In a case recently filed in the U.S. District Court, Southern District of Ohio, an insured has sued a California based life settlement company after a life insurance policy purchased at the behest of the company did not sell on the secondary market.

Plaintiff Louis Levin alleged that he was ap-proached by an employee of Defendant Barry Kaye & Associates with an offer to use a life insurance policy on Levin’s own life as an investment tool with the potential for substantial profit. Defendant allegedly urged Plaintiff to purchase a $5 million life insurance policy, with the notion that Plaintiff could sell the policy in two years for at least $500,000 if his health remained the same. Levin also was told that a bank or finan-cial entity would pay the premiums on his policy.

Although Plaintiff disclosed, and Defendant knew, that he had sufficient financial resources and did not require the amount of insurance being proposed, Plaintiff purchased a $5 million policy from Transamerica Occidental Life Insurance Company. Defendant later told Plaintiff that a bank or financial entity could not be located to pay the insurance premiums on his policy. Plaintiff made premium payments for 25 months and then requested that Defendant sell the policy as it had promised. Defendant told Plaintiff that it could not locate any buyers and that no market existed for the sale and purchase of Levin’s insurance policy. Plaintiff subsequently filed a lawsuit claiming, among other things, breach of contract, negligence and violations of Ohio securities law.

This case is in the preliminary stages of litigation: Levin v. Barry Kaye & Associates, Inc., et al., U.S. District Court, Southern District of Ohio, Western Division, Case No. 3:09-CV-287.

Note: The Ohio Department of Insurance is currently developing rules to implement Ohio’s new Anti-STOLI legislation. For more information on STOLI, please visit Bricker & Eckler’s STOLI Resource Center at http://www.bricker.com/legalservices/industry/insurance/stoli/