Volume 1, No. 1 - June 2012

Case Notes

The following are instances in which licensees or other persons violated the Florida Insurance Code and the administrative action the department has taken against them.
Note: All administrative investigations are subject to referral to the Division of Insurance Fraud for criminal investigation.

Case: A life agent, who was also an attorney, convinced a 70-year-old woman with Alzheimer's to assign him as power of attorney over her assets. As power of attorney over her accounts, he had authority to make 1035 exchanges on her annuity accounts causing her substantial surrender penalties, but earning him thousands of dollars in commissions. In addition to the senior consumer, the agent also took advantage of at least ten other Florida consumers causing them to also incur substantial surrender penalties. The annuity company made restitution to the consumers in excess of $200,000.
Disposition: License revoked and permanently barred from licensure. He was arrested for exploitation of the elderly $100,000 or more and sentenced to five years in prison followed by 10 years of felony probation and ordered to make restitution. The Florida Bar suspended him from the practice of law as well.

Case: A general lines agent accepted premium from numerous senior citizens and issued homeowner policies for mobile homes. The policies were purported to be underwritten by a surplus lines carrier, when in fact they were fraudulent policies not underwritten by any authorized insurance company or eligible surplus lines carrier - having been produced on the agent's home computer. An emergency order of suspension of the agent's license was issued and she was arrested.
Disposition: License revoked and permanently barred from licensure. She was criminally charged with multiple felonies and the case remains pending.

Case: Less than one year after being licensed, a life agent solicited and sold two annuities to a single client. The beneficiary of the annuities was a revocable insurance trust for which the agent named himself the trustee. As trustee, he had the authority to withdraw and deposit monies from the annuities and have those funds deposited into the trust. The agent then began depositing checks made payable to the trust into his personal bank account and took eleven other checks to a check cashing store, where he received cash. In total the agent misappropriated more than $25,000 from the trust account.
Disposition: License revoked and permanently barred from licensure. He was arrested and pled no contest to grand theft.

Case: Father and son surplus lines agents and their agency were found to be engaging in a large scale scheme to divert collected premium for their own use. The theft of premium was in excess of $1,000,000. The investigation involved interviews and communication outside the United States.
Disposition: Licenses of both agents and their agency were revoked. Both were arrested and criminally charged with diverting insurance premiums, and both criminal cases remain pending.

Case: A life agent submitted applications to an insurance company on four individuals that did not exist. He made up addresses, social security numbers, and dates of birth as well as paid the first month's premium for each. The company issued the policies, which were later cancelled. He claimed he committed the acts because the company paid an annualized commission for collecting a first month's premium.
Disposition: License revoked.  He was arrested and criminally charged with insurance fraud.

Case: A life agent was selling annuities to senior citizens that provided no benefit to the them yet produced large commissions to the agent. Many of his victims shared common traits: they had limited investment experience; were elderly; had limited communication skills due either to a medical condition or being speaking English as a second language; and readily signed their names to voluminous documents, mostly without reading them.
Disposition: License revoked and permanently barred from licensure. Ordered to pay restitution to his victims.

Case: The Department received and investigated multiple complaints from consumers regarding a life agent's marketing and sales techniques. The common thread through all complaints was that the agent would convince senior citizens to cancel their existing annuities or retirement plans and replace them with new annuities thus generating new commissions. He misrepresented the terms and benefits of the new contracts, convincing the seniors that they would receive large bonuses for making the switch and that they would have complete penalty-free access to their money when needed.
Disposition: License surrendered and permanently barred from licensure.

Case: A title insurance agent, as sole officer and agent-in-charge of a title insurance agency, failed to pay the agency's annual administrative surcharge, failed to maintain the required surety bond, and misappropriated more than $8,000. The misappropriated funds represented unpaid premiums to the underwriter as well as title plant fees.
Disposition: Title agent's license revoked; title insurance agency's license suspended.

Case: A general lines agent cashed multiple refund checks from an insurance company meant for policyholders in excess of $17,000. The insurance company reviewed the agency's book of business and found that on each of the policies in question he had changed the insured's mailing address to the agency's address. The refund checks including cancellation refunds were deposited into the agency's bank account, of which he had control. Affidavits were provided from several of the insureds that indicated the endorsements on the back of the refund checks were not their true and correct signature.
Disposition: License revoked.

Case: An applicant for a life including variable annuity and health license who was taking the examination was caught with notes in the exam room while taking his licensing exam. This occurred after he had failed the examination twice already. By the time the notes were discovered he had successfully completed the examination, which resulted in a license being issued. 
Disposition: License suspended, must re-take and pass the examination, $500 penalty. If he passes the examination, the license will be placed on probation for two years. If he fails the examination, the license will be revoked.