FAQs - Life Settlement Fraud
Anti-Fraud Public Awareness Campaign
Who can commit a fraudulent life settlement act?
Aside from the insured himself, a policy owner, insurance agent, or life settlement broker could be responsible for fraudulent misrepresentation within a life insurance or life settlement application.
What penalties exist for a fraudulent life settlement act?
In many states, committing a fraudulent life settlement act can result in civil as well as criminal penalties. For example, in the state of New York, committing a fraudulent life settlement act is a crime, and also subjects the offender to civil penalties, which can be up to five thousand dollars plus the stated value of the claim for each violation.
What does Life Partners, Inc. do to prevent fraudulent life settlement acts?
As a licensed life settlement provider, LPI is committed to combating fraudulent life settlement practices, and several states in which we are licensed require us to maintain an "Anti-Fraud Plan" with procedures to detect and report life settlement fraud. Below is an overview of some key points of our fraud reporting procedures from our Anti-Fraud Plan.
SPECIAL INVESTIGATIONS UNIT
LPI has a Special Investigations Unit (the "Unit") to detect, investigate, and prevent fraudulent life settlements acts, which is staffed by Life Partners, Inc.'s legal department. This department is led by R. Scott Peden, the President and General Counsel of LPI. The principal fraud investigators for the Unit are Mr. Peden and Justin R. Blount, LPI's Associate General Counsel. A third employee in the Unit, Mandy Bray, operates under, and provides assistance to, these primary fraud investigators.
POLICY REVIEW AND FRAUD REPORTING PROCEDURES
- All policies referred to LPI for purchase go through our processing department, where the insured and/or policy owner, or their representative, are provided with an application, contract, and disclosure forms, and where the necessary medical records and policy documents to properly evaluate the policy for purchase are obtained. At this point in the transaction process the policy is evaluated for purchase, and potential fraud in the application materials is most likely to be detected. The procedures for exposing any material inconsistencies between the policy documents, the medical records, and the application for a life settlement contract are as follows:
- At the point when the application, policy documents, and medical records have been provided to Life Partners, Inc., they are reviewed for purchase, and to determine if there is any evidence of any conflicting, inconsistent, or materially false information in the materials.
- If any evidence of any material inconsistency is detected that is not overtly fraudulent, the broker and/or insured/policy owner is contacted and inconsistency is explained to them. This ensures that the insured/policy owner has the opportunity to explain or provide more information to resolve the inconsistency. If an overtly fraudulent material inconsistency is detected such that a rectification by the insured/policy does not appear to be possible, or if the insured/policy owner cannot provide information to explain the inconsistency, the inconsistency is referred to the Unit for further investigation.
- Upon referral from the processing department, an investigator from the Unit will examine the application materials and the relevant facts to determine if there is sufficient evidence that a fraudulent life settlement act has potentially taken place that should be reported to the appropriate state insurance department or law enforcement or prosecutorial agency.
Insurance Information Institute. http://www.iii.org/
"Lies that could kill your life insurance," MSN Money, Dec. 2009. http://articles.moneycentral.msn.com/Insurance/InsureYourLife/lies-that-could-kill-your-life-insurance.aspx?page=1.