American General Life Insurance Company is asking a federal court in Indianapolis to void a $15 million life insurance policy it contends was purchased fraudulently, by a buyer who intended to sell the policy.

The insurer also is asking the court to allow it to retain the premiums paid on the policy and to order the agent who sold the policy to return his commissions.

The policy, purchased by Germaine Tomlinson in January 2006, was a stranger-originated life insurance policy and hence illegal under Indiana law, American General, Houston, part of American International Group Inc., New York (NYSE:AIG), alleges in court documents.

Tomlinson died Dec. 29, 2008.

As defined by American General in court papers, a STOLI policy is one in which “the insured and/or policy owners intended at incept for the policy or a beneficial interest in the entity that owns the policy to be sold, and the speculators require or agree to acquire an interest in the life insurance policy.”

Tomlinson’s policy was purchased as part of an effort “to recruit older persons to pose as applicants for and proposed owners of large-face-amount life insurance policies that were never meant to be for the benefit of the ostensible owners,” American General alleges in its suit, which was filed with the U.S. District Court for the Southern District of Indiana.

The defendants named in the case include Germaine Tomlinson Insurance Trust and its trustees; Carlson Media Group Inc., Indianapolis, which owns the trust and the disputed policy; and Geoffrey A. Vanderpal, Las Vegas, the broker who arranged Tomlinson’s purchase of the policy.

The defendants have asked the court to dismiss the case, arguing that Tomlinson died almost 3 years after receiving the policy, well beyond the incontestability period stated in the contract. In papers filed with the court, they report that the incontestability provision, mandated by Indiana law, states that the insurer may not contest the policy after it had been in force for 2 years

In response, American General attorneys have argued that “due to a lack of insurable interest, the policy was void from the inception.”

American General is asking the court to let it keep more than $387,000 in premiums it collected on the policy.

In his filing with the court, Vanderpal, the broker, denied knowledge of plans to sell the policy and called the insurer’s charges “frivolous and without foundation.”

Among other complaints, American General charges that because Carlson Media owns the Germaine Tomlinson Insurance Trust, the trust “lacks a valid insurable interest in the life of the insured.” Investors in the trust were “wagering on the life of other persons,” the company states in the suit.

In their motion to dismiss the case, attorneys for Carlson Media and other defendants have argued that the state’s “incontestability bar is absolute, even in circumstances of possible fraud.”