New Jersey Investor Sues Advisor and Insurers Over Premium Financing Losses
From the desk of Jim Eccleston at Eccleston Law
A New Jersey resident has filed suit against a financial advisor, his firm, two insurance companies, and other parties over losses tied to a premium financing arrangement for life insurance.
According to ThinkAdvisor, Joseph Monte alleges that advisor Brian McGeehan of Creative Financial Group misrepresented the performance of two life insurance policies purchased through premium financing. Monte further claims McGeehan failed to execute a 1035 exchange that could have reduced risk exposure.
In 2021, McGeehan advised Monte’s wife, Elaine, to purchase a $7.5 million whole life policy from MassMutual with seven years of $300,000 annual premiums. Monte contributed a $630,000 1035 exchange from an existing policy to help fund the purchase. Elaine also purchased a Penn Mutual policy with a $10.5 million death benefit and $700,000 annual premiums. Both policies relied on premium financing.
Monte alleges that when he asked McGeehan in 2022 about the effect of rising interest rates, McGeehan provided only unofficial spreadsheets and marketing materials rather than carrier-approved ledgers. Monte claims the materials misrepresented the true performance of the policy and failed to disclose risks tied to market fluctuations, refinancing, collateral, and lending rates.
ThinkAdvisor reports that Monte transferred more than $640,000 into the MassMutual policy, paid approximately $100,000 in interest, and ultimately received just $50,000 in cash value after the policy lapsed.
Monte accuses McGeehan of negligent misrepresentation, breach of fiduciary duty, and professional negligence. ThinkAdvisor reports that he also brings claims against McGeehan and Creative for violations of the New Jersey Consumer Fraud Act, unjust enrichment, and common law fraud. The complaint further alleges negligence by MassMutual, Penn Mutual, and U.S. Bank for failing to ensure proper advice was given.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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