On March 12, West Coast Life Insurance Co. added civil conspiracy and several violations of Florida law to a complaint alleging that an investment company, several insurance brokers and individual policyholders engaged in an illegal stranger-owned life insurance (STOLI) scheme. The amended complaint alleges that Park Venture Advisors masterminded and implemented the plan, which involved the sale of individual life insurance policies to private investors, while Wells Fargo Delaware Trust Co. served as a trustee for an insurance trust where the disputed policies were collected and eventually sold.
In the complaint, which was originally filed in August 2008, West Coast Life alleges that over the course of 2007 and 2008, nine elderly individuals applied for life insurance policies ranging from $3 million up to $10 million, well beyond their means and what they would ordinarily have sought. West Coast Life alleges that Park Venture Advisors offered the policy applicants a cash incentive equal to an unspecified percentage of the policy and that both the policy applicants and brokers fraudulently stated in the policy applications that they had no intention of selling an interest in their policies to private investors. However, the life insurance policies were soon transferred to Park Venture Advisors’ Granite Program, which established different trusts through which the policies’ death benefits would pass, permitting the policies to be sold to investors with no relationship to the policyholders. West Coast Life is seeking declaratory judgment allowing it to invalidate the policies and retain the premiums it has collected. The insurance company has also requested the court to order the brokers to return at least $1 million in fees and to declare the individual trusts invalid. (West Coast Life Insurance Co. v. Life Brokerage Partners LLC et al., 08-cv-80897 (U.S. District Court for the Southern District of Florida))