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Judge Puts Controversial Viatical Settlement Provider in Conservatorship

8/12/2002

Emergency Petition



TALLAHASSEE - Responding to an emergency petition by Department of Insurance regulators, a St. Johns County Circuit Court judge has ordered Future First Financial Group, Inc., a viatical settlement provider, into conservatorship to protect as many as 9,500 consumers with more than $300 million invested in death benefits with the firm.

The judge's decision marks a turning point, Florida Treasurer and Insurance Commissioner Tom Gallagher said, in a three-year struggle by department regulators to shut down the troubled Future First and to protect investors from incurring additional losses through its sister company, Life Settlement Services Corporation.

Under the order, Judge J. Michael Traynor appointed Miami attorney David Levine to serve as the independent conservator for Future First. The order directs the conservator to assume control of all records and funds collected by the companies and Future First's trust, The Fidelity Trust.

The order also requires the conservator to investigate the status of all policies, locate the companies' assets on behalf of investors, and determine the best strategy for salvaging consumers' investments. Levine will head a team of appointees that must contact all investors and present a preliminary report to the court within 30 days.
"With an independent conservator in place, investors will know with certainty where their money has gone and what options are available," Gallagher said.

Gallagher said that 2,300 Floridians invested $57 million with Future First.

After a 1999 investigation by the department's fraud division, both Future First and its then-vice president, William Sweeney, were charged by a statewide grand jury with 81 counts of grand theft and one count of organized fraud in the marketing of policies valued at $6.9 million. They are awaiting a November trial.

Although Gallagher revoked Future First's license in May 2002, the firm continued to conduct business as Life Settlement Services Corp. with the same president, same office location and most of the same employees. Last month, Life Settlement Services Corp. sent letters to investors, asking for six months' worth of premiums in order to keep the Future First policies in which they had invested from being cancelled for non-payment. Life Settlement Services Corp. told the investors that Future First had no money with which to pay the premiums, estimated at $350,000 per month. In response, the department filed an emergency petition.

Viatical settlements are agreements in which existing life insurance policies may be purchased by viatical settlement providers and re-sold to investors. The life insurance policies are sold for a percentage of the face value, and the investor collects the death benefit when the insured dies.

Investors may contact conservator David Levine at (305) 536-1112. They may also wish to consult an attorney to decide what actions are appropriate to protect their investments, or call the Department of Insurance Helpline at 1-800-342-2762.