|By Michael Buck|
|A.M. Best Company, Inc.|
Three insurance agents have been accused by the
The men allegedly earned millions in commissions during the course of the scheme and even bought STOLI policies for themselves, the
"The defendants conspired to reap the benefits of a scheme that defrauded insurance companies and lined their own pockets,"
According to the
The men allegedly recruited elderly people of modest means as straw buyers to purchase the policies, promising payments if their policies were resold. The applications for policies, which were submitted by Binday, typically contained misrepresentations regarding the straw buyers' net worth, assets and their intent to resell the policies.
Policy premiums were paid by third-party financiers, who would wire money into the straw buyers' bank accounts. The system was allegedly brokered by the three men in an attempt to fleece the insurance companies into thinking the straw buyers were paying for the policies on their own. The policies were also resold on the secondary market.
STOLI transactions have emerged as an issue in recent years. In 2008, the life settlement industry was hit with a wave of lawsuits filed by life insurers, alleging the life settlement industry was participating in STOLI transactions. And as a result, dozens of states have enacted anti-STOLI laws to prevent such transactions (Best's News Service,
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