Estates Sue Over $26M in Life Policies Held by U.S. Bank

The Minnesota case parties: The four new Minnesota STOLI cases were all filed Dec. 22.

The plaintiffs in the cases are:

• The personal representative of the estate of John C. Breslin, a Colorado resident who was insured by a $3.65 million policy and who died March 17, 2023.
• The executor of the estate of Jacqueline Hopfinger, a Florida resident who was insured by a $3 million policy and who died Oct. 27, 2021.
• The administrator of the estate of Susan Jacobs, a California resident who was insured by two $7 million life insurance policies and who died Jan. 1, 2022.
• The administrator of the estate of Raymond Cappelli, a Pennsylvania resident who was insured by a $5 million policy and who died Dec. 19, 2017.

The defendants in all four cases are U.S. Bank, which serves as the record owner and beneficiary for the policies, and three trusts: Financial Credit II Trust A, Financial Credit Investment Trust C and Financial Credit Investment II Trust F.

Financial Credit Investment, the entity that formed the trusts, is owned by an Irish entity and is a citizen of Ireland, according to the plaintiffs’ complaints.

Apollo Global Management lists Financial Credit Investment Advisors II and Financial Credit Investment II Manager as subsidiaries in its Form-10-K annual report for 2022, and it includes fee revenue from Financial Credit Investment II and related funds in its Form 10-Q quarterly report for the quarter ending Sept. 30, 2023.

The allegations: The plaintiffs allege that a bank created premium financing arrangements and trusts to “wager on the lives of hundreds of American senior citizens,” obtained life insurance policies insuring the lives of senior citizens, then sold the policies to other entities.

Over the years, the policies passed through a number of different portfolios and ended up in the Financial Credit Investment trusts, according to the complaint.

The policy portfolio managers repeatedly contacted the insureds and their family members to check on the insureds’ health, obtained the insureds’ medical records and gave the insureds’ medical records to life expectancy analysts, the plaintiffs allege.

The plaintiffs say the health monitoring efforts invaded the insureds’ privacy.

Under common-law principles recognized by jurisdictions such as Wisconsin, the estate of the insured can sue to collect the benefits a life insurer pays to a policy owner that lacks an insurable interest in the life of an insured, according to the plaintiffs.

The plaintiffs have accused the defendants of unjust enrichment. They are asking the court to award the estates amounts equal to the death benefits the life settlement trusts have received, along with attorneys’ fees and interest.

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