Annuity Fraud Class Action Lawsuit

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A class action lawsuit was filed in Illinois federal court against Guggenheim Partners LLC along with three other insurance companies under its control, alleging that they engaged in annuity fraud by hiding the carriers’ finances.

The class action lawsuit was filed by annuity buyers Clarice Whitmore and Helga Maria Schulzki, claiming that their asset manager stole the cash reserves of the insurance companies they had purchased annuities from after Guggenheim took control of them.

“Guggenheim’s plan was pernicious — acquire insurance companies weakened by the recession and use them to sell seemingly safe and secure annuity products,” the two women allege, all so they could then funnel cash back to Guggenheim, its friends, affiliates and associates.

The defendants’ behavior was compared to that of the energy company Enron Corp., which collapsed in 2001 after it was learned that it had engaged in widespread accounting fraud. The annuity fraud lawsuit said that Guggenheim also used complicated accounting to give the impression that they were financially strong and stable when the company was not.

Guggenheim Capital LLC spokesman Michael Sitrick issued a response saying that Guggenheim and the insurance companies in question are “properly and well capitalized” and that the charges are false and inaccurate.

“All investments, reinsurance contracts are proper, legal and disclosed,” Sitrick said. “All service contracts between Guggenheim and insurance companies are proper, legal and approved by the regulators.”

The Guggenheim annuity class action lawsuit was filed on behalf of anyone who purchased an annuity from Security Benefit Life Insurance Co., Guggenheim Life and Annuity Co. or Equitrust Life Insurance Co. from Jan. 1, 2010 to the present.

According to the annuity fraud lawsuit, Guggenheim Partners and the insurance  companies in question had a racketeering enterprise, which overcharged those who purchased annuities.

Schulzki and Whitmore did not specify the amount of money in damages they are owed but did say they are seeking triple damages allowed under the federal racketeering law.

Annuity fraud is commonly committed against older individuals by insurance companies. Annuities are sold by insurance companies to provide those in the elderly community with a steady income stream in their retirement, which is why they are a popular investment as part of someone’s retirement plan.

However, several insurance companies have allegedly taken advantage of their elderly clients and committing annuity fraud against them. This is often done by selling seniors annuities that will last more years than they are likely to live.

Other red flags of annuity fraud are when a senior’s annuity makes up more than 35 percent of his or her assets, the charge for early cash-in is more than 14 percent of the principal, and the senior has bought several annuities from the same agent.

The annuity fraud lawsuit is Whitmore, et al. v. Guggenheim Partners LLC, et al., Case No. 14-cv-00948, in the U.S. District Court for the Northern District of Illinois.

If you or someone you know was a victim of fraudulent activity due to an annuity or life insurance policy, legal action is available to you through an investment fraud attorney. Contact the Life Insurance, Annuities Fraud Class Action Lawsuit Investigation for a free review of your case.