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Volume 2, No. 1 - January 2013

Case Notes

Bureau of Investigation

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: An unlicensed individual, with the assistance of his wife who was a licensed life and variable annuity agent, sold life insurance policies to unsuspecting employees at a school. Unfortunately for the insureds, the couple pocketed a sizeable amount of their premium payments and only submitted a portion to the carrier. Once the victims found out the husband was not even licensed, his scheme began to unravel. Fortunately, thanks to the Department's intervention, the consumers were made whole and issued life policies. The husband was arrested in a life insurance sting operation set up by state authorities. He met an undercover police detective and solicited a payment of $528,000 to purchase nonexistent life insurance policies.
Disposition: The wife's license was revoked. The husband was ordered to cease and desist from his activities, and the order barred him permanently from the insurance industry. He was convicted of pilfering close to $490,000 from two senior citizens in Florida who thought they were buying into stranger-originated life insurance. He was sentenced to 34 months in prison plus 25 years of probation and was ordered to pay restitution to the seniors. He was subsequently arrested again by another jurisdiction and is facing multiple felony charges related to allegedly acting as an insurance agent without a license and alleged fraudulent crimes involving a senior citizen.

Case: An investigation of a general lines agent alleged he was transacting insurance business with a suspended license and failed to secure coverage and forward premiums collected on multiple commercial accounts.
Disposition: Both the license of the agent and his insurance agency were revoked. The Division of Insurance Fraud conducted their own investigation and obtained a full confession from the former licensee. He was sentenced to 15 years felony probation, which includes he may not be employed in any capacity in the insurance industry; ordered to pay in excess of $100,000 in restitution to multiple victims and Fraud Division's investigative costs.

Case: An investigation of a title agent who owned a title insurance agency revealed she was recruited to be the closing agent for a mortgage fraud scheme. As part of her responsibilities as closing agent, she prepared a standard settlement statement that identified various expenses, payments, and disbursements related to a fraudulent transaction. On the settlement statement, she represented an inflated appraised value as the purchase price of the property, when in fact the purchase price that had been negotiated with the sellers was much less. Although she knew that two contracts existed, one for the lower price negotiated with the sellers and one for the higher price based on the inflated appraisal, she did not inform the bank of these facts. She also falsely represented on the settlement statement that the third-party buyer would make a down payment when in fact no down payment was made. During the closing, she informed the bank that all closing conditions had been met and, as a result, the bank disbursed a first and a second mortgage loan. After the bank disbursed the funds, she issued a check to the orchestrator for more than $150,000, which was the difference between the actual purchase price and the inflated appraised value. The funds were ultimately deposited into her title agency's escrow account as the down payment for the transaction. Although she knew that the down payment did not come from the buyer's funds but instead came from the loan funds, she did not inform the bank of this fact.
Disposition: Both licenses of the title agent and title insurance agency were revoked. She was sentenced for bank fraud related to a mortgage fraud scheme. As part of the sentence, she was ordered to pay restitution to victims in the amount of $531,356. The court also entered a judgment against her for $178,625, which was the amount of money she received as a result of the scheme.

Case: An investigation of a customer representative alleged that on several occasions while working at an insurance agency, she exceeded the limits of her license by repeatedly representing herself as the general lines agent when executing insurance policies for clients of the insurance agency. The policies failed to include the signature of the supervising general lines agent.
Disposition: License revoked.

Case: An investigation of a life, health and variable annuity agent alleged that he aided or represented an unauthorized insurer, DEPAWIX.
Disposition: License suspended for six months; probation for 12 months if and when he applies for reinstatement; fined $5,500; restitution of $660.50.

Case: An investigation of a bail bond agent alleged he continued executing bail bonds in the state of Florida after judgments were entered by the Clerk of the Circuit Courts and remained unpaid for 35 days.
Disposition: Fined $3,000 and placed on probation for 12 months.

Case: An investigation of a public adjuster alleged he had submitted an adjusting contract to Citizens Property Insurance Corporation (Citizens) that charged fees greater than the statutorily required limitation for services rendered to policyholders.
Disposition: Fined $1,750; probation for six months; restitution of nearly $6,300; shall offer to execute new adjusting contracts with fees not to exceed 10% with consumers who were overcharged.

Case: A non-resident general lines agent failed to report to the Bureau of Licensing when applying for an agency license that another state insurance department took action against his license in their state. The other state had issued an action against the licensee for failing to properly supervise an employee. The other state levied a fine against him and his agency.
Disposition: Fined $1,500; agency license granted; placed on probation for 12 months.