The jury found
"We are very pleased that the jury held these defendants responsible and accountable for their flagrant misconduct," said
"This verdict serves as a strong warning to financial advisors to always put their clients' interests first, and to financial firms to closely supervise their employees," said
Witherspoon told his wife's siblings that their wealthy parents would gift them the premium, in amounts small enough to escape the gift tax, as an estate-planning tool. The siblings, however, needed to be the owners of the Policy, and to personally pay the premiums, for the parents to transfer their funds out of their estate, and thus avoid estate tax on these funds.
The Policy premiums were paid through 1995, with no payment in 1996. Although paid in 1997, beginning again in 1998 and continuing through to 2003, the Policy premiums were not paid, resulting in loans being taken out on the policy to pay the premiums. Witherspoon admitted he failed to inform Plaintiffs that premiums were not paid, and that loans were occurring.
During this time, the UBS Defendants were tasked with supervising Witherspoon, their employee. The jury, however, found that UBS failed to supervise Witherspoon, allowing the premiums to go unpaid while Witherspoon, the broker of record, refused to tell the policy owners.
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