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Two brokers were accused by the U.S. Securities and Exchange Commission of committing fraud against numerous consumers by using variable annuities that allowed them to invest in insurance contracts that essentially bet on the lives of terminally ill policy holders.
An annuity is a certain type of insurance that has become a popular form of investment and retirement plan in the United States because it pays the policy holder a steady stream of income. Variable annuities are a type of retirement investment that has become popular with high-net-worth investors.
A variable annuity tends to combine the death benefits clause of a life insurance policy and some features of a mutual fund portfolio. However, it the person whose death would result in an insurance benefits payout is not always the person who owns the policy. Furthermore, what makes these kinds of policies even more questionable is that the investor of a variable annuity policy is not required to prove that they actually know the annuitant.
According to the SEC, two brokers concocted a scheme to commit annuity fraud. Michael A. Horowitz of Los Angeles and Moshe Marc Cohen of New York, have been accused of working with three individuals working in hospice care and nursing home industries in order to illegally obtain the personal data of at least 16 terminally ill patients located in California and Chicago. Using this personal identification data, the brokers were able to list these patients as annuitants in variable annuity life insurance policies.
The SEC states that Horowitz and Cohen allegedly falsified other forms and paperwork in order to give their annuity policies the appearance of legality. Afterwards, the two brokers convinced at least 50 investors to buy into their “stranger-owned annuities,” that they claimed were “loss-proof” investments.
Horowitz and Cohen managed to attract $80 million in capital and made about $1 million in commissions between 2007 and 2008. According to the report, the terminally ill individuals allegedly received nothing from the brokers’ annuity fraud scheme.
Get a Free Life Insurance Claims/Annuity Fraud Lawsuit Review
If you or your loved one purchased a bonus annuity, life insurance policy or Medicaid qualified annuity and it did not turn out as promised, you may need to have an investment fraud lawyer review the policy, the payments, and the potential benefits. You may be surprised at what they find, and you may even qualify for financial compensation beyond what the policy promised.
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