Companies Allegedly Sold Interests In Fake Life Insurance Policies

27 Jul 2007

Tallahassee. FL - August 5, 1999 - Investigators say two Florida companies may have defrauded investors who bought life-insurance policies from terminally ill people. It is believed that in some cases the policies didn't actually exist.

A completely legal practice known as "viatical settlements'' gives a terminally ill person a chance to get much-needed cash while still alive. An investors buys a life insurance policy at a discount from the face value, giving the policyholder money up front, and then profits when the seller dies. Viatical companies arrange for the sales of the policies and take a share of the proceeds.

The state, and reportedly the FBI, is investigating the two companies to determine if they cheated investors out of tens of millions of dollars by selling fake policies.

A Florida judge has ordered one of the companies to turn over records to investigators with the state Department of Insurance. Investigators also are reviewing documents from the second company.

The two companies are related, though separate, corporations. Essentially, one company lined up the terminally ill patients and bought the policies, supplying them to the second company, which sold the products to investors.

Several investors have sued one of the companies in state court in Florida, claiming they asked to see the policies but were not provided them.