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Volume 3, No. 4 - April 2014

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 insurance company notified the Department that it terminated a life agent's appointment for allegedly withholding premiums, receipts, documents, or correspondence that rightfully should have been submitted to the company. During the investigation, the Department discovered and obtained evidence that the agent took advantage of senior consumers by initially gaining their trust, either as a tax preparer, or as their financial advisor. He would sell them legitimate annuity products, and then followed up by having them agree to give him additional funds as part of their investment strategy where he would write the checks for them, having the payee as one of his two personal corporations, and have the consumer sign the check. Nine victims gave him more than $600,000.
Disposition: License revoked and he is permanently barred from the insurance industry. Additionally, the Division of Insurance Fraud arrested him on charges for alleged exploitation of the elderly, money laundering, and scheme to defraud to which he pleaded guilty and was sentenced to prison. He is currently in jail and being tried for additional similar charges.

Case: The Department received a complaint from an insurance company that it had terminated a life agent's appointment for allegedly submitting bogus and invalid business. According to the documentation the Department obtained, while the director of a small non-profit business, the agent submitted a total of 16 applications, 12 of which were paid for by the non-profit, using funds without their permission. The agent still owes the company for advanced commissions he was paid. As a result of the agent using the funds of the non-profit to pay the premiums for these policies, the non-profit had to cease doing business and closed its doors.
Disposition: License revoked.

Case: The Department received multiple complaints regarding a bail bond agent. Whether it was collecting funds from clients and failing to secure their bonds or using their premiums to dine out and pay her utility bills, the bail bond agent showed a blatant disregard for the insurance-buying public. Ultimately, she failed to return more than 222 bail bond powers totaling nearly $3 million, which exposed her bail bond surety companies to costly liabilities. She also produced falsified bail bond receipts on bail bond surety paperwork.
Disposition: License revoked permanently.

Case: An investigation of a general lines agent alleged she issued two ACORD insurance binders to two separate consumers showing that they had comprehensive and collision coverage when they had only purchased personal injury protection and property damage liability. The agent admitted issuing the binders saying that both consumers were going to return to the agency and purchase the coverage, but neither of them did.
Disposition: License suspended for twelve months.

Case: A general lines agent issued a Certificate of Insurance indicating that the insured had homeowners insurance coverage with an insurance company. The Certificate was faxed to a title agency for the insured's closing on a property. However, the application and the premiums were never submitted to the insurance company. The insured attempted several times to either obtain coverage or receive a refund of the monies deducted at closing. Due to efforts of the Department, the insured received a full refund and luckily the bank did not force place coverage.
Disposition: Fined $7,500 and placed on probation for one year.

Case: Previously, the license of a life & health agent was revoked by the Department. Approximately five years later, he was granted a new license. However, he was again suspended for 18 months based on the allegation that he violated the consent order by continuing to transact insurance during his revocation. An investigation revealed that he, during the suspension, again violated the consent order by representing himself as a recruiting MGA on an agent's appointment information form and received override commission from policies initiated during his suspension. In addition, he remained on the agency's bank account as a controlling member during his time of suspension, which was served.
Disposition: Fined $3,000 and license granted following two month inactive period.

Case: An investigation of a general lines agent revealed that she opened a bank account with the same agency initials as the agency she was employed. She then redirected insureds' premiums to the bank account. She would finance insurance premiums, issue bank drafts from the premium finance company and deposited those checks into the personal account she established.
Disposition: License revoked.

Case: A life agent was placing advertisements in a local newspaper that did not identify the product being offered as being an annuity and lacked the required disclosures for an annuity. In addition, the advertisement did not identify the business as being an insurance agency and did not contain the Florida insurance license numbers for the two life agents who were pictured in the advertisement. The evidence showed that both were responsible for the placement and approval of the advertisements.
Disposition: The agency owner and her licensed employee were each fined $3,000.

Case: The Department discovered that a Final Order was issued against a life & health agent in federal court for a permanent injunction and monetary judgment of more than $11 million to the Federal Trade Commission. The agent was running a telemarketing scheme that "preys on vulnerable consumers, including the unemployed, and those with pre-existing conditions." They promised comprehensive health coverage; however, they enrolled them in a "trade association" and provided limited healthcare policies. In addition, the agent failed to report the administrative action to the Department within 30 days after final disposition.
Disposition: License revoked.

Case: The Department's Division of Rehabilitation and Liquidation issued a final judgment against an insurance agency for unearned commissions due to the Receivership of Northern Capital Insurance Company. The Receiver was due $298.80 plus pre-judgment interest of $15.40 and post judgment interest. The agency failed to pay the judgment within the 30 days required by the court's order in violation of Florida Statute.
Disposition: Fined $750.

Case: A Clerk of Court notified the Department of an outstanding judgment against a bail bond agent that was unpaid for more than 35 days per Florida Statutes. The Department investigated and determined the number of bonds executed by the agent during the period the judgment was unpaid to be 49 bonds.
Disposition: Fined $1,500 and placed on probation for one year.