Volume 4, No. 5 - May 2015

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: The Division of Agent and Agency Services' Bureau of Investigation initially developed evidence against a life and variable annuity agent who operated a sham company which he held out to be a legitimate international investment company. The agent was the mastermind behind a complex scheme to defraud numerous investors, including retired school teachers. By promising a high rate of return, the agent persuaded investors to transfer their retirement savings from legitimate life insurance and investment companies into his direct control through an off-shore shell corporation. Instead of investing the funds for the victims, the agent converted the funds for personal use including high-end luxury items, and commercial and residential real estate. As part of the scheme to defraud, the agent used money received from new investors to pay earlier investors. The total amount the agent defrauded was estimated at more than $4 million.

Disposition: Licenses revoked.  The former agent was arrested by the U.S. Attorneys’ office through its cooperation with the Division of Insurance Fraud. A federal grand jury indicted the former agent for 34 counts of wire and mail fraud, who pled guilty to fraud and money-laundering and was sentenced to 10 years in federal prison, and ordered to pay $3.6 million in restitution to the defrauded investors.  After completing his sentence, the former agent will be deported as he is not a U.S. citizen.

Case: A few years ago, a general lines agent was living the lavish lifestyle of a successful insurance agent. The problem was, the agent was using her clients’ fiduciary funds to finance her lifestyle. In just one case, the agent diverted a client’s numerous monthly auto insurance payments to her own bank account, and used the funds to issue money orders to herself. When the department requested records to establish whether this was a standard agency practice, the agent brazenly provided investigators with a falsified production register containing incomplete insurance entries.

Disposition: License suspended for six months and ordered to pay restitution

Case: A licensed life agent made material misrepresentations to multiple consumers during the sale or conversion of life insurance products. The agent misrepresented that certain policy features were available to the consumers, provided inaccurate information about possible tax consequences and penalties, and provided consumers with illustrations that did not match the policy issued. The insurance company rescinded the policies and refunded all premiums to the eight affected consumers.

Disposition: License suspended for 24 months and placed on probation for two years.

Case: An all-lines adjuster thought nothing of creating false claim files and issuing claim checks to himself. The adjuster diverted well over $184,000 of company claims funds for his personal use.

Disposition: License revoked and permanently barred from the insurance business.

Case: Continuing education is a serious business. A continuing education instructor was caught shouting out test answers to class students while administering a course exam.

Disposition: Fined $2,500 and placed on probation for one year.

Case: A department licensee reported that a general lines agent had altered a certificate of insurance previously issued by the insurance agency to show proof of insurance for a business that the insurance agency did not insure. The fraudulent certificate of insurance indicated that the agent not only changed the coverage date but also the named insured. The certificate was presented to the municipal building department which had received several certificates from the agent.

Disposition: Licenses revoked. The agent was arrested by the Division of Insurance Fraud and charged with forgery and uttering a forged instrument, both felony crimes.

Case: A consumer complained that a public adjuster cashed a claims check and refused to release the funds. Investigators determined the adjuster also overcharged the consumer. The adjuster later sent the consumer a check after deducting his fee. Part of the fee included withheld Recoverable Depreciation which was assessed prior to the adjuster’s involvement in the claim. The investigation also revealed numerous violations in the adjuster’s contract.

Disposition: Suspended for six months and ordered to make restitution to the consumer.

Case: A county Clerk of Courts office notified the department of a Final Judgment issued against a bail bond agent and satisfaction of the Judgment was due within 30 days. The Judgment was not satisfied by the deadline but the bail bond agent continued to execute bonds while it remained unpaid for more than 35 days. The department’s investigation concluded the agent executed ten bonds while the judgment remained unsatisfied.

Disposition: Fined $1,500 and placed on probation for one year.