- 2015
Respondent engaged in a scheme involving the sale of prearranged funeral contracts, which are strictly regulated. Funds received in exchange for funeral contracts were placed in a trust that was used to purchase whole life insurance policies from related entities (likely generating commissions for those entities). Respondent would then authorize or permit loans against the whole life policies’ cash surrender value and then surrender the policies for cash minus the amount of the loans against the policies. Once the policies were surrendered, he would purchase term life policies that were funded by later contract purchases. Unsurprisingly, the scheme ultimately collapsed, leaving a wake of losses exceeding $400 million. Respondent was also criminally convicted and sentenced to 10 years imprisonment.
