Imperial Holdings Paying $8M to Resolve Probe

Financial services company Imperial Holdings Inc. said Monday it will pay an $8 million penalty to resolve federal criminal allegations that it failed to prevent some employees from making false statements on applications for life insurance policies for seniors.

The company, which cooperated with the investigation and terminated the business in which the alleged problems occurred, won’t be prosecuted by the Justice Department under the agreement, so long as it complies with federal laws.

Imperial also announced that President and Chief Operating Officer Jonathan Neuman has resigned from the company and the board. He has been on a leave of absence since January.

The agreement with the Justice Department doesn’t resolve a related civil investigation by the Securities and Exchange Commission of Imperial’s life insurance finance business, the company said in a news release. Imperial makes loans to life insurance policyholders using the policies as collateral.

Imperial said the problems occurred in some instances in which company employees who also were licensed life insurance agents wrote the policies used as collateral for loans. Part of its life finance business was terminated in January 2009, the company said.

In September, FBI agents shut Imperial’s Boca Raton, Fla., headquarters and searched its offices, acting on a warrant issued by the U.S. Attorney’s office in New Hampshire. That warrant was related to the life finance business probe, the company said.