Former Broker Charged with Variable Annuity Scheme
From the Desk of Jim Eccleston at Eccleston Law Offices:
Michael A. Horowitz, an ex-broker from Los Angeles, was charged with orchestrating an $80 million variable annuity scheme that profited from the deaths of the terminally ill.
Horowitz devised an investment strategy to take advantage of the fact that variable annuity issuers don't require medical underwriting for contracts with less than $2 million and don't require the annuity purchaser to prove an insurable interest in the annuitant. In his strategy, a sickly patient would be chosen as the contract annuitant, while a wealthy client would fund the variable annuity.
Between July 2007 and October 2007, Mr. Horowitz sold at least 14 of that kind of annuity by selecting a terminally ill person as the contract annuitant for each of these transactions. He obtained patient identification information and health data through annuitant finders. Horowitz earned a total of $317,724 in sales commissions stemming from the stranger-owned variable annuities he had sold using false information when filing trade tickets with his broker-dealer.
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