Minnesota regulators have accused an insurance agent of having a client buy about $128 million in life insurance with the intention of selling the policies in the stranger-originated life insurance market.
The Minnesota Department of Commerce says it has suspended the license of Michael Antonello, chairman of Wealth Management Advisors L.L.C., Golden Valley, Minn., and charged him and his agency with fraud and forgery.
The department has scheduled a hearing May 14 before Administrative Law Judge Bruce Johnson to consider the charges.
Antonello has denied the charges, and he says the practices he used when he sold the policies in question were in line with what were considered to be accepted procedures at the time.
“Once insurance companies better defined financial underwriting guidelines and replacement guidelines, we complied with these revised standards,” Antonello says. “However, our practices in the early days of the senior settlement industry appear to be examined through the prism of today’s more rigorous underwriting guidelines.”
The Minnesota department asserts in its order for summary suspension that Antonello obtained life insurance for a number of clients that substantially exceeded the clients’ net worth.
In one case, the department charged, Antonello secured 44 policies insuring the life of John Paulson from October 1999 to December 2004. The total value of the death benefits was $127,750,000.
The department says Antonello obtained the insurance from about a dozen carriers by misrepresenting the total amount of coverage already in force on Paulson’s life and by falsely claiming on some applications that policies already in force would be replaced by newer policies.
Antonello received large commissions from the sale of the policies and also profited from selling each of the policies to investors in the STOLI market after the 2-year period for contesting such policies had lapsed, the department alleges.
STOLI policies are bought solely with the intent of selling the policies in the secondary market as soon as possible. Often, their purchase is financed by investors, who take over the premium payments until the insured dies.
Some insurance companies have sued Antonello to cancel policies he sold and to require him to return commissions earned on the policies’ sale, the Minnesota department says.
In another case, the department says, Antonello received policies insuring the life of Marietta Campbell from 5 different carriers. The total value of the death benefits was $14 million. Antonello had Campbell sign application forms from 5 life insurance companies and return them to him otherwise blank, the Minnesota department alleges.
After Campbell died in 2006, Antonello forged her signature on benefit forms, the department alleges. It says the case is the subject of lawsuits against Antonello by the insurance companies involved.
Antonello denies the charges. He maintains that none of the policies in question were purchased with the intention of selling them. He acknowledges, however, that “the settlement market was known to many clients” at the time they purchased their policies.
Moreover, Antonello says, he did not ask Marietta Campbell to sign blank insurance forms. He also denies forging any documents. He acknowledges that he did have a signed beneficiary form for Campbell on hand when she died.
“After her death, and with the full knowledge of the insurance company, the form was submitted so the death benefit would be paid in a tax-effective manner,” he says.
Antonello acknowledges changing the date on a form but says he did so at the direction of the insurer.