SEC Charges Brokers, Investment Advisory Firm, and Others $80M Variable Annuity Scam

Posted on March 26th, 2014 at 9:30 AM

From the Desk of Jim Eccleston at Eccleston Law Offices:

Michael A. Horowitz of Los Angeles and Moshe Marc Cohen of Brooklyn, N.Y., were charged by the SEC in a scheme wherein they sold $80 million of variable annuities to wealthy investors in order to profit from the death of terminally ill hospice and nursing home patients.

Horowitz obtained the personal health and identification data of the dying patients through fraud, marking them as annuitants on variable annuity contracts that he then sold to wealthy clients. He recruited Mr. Cohen to help facilitate the sale of those “stranger-owned annuities.” Under false pretenses, both men received their broker-dealers' approval to sell the annuities. The brokers reaped a windfall in commissions from their sale, the SEC claimed, with Horowitz obtaining more than $300,000 and Cohen snagging more than $700,000.

Horowitz told the contract owners — the wealthy investors funding the variable annuities — to invest aggressively to help drive up the value of the account. He allegedly misrepresented that there was no way to lose.That is, if the value of the annuity contract climbed, the client would receive the increased value as the death benefit payout following the demise of the terminally ill annuitant. On the other hand, if the value fell, then the client would receive a death benefit with a guaranteed payout equal to the premiums paid minus any withdrawals.

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston


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