Cable television host Larry King has filed suit against a Maryland insurance brokerage in connection with complaints about life settlement transactions.
In a complaint filed in October in the U.S. District Court in Los Angeles, King alleges that the Meltzer Group Inc., Bethesda, Md., persuaded him to engage in “highly complex life insurance transactions” involving the purchase and resale of insurance policies with an aggregate value of $15 million.
The insurance agency advised King on more than one occasion to buy a life policy with a trust under his control as the official owner of the policy, then to sell his stake in that trust, King alleges in the complaint.
King says he bought three policies with a total value of $10.5 million in 2002 to protect his wife and two minor children.
In February 2004, he says, he acted on the advice of the agency and used a trust to buy and sell a new $10 million life insurance policy for $550,000.
In October 2004, King says, he used a trust to buy and sell another policy, for $5 million, for $850,000.
King says the insurance agency should have warned him that his age and health might make buying replacement life insurance difficult.
If getting cash was the main objective, the agency should have had him start by selling a 2002 life insurance policy, through a transaction that would have generated a higher sale price along with returns that would have been taxed at the lower capital gains rate rather than at the higher rate imposed on ordinary income, King alleges.
The insurance agency violated its fiduciary duty by advising King to partake in the transaction and by failing to provide the proper disclosures for such transactions, King alleges.
Representatives for the Meltzer Group could not immediately be reached for comment.
King says in the complaint that Coventry First L.L.C., Fort Washington, Pa., the ultimate buyer of the policies sold through life settlements, has been investigated and sued by state authorities in New York.
Coventry is a “company of questionable repute,” King alleges.
Coventry is not named as a defendant in the case, King et al. vs. Meltzer et al.
“Certain statements in the [King] complaint are susceptible to misleading and erroneous inferences about Coventry’s business practices,” Coventry says in a statement about the complaint.
Coventry was not the purchaser of the $10 million policy that was resold immediately through the ownership trust, and Coventry opposes such transactions, Coventry says.
Most of the lawsuit against Coventry that was filed by Eliot Spitzer, who was attorney general of New York and is now the state’s governor, has been thrown out by the court, Coventry says.
“The state of Florida investigated the same allegations, and closed its investigation on Oct. 1, 2007, with no finding of wrongdoing,” Coventry says.